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EXHIBIT 4.03
PLATO LEARNING, INC.
2000 STOCK INCENTIVE PLAN
1. Purpose. The PLATO Learning, Inc. 2000 Stock Incentive Plan (the
"Plan") is intended to promote the long-term success of PLATO Learning, Inc.
(the "Company") and its stockholders by strengthening the Company's ability to
attract and retain highly competent managers and other selected employees and to
provide a means to encourage stock ownership and proprietary interest in the
Company. The Plan is intended to provide participants with stock-based incentive
compensation which is not subject to the deduction limitation rules prescribed
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), and should be construed to the extent possible as providing for
remuneration which is "performance-based compensation" within the meaning of
Section 162(m) of the Code and the regulations promulgated thereunder.
2. Term. The Plan shall become effective upon its ratification and
approval by the affirmative vote of the holders of a majority of the securities
of the Company present or represented, and entitled to vote at a meeting of
stockholders of the Company, and shall terminate at the close of business on the
tenth anniversary of such approval date unless terminated earlier under Section
14. After termination of the Plan, no future awards may be granted, but
previously granted awards shall remain outstanding in accordance with their
applicable terms and conditions and the terms and conditions of the Plan.
3. Plan Administration. A committee (the "Compensation Committee")
appointed by the Board of Directors of the Company (the "Board") shall be
responsible for administering the Plan. The Compensation Committee shall be
comprised of two or more nonemployee members of the Board who shall qualify as
outside Directors to administer the Plan as contemplated by (1) Rule 16b-3 under
the Securities and Exchange Act of 1934 (the "Exchange Act") or any successor
rules; and (2) Section 162(m) of the Code. Except as otherwise provided in the
Plan, the Compensation Committee shall have full and exclusive power to
interpret the Plan and to adopt such rules, regulations and guidelines for
carrying out the Plan as it may deem necessary or proper, and such power shall
be executed in the best interests of the Company and in keeping with the
objectives of the Plan. The interpretation and construction of any provision of
the Plan or any option or right granted hereunder and all determinations by the
Compensation Committee in each case shall be final, binding and conclusive with
respect to all interested parties.
4. Eligibility. Any employee of the Company shall be eligible to
receive one or more awards under the Plan. "Company" includes any entity that is
directly or indirectly controlled by the Company or any entity in which the
Company has a significant equity interest, as determined by the Compensation
Committee.
5. Shares of Common Stock Subject to the Plan. Subject to the
provisions of Section 6 of the Plan, the aggregate number of shares of Common
Stock, $.01 par value, of the Company ("Stock") which may be transferred to
participants under the Plan shall be 700,000, and the aggregate number of shares
of Stock that may be covered by awards granted to any single individual under
the Plan shall not exceed 75,000 shares per fiscal year of the Company. Any or
all of such shares may be granted in the form of incentive stock options
("ISOs") intended to comply with Section 422 of the Code.
Shares subject to awards under the Plan which expire, terminate, or are
canceled prior to exercise or, in the case of awards granted under Section 8.3,
do not vest, shall thereafter be available for the granting of other awards.
Shares which have been exchanged by a participant as full or partial payment to
the Company in connection with any award under the Plan also shall thereafter be
available for the granting of other awards. In instances where a stock
appreciation right ("SAR") or other award is settled in cash, the shares covered
by such award shall remain available for issuance under the Plan. Likewise, the
payment of cash dividends and dividend equivalents paid in cash in conjunction
with outstanding awards shall not be counted against the shares available for
issuance. Any shares that are issued by the Company, and any awards that are
granted through the assumption of, or in substitution for, outstanding awards
previously granted by an acquired entity shall not be counted against the shares
available for issuance under the Plan.
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Any shares of Stock issued under the Plan may consist in whole or in
part of authorized and unissued shares or of treasury shares, and no fractional
shares shall be issued under the Plan. Cash may be paid in lieu of any
fractional shares in settlements of awards under the Plan.
6. Adjustments. In the event of any stock dividend, stock split,
combination or exchange of shares, merger, consolidation, spin-off,
recapitalization or other distribution (other than normal cash dividends) of
Company assets to stockholders, or any other change affecting shares of Stock or
share price, such proportionate adjustments, if any, as the Compensation
Committee in its discretion may deem appropriate to reflect such change shall be
made with respect to (1) the aggregate number of shares of Stock that may be
issued under the Plan; (2) each outstanding award made under the Plan; and (3)
the exercise price per share for any outstanding stock options, SARs or similar
awards under the Plan.
7. Fair Market Value. "Fair Market Value," for all purposes of the
Plan, shall mean the closing price of a share of Stock on the NASDAQ National
Market System for the date in question. If no sales of shares were made on such
date, the closing price of a share as reported for the preceding day on which a
sale of shares occurred shall be used.
8. Awards. Except as otherwise provided in this Section 8, the
Compensation Committee shall recommend to the Board the type or types of
award(s) to be made to each participant and the number of shares of Stock
subject to each such award, and any other terms, conditions and limitations
applicable to such award, and the Board shall grant awards under the Plan after
considering such recommendations. Awards may be granted singly, in combination
or in tandem. Awards also may be made in combination or in tandem with, in
replacement of, as alternatives to or as the payment form for grants or rights
under any other compensation plan or individual contract or agreement of the
Company including those of any acquired entity. The types of awards that may be
granted under the Plan are:
8.1 Stock Options. A stock option is a right to purchase a
specified number of shares of Stock during a specified period. The
purchase price per share for each stock option shall be not less than
100% of Fair Market Value on the date of grant, except if a stock
option is granted retroactively in tandem with or as a substitution for
a SAR, the exercise price may be no lower than the Fair Market Value of
a share as set forth in award agreements for such tandem or replaced
SAR. A stock option may be in the form of an ISO which complies with
Section 422 of the Code. The price at which shares may be purchased
under a stock option shall be paid in full by the optionee at the time
of the exercise in cash or such other method permitted by the
Compensation Committee, including (1) tendering shares; (2) authorizing
a third party to sell the shares (or a sufficient portion thereof)
acquired upon exercise of a stock option and assigning the delivery to
the Company of a sufficient amount of the sale proceeds to pay for all
the shares acquired through such exercise; or (3) any combination of
the above.
8.2 SARs. A SAR is a right to receive a payment, in cash
and/or shares, equal to the excess of the Fair Market Value of a
specified number of shares of Stock on the date the SAR is exercised
over the Fair Market Value on the date the SAR was granted as set forth
in the applicable award agreement; except that if a SAR is granted
retroactively in tandem with or in substitution for a stock option, the
designated Fair Market Value set forth in the award agreement shall be
no lower than the Fair Market Value of a share for such tandem or
replaced stock option.
8.3 Stock Awards. A stock award is a grant made or denominated
in shares or units equivalent in value to shares. All or part of any
stock award may be subject to conditions and restrictions as set forth
in the applicable award agreement, which may be based on continuous
service with the Company or the achievement of performance goals
related to profits, profit growth, profit-related return ratios, cash
flow or total stockholder return, where such goals may be stated in
absolute terms or relative to comparable companies.
Notwithstanding the foregoing, the Compensation Committee shall have
full and exclusive authority to determine the type or types of awards to be made
to the Chief Executive Officer of the Company, the number of shares subject to
each such award and any other terms, conditions and limitations applicable to
such awards.
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9. Dividends and Dividend Equivalents. Any awards under the Plan may
earn dividends or dividend equivalents as set forth in the applicable award
agreement. Such dividends or dividend equivalents may be paid currently or may
be credited to a participant's account. Any crediting of dividends or dividend
equivalents may be subject to such restrictions and conditions may be
established in the applicable award agreement, including reinvestment in
additional shares or share equivalents.
10. Deferrals and Settlements. Payment of awards may be in the form of
cash, stock, other awards or combinations thereof as shall be determined at the
time of grant, and with such restrictions as may be imposed in the award
agreement. The Compensation Committee also may require or permit participants to
elect to defer the issuance of shares or the settlement of awards in cash under
such rules and procedures as it may establish under the Plan. It also may
provide that deferred settlements include the payment or crediting of interest
on the deferral amounts, or the payment or crediting of dividend equivalents
where the deferral amounts are denominated in shares.
11. Transferability and Exercisability. Awards granted under the Plan
shall not be transferable or assignable other than (1) by will or the laws of
descent and distribution; (2) by gift or other transfer of an award to any trust
or estate in which the original award recipient or such recipient's spouse or
other immediate relative has a substantial beneficial interest, or to a spouse
or other immediate relative, provided that any such transfer is permitted by
Rule 16b-3 under the Exchange Act as in effect when such transfer occurs and the
Board does not rescind this provision prior to such transfer; or (3) pursuant to
a domestic relations order (as defined by the Code). However, any award so
transferred shall continue to be subject to all the terms and conditions
contained in the instrument evidencing such award.
12. Award Agreements. Awards under the Plan shall be evidenced by
agreements as approved by the Compensation Committee that set forth the terms,
conditions and limitations for each award, which may include the term of an
award (except that in no event shall the term of any ISO exceed a period of ten
years from the date of its grant), the provisions applicable in the event the
participant's employment terminates, and the Compensation Committee's authority
to unilaterally or bilaterally amend, modify, suspend, cancel or rescind any
award. The Compensation Committee need not require the execution of any such
agreement, in which case acceptance of the award by the participant shall
constitute agreement to the terms of the award.
13. Acceleration and Settlement of Awards. The Compensation Committee
shall have the discretion, exercisable at any time before a sale, merger,
consolidation, reorganization, liquidation or change of control of the Company,
as defined by the Compensation Committee, to provide for the acceleration of
vesting and for settlement, including cash payment of an award granted under the
Plan, upon or immediately before the effectiveness of such event. However, the
granting of awards under the Plan shall in no way affect the right of the
Company to adjust, reclassify, reorganize or otherwise change its capital or
business structure, or to merge, consolidate, dissolve, liquidate, sell or
transfer all or any portion of its businesses or assets.
14. Plan Amendment. The Plan may be amended by the Compensation
Committee as it deems necessary or appropriate to better achieve the purposes of
the Plan, except that no such amendment shall be made without the approval of
the Company's stockholders which would increase the number of shares available
for issuance in accordance with Sections 5 and 6 of the Plan, or cause the Plan
not to comply with Section 162(m) of the Code. The Board may suspend the Plan or
terminate the Plan at any time; provided, that no such action shall adversely
affect any outstanding benefit. Any shares authorized under Section 5 (or any
amendment thereof) with respect to which no Award is granted prior to
termination of the Plan, or with respect to which an Award is terminated,
forfeited or canceled after termination of the Plan, shall automatically be
transferred to any subsequent stock incentive plan for employees of the Company.
15. Tax Withholding. The Company shall have the right to deduct from
any settlement of an award made under the Plan, including the delivery or
vesting of shares, a sufficient amount to cover withholding of any federal,
state or local taxes required by law, or to take such other action as may be
necessary to satisfy any such withholding obligations. The Compensation
Committee may, in its discretion and subject to such rules as it may adopt,
permit participants to use shares to satisfy required tax withholding and such
shares shall be valued at the Fair Market Value as of the settlement date of the
applicable award.
16. Registration of Shares. Notwithstanding any other provision of the
Plan, the Company shall not be obligated to offer or sell any shares unless such
shares are at that time effectively registered or exempt from
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registration under the Securities Act of 1933, as amended (the "Securities Act")
and the offer and sale of such shares are otherwise in compliance with all
applicable federal and state securities laws and the requirements of any stock
exchange or similar agency on which the Company's securities may then be listed
or quoted. The Company shall have no obligation to register the shares under the
federal securities laws or take any other steps as may be necessary to enable
the shares to be offered and sold under federal or other securities laws. Prior
to receiving shares a Plan participant may be required to furnish
representations or undertakings deemed appropriate by the Company to enable the
offer and sale of the shares or subsequent transfers of any interest in such
shares to comply with the Securities Act and other applicable securities laws.
Certificates evidencing shares shall bear any legend required by, or useful for
the purposes of compliance with, applicable securities laws, this Plan or award
agreements.
17. Other Benefit and Compensation Programs. Unless otherwise
specifically determined by the Compensation Committee, settlements of awards
received by participants under the Plan shall not be deemed a part of a
participant's regular, recurring compensation for purposes of calculating
payments or benefits from any Company benefit plan or severance program.
Further, the Company may adopt other compensation programs, plans or
arrangements as it deems appropriate or necessary.
18. Unfunded Plan. Unless otherwise determined by the Compensation
Committee, the Plan shall be unfunded and shall not create (or be construed to
create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any participant or other person.
To the extent any person holds any rights by virtue of an award granted under
the Plan, such rights shall be no greater than the rights of an unsecured
general creditor of the Company.
19. Use of Proceeds. The cash proceeds received by the Company from the
issuance of shares pursuant to awards under the Plan shall constitute general
funds of the Company.
20. Regulatory Approvals. The implementation of the Plan, the granting
of any award under the Plan, and the issuance of shares upon the exercise or
settlement of any award shall be subject to the Company's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the awards granted under it or the shares issued pursuant to it.
21. Employment Rights. The Plan does not constitute a contract of
employment and participation in the Plan will not give a participant the right
to continue in the employ of the Company on a full-time, part-time or any other
basis. Participation in the Plan will not give any participant any right or
claim to any benefit under the Plan, unless such right or claim has specifically
accrued under the terms of the Plan.
22. Governing Law. The validity, construction and effect of the Plan
and any actions taken or relating to the Plan shall be determined in accordance
with the laws of the State of Illinois and applicable federal law.
23. Successors and Assigns. The Plan shall be binding on all successors
and assigns of a participant, including, without limitation, the estate of such
participant and the executor, administrator or trustee of such estate, or any
receiver or trustee in bankruptcy or representative of the participant's
creditors.
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