Exhibit 10.4
LAB HOLDINGS, INC.
1997 DIRECTORS' STOCK OPTION PLAN
(as amended as of August 17, 1998)
1. PURPOSE
The Lab Holdings, Inc. 1997 Directors' Stock Option Plan is designed to
enable Directors of the Company to acquire or increase their ownership of the
$1.00 par value common stock of the Company on reasonable terms. The opportunity
so provided is intended to foster in participants a strong incentive to exert
maximum effort for the continued success and growth of the Company and its
Subsidiaries and the enhancement of shareholders' interests.
2. DEFINITIONS
When used herein, the following terms shall have the meaning set forth
below:
2.1 "BOARD" means the Board of Directors of Lab Holdings, Inc.
2.2 "BOOK VALUE" of property referred to in subsection 7.3 hereof means book
value as determined in accordance with generally accepted accounting
principles.
2.3 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
2.4 "COMPANY" means Lab Holdings, Inc.
2.5 "DIRECTOR" means a member of the Board.
2.6 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
2.7 "FAIR MARKET VALUE" means (i) with respect to the Company's Shares, the
closing sales price of the Shares, as reported on the National Market
System of the Nasdaq Stock Market, or, if not so reported, the closing
sales price as reported by any other appropriate reporting system of
general circulation, on the date for which the value is to be
determined, or if there is no closing sales price on such date, then on
the last date for which transactions in Shares were so reported prior to
the date on which the value is to be determined; and (ii) with respect
to property referred to in subsection 7.3 hereof, the value of such
property as determined by independent, third party appraisal.
2.8 "GRANTEE" means a person to whom an Option is granted.
2.9 "NON-QUALIFIED STOCK OPTION" or "NQSO" means an Option awarded under the
Plan which by its terms and conditions does not meet the terms and
conditions established by Code Section 422A.
2.10 "OPTION" means the right to purchase, at a price, for a term, under
conditions, and for cash or other considerations fixed by the Plan, a
number of Shares specified by the Plan. An Option can only be an NQSO.
2.11 "PLAN" means the Company's 1997 Directors' Stock Option Plan.
2.12 "PRE-OWNED SHARES" means Shares owned by a Grantee at the time of the
exercise of an Option, and if they are Shares which the Grantee acquired
through the exercise of an Option under the Plan, such Shares have been
owned for more than six months prior to the Option exercise.
2.13 "RESIGNING DIRECTORS" means those directors whose resignations as such
are effective on the date upon which a definitive Proxy Statement is
filed with the Securities and Exchange Commission respecting a Special
Meeting of Company shareholders, called for the purpose of considering
and voting upon a proposal to amend the Company's Articles of
Incorporation to change the Company's name to Lab Holdings, Inc.
2.14 "SECURITIES ACT" means the Securities Act of 1933, as amended.
2.15 "SHARES" means shares of the Company's $1.00 par value common stock or,
if by reason of the adjustment provisions hereof any rights under an
Option granted under the Plan pertain to any other security, such other
security.
2.16 "SUBSIDIARY" means any business, whether or not incorporated, in which
the Company, at the time an Option is granted or in other cases at the
time of reference, owns directly or indirectly not less than 50% of the
equity interest.
2.17 "SUCCESSOR" means the legal representative of the estate of a deceased
Grantee or the person or persons who shall acquire the right to exercise
an Option, by assignment, bequest or inheritance or by reason of the
death of the Grantee, as provided in accordance with subsection 6.7
hereof.
2.18 "TAX DATE" means the date on which the amount of tax to be withheld with
respect to an Option is determined.
2.19 "TERM" means the period during which a particular Option may be
exercised.
2.20 "UNIT" means (i) the lowest number of Shares required to be purchased to
permit the issuance with such Shares of a whole security of another
type, if any, issuable pursuant to subsection 7.2 hereof upon exercise
of an Option and (ii) such other whole security.
3. ELIGIBILITY
Each person who is a Director on the Effective Date of the Plan under
Section 9 hereof, other than Resigning Directors, and each person who becomes a
Director thereafter during the term of the Plan shall be entitled (subject to
any limitations imposed by Section 4 hereof) to participate in the Plan. A
Director is entitled to participate whether or not he is also an officer of the
Company and whether elected by shareholders or appointed to fill a vacancy
created by the resignation of a Director or the expansion of the Board.
4. SHARES SUBJECT TO PLAN
The Company hereby reserves 90,000 Shares for issuance in connection with
Options under the Plan, subject to adjustment under Section 7 hereof. The Shares
so issued may be unreserved Shares held in the treasury, however acquired, or
Shares which are authorized but unissued. Any Shares subject to issuance upon
exercise of Options but which are not issued because of a surrender, lapse,
expiration or termination of any such Option prior to issuance of the Shares
shall once again be available for issuance in satisfaction of other Options.
Shares withheld pursuant to a tax withholding election permitted under Section
13 hereof, and any Shares owned by a Grantee which are used in the exercise of
an Option under subsection 8.3 hereof shall be deemed issued under the Plan.
5. GRANT OF OPTIONS
Each person who is a Director as of the Effective Date of the Plan under
Section 9 hereof shall, as of the Effective Date, receive a grant of Options
respecting 15,000 Shares, and each Director who first becomes a Director after
the Effective Date shall, on the date he first becomes a Director, receive a
grant of Options respecting 15,000 Shares, in all cases without further action
by the Board or otherwise. Such Options shall be in the form set forth as
Exhibit A hereto. No person shall receive more than one grant respecting 15,000
Shares.
6. TERMS AND CONDITIONS OF OPTIONS
All Options under the Plan shall be granted subject to the following terms
and conditions:
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6.1 The purchase price of each Share subject to an Option shall be 100% of
the Fair Market Value of the Shares on the effective grant date of such
Option.
6.2 Options shall expire on the tenth anniversary of the effective date of
grant.
6.3 Options shall be vested (i.e., exercisable) as follows: As to 5,000
shares, on and after the twelve month anniversary of the date of grant;
as to another 5,000 shares, on and after the twenty-four month
anniversary of the date of grant; and as to the final 5,000 shares, on
and after the thirty-six month anniversary of the date of grant.
6.4 Notwithstanding subsection 6.3 hereof, in the event of the death of an
Option holder during his term as a Director, all outstanding unvested
Options held by him shall become immediately exercisable.
6.5 After the termination of an Option holder's term as a Director for any
reason, the Option shall be exercisable only as to those Shares and
other securities, if any, which were subject to the exercise of such
Option on the date of termination (including those shares and other
securities, if any, subject to the exercise as a consequence of
subsection 6.4 hereof).
6.6 Options, whether vested or not, shall expire to the extent unexercised
on the date which is 90 days after the date a Director's term as a
Director shall terminate; provided however, that in the event of the
death of a Director during such person's term as a Director or during
the 90-day period following expiration of such term, such Options
shall expire to the extent unexercised by such person's Successor on
that date which is 12 months after the date of death; provided
however, if the term of a director does not continue due to the terms
of any plan or arrangement involving any merger, consolidation or
other event specified in Section 6.8, 6.9 or 6.10 or if the director
is not elected to continue in office for three years following such an
event or is removed without cause from such office within three years
following such an event, then all options that are exercisable at the
time of such event or that become exercisable due to such event shall
not expire until the earlier of (a) twelve months following the date
of death of the director or (b) the end of the original term of the
option regardless of the date of termination of an Option holder's
term as a Director.
6.7 Each Grantee may name, from time to time, any beneficiary or
beneficiaries (who may be named contingently or successively) to whom
any benefit or rights under the Plan is to be paid or transferred in
case of his death before he receives any or all of such benefit or
exercises such rights. Each designation will revoke all prior
designations by the same Grantee, and will be effective only when filed
by the Grantee in writing during his lifetime with the Company's
Secretary. In the absence of any such designation, benefits or rights
remaining unpaid or unexercised at the Grantee's death shall be paid to
or shall be exercisable by his estate, subject to the terms hereof.
6.8 Notwithstanding subsection 6.3 hereof, all outstanding unvested Options
shall become exercisable immediately if any of the following events
occur:
6.8.1 Any "person" (as defined in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty-five percent (25%) or
more of the combined voting power of the Company's then outstanding
securities, provided that this provision shall not apply to the
direct, indirect or beneficial ownership of Shares by descendants
of W. T. Grant or their spouses, or
6.8.2 At any time there shall cease to be a majority of the Board
comprised as follows: individuals (other than Resigning Directors)
who on the Effective Date of this Plan under Section 9 hereof
constitute the Board, and any new Director(s) whose election by the
Board or nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds ( 2/3) of the Directors
then still in office who either were Directors on the Effective
Date of this Plan or whose election or nomination for election was
previously so approved, or
6.8.3 The requisite percentage of the Company's shareholders shall
approve a plan of complete liquidation and dissolution of the
Company.
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6.9 Notwithstanding anything in subsection 6.3 hereof, all outstanding
unvested Options held by a Grantee shall become exercisable immediately
upon the approval by the requisite percentage(s) of shareholders of all
constituent companies to a merger or consolidation involving the Company
if, but only if, by the terms of the agreement of merger or
consolidation or other contemporaneous related document said Grantee's
term as a Director of the Company is not to continue after consummation
of the merger or consolidation or is specifically limited in time to a
period which does not extend at least until the thirty-six month
anniversary of the date of grant.
6.10 In the event of the dissolution or liquidation of the Company, each
outstanding Option shall terminate to the extent that it shall not have
been exercised prior to the effective time of such event.
7. ADJUSTMENTS IN EVENT OF CHANGES IN CAPITALIZATION
7.1 In the event that a dividend shall be declared upon the Shares of the
Company payable in Shares, the number of Shares then subject to any
Option outstanding under the Plan and the number of Shares reserved for
Options pursuant to the Plan but not yet subject to Options 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 Company
entitled to receive such Share dividend.
7.2 In the event that a dividend shall be declared upon the Shares of the
Company payable in an equity security of the Company other than the
Shares, each Option outstanding under the Plan and the number and type
of securities issuable under the Plan shall be changed so that
thereafter there shall be issuable upon the exercise of Options then
outstanding or thereafter granted, in addition to Shares, such number of
such other equity security that would have been distributable in respect
of Shares subject to outstanding Options or issuable under the Plan had
such Shares been outstanding on the date fixed for determining the
shareholders of the Company entitled to receive such equity security
dividend.
7.3 In the event that a dividend shall be declared upon Shares (or other
securities that, with the Shares, comprise a Unit) of the Company
payable in cash or other property (other than Shares or other equity
securities of the Company) and the aggregate amount of the cash or Book
Value of the property payable to shareholders pursuant to such dividend
exceeds 10% of the Company's total assets on a consolidated basis, the
Option exercise price for each Share (or Unit, if applicable) subject to
an Option shall be reduced on the date following the payment date of
such dividend by the aggregate amount of cash and the Fair Market Value
of any other property payable with respect to each outstanding Share
pursuant to such dividend.
7.4 In the event that the outstanding Shares shall be changed into or
exchanged for a different number or kind of shares or other securities
of the Company or of another entity, whether through reorganization,
recapitalization, split-up, combination of shares, merger, consolidation
or otherwise, then there shall be substituted for each Share subject to
any outstanding Option and for each Share reserved for Options pursuant
to the Plan but not yet subject to Options 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.
7.5 In the case of any substitution or adjustment as provided for in
subsections 7.1, 7.2 or 7.4 hereof, the Option price set forth in each
outstanding Option for each Share covered thereby prior to such
substitution or adjustment will be the Option price for all Shares or
other securities which shall have been substituted for such Share or to
which such Share shall have been adjusted pursuant to such subsections.
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7.6 In the case of any adjustment provided for in subsection 7.2 hereof, the
Option may thereafter only be exercisable as to Units and the Option
exercise price for each Unit will be the aggregate of the Option
exercise price for the Shares included within the Unit.
7.7 No adjustment or substitution provided for in this Section 7 shall
require the Company to sell or issue a fraction of a Share or other
equity security, and the total substitution or adjustment with respect
to each outstanding Option shall be limited accordingly. Upon any
adjustment made pursuant to this Section, the Company will, upon
request, deliver to the Option holder or to such person's Successor a
certificate of its Chief Financial Officer setting forth, with respect
to such Option, the Option price thereafter in effect and the number and
kind of Shares or other securities thereafter purchasable thereunder.
8. EXERCISE OF RIGHTS UNDER OPTIONS
8.1 A person entitled to exercise an Option may do so by delivery of a
written notice to that effect specifying the number of Shares with
respect to which the Option is being exercised and any other information
the Company may prescribe.
8.2 The notice of exercise shall be accompanied by payment in full of the
purchase price for any Shares to be purchased, with such payment being
made in cash or cash equivalents or in Pre-Owned Shares having a Fair
Market Value at that time equivalent to the purchase price of the Shares
or Units to be purchased, or a combination thereof.
8.3 In lieu of delivery of a stock certificate or certificates evidencing
Shares tendered by the Grantee in payment of the purchase price in
exercising an Option, the Grantee may furnish a notarized statement
executed by the Grantee, in such form as prescribed by the Company, as
payment for all or a portion of the purchase price for Shares or Units
to be purchased. The statement shall recite the number of Shares or
Units being purchased by the Grantee pursuant to the Option and the
number of Pre-Owned Shares owned by the Grantee which otherwise could be
freely delivered as payment of the purchase price by the Grantee based
on their Fair Market Value at that time. The Grantee will then be issued
a certificate(s) for (a) new Shares equal to the number of Shares
acquired by the Grantee hereunder upon exercise of the Option, less the
number of Pre-Owned Shares owned by the Grantee and described in the
notarized statement, and (b) if applicable, other securities comprising
the Units as to which the exercise relates.
8.4 No Shares or other securities shall be issued upon exercise of an Option
until full payment has been made therefor.
8.5 Upon exercise of an Option but before a distribution of Shares or other
securities in satisfaction thereof, the Grantee may request in writing
that the Shares or other securities to be issued in satisfaction of the
Option exercise be issued in the name of the Grantee and another person
as joint tenants with right of survivorship or as tenants in common.
8.6 All notices or requests to the Company provided for herein shall be
delivered to the Secretary of the Company.
9. EFFECTIVE DATE OF THE PLAN AND DURATION
9.1 The Plan shall become effective on the date upon which the Company files
a definitive Proxy Statement with the Securities and Exchange Commission
respecting a Special Meeting of Company shareholders, called for the
purpose of considering and voting upon a proposal to amend the Company's
Articles of Incorporation to change the Company's name to Lab Holdings,
Inc.
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9.2 The Plan shall remain in effect until all Options have been exercised in
accordance herewith, but no Options may be granted under the Plan after
September 15, 2007. The provisions of any Option may be amended at any
time prior to the end of its Term in accordance with the Plan.
10. SHAREHOLDER STATUS
No person shall have any rights as a shareholder by virtue of the grant of
an Option under the Plan, except with respect to Shares or other securities
actually issued to that person.
11. POSTPONEMENT OR NON-EXERCISE
The Company shall not be required to issue any certificate or certificates
for Shares or other securities upon the exercise of an Option granted under the
Plan prior to (i) the obtaining of any approval from any governmental agency
which the Company shall, in its sole discretion, determine to be necessary or
advisable, (ii) the taking of any action in order to comply with restrictions or
regulations incident to the maintenance of a public market for its Shares or
other securities, if any; and (iii) the completion of any registration or other
qualification of such Shares or other securities, if any, under any state or
Federal law or rulings or regulations of any governmental body which the Company
shall, in its sole discretion, determine to be necessary or advisable. The
Company shall not be obligated by virtue of the terms and conditions of any
Option or any provisions of the Plan to recognize the exercise of an Option or
to sell or issue Shares or other securities in violation of the Securities Act
or the law of any government having jurisdiction thereof. Any postponement or
delay by the Company in recognizing the exercise of any Option or in issuing any
Shares or other securities hereunder shall not extend the Term of an Option and
neither the Company nor its directors or officers shall have any obligation or
liability to the Grantee of an Option, to a Successor or to any other person
with respect to any Shares or other securities, including those as to which an
Option shall lapse because of such postponement.
12. TERMINATION, SUSPENSION OR MODIFICATION OF PLAN
The Board may terminate, suspend or modify the Plan at any time and in any
manner, provided, however, that to the extent shareholder approval is required
by regulations issued under the Securities Act or the Exchange Act, in order to
create or preserve Company or Grantee benefits or rights under or with respect
to Options, the Board shall not, without authorization of the shareholders,
effect any change (other than through adjustment for changes in capitalization
or as otherwise herein provided) which:
(i) increases the aggregate number of Shares for which Options may be
granted under the Plan or increases the maximum number of Shares for which
Options may be granted to any one Grantee;
(ii) lowers the minimum Option exercise price;
(iii) lengthens the maximum period during which an Option may be
exercised;
(iv) materially modifies the requirements as to eligibility to
participate in the Plan;
(v) extends the period of time during which Options may be granted; or
(vi) materially increases the benefit accruing to Grantees.
Notwithstanding the foregoing, (i) the Board may amend the Plan, without
shareholder authorization, to comply with Section 16(b) of the Exchange Act or
regulations issued thereunder, to effect registration of the Plan or securities
issuable thereunder under the Securities Act or the securities laws of any
state, or to obtain any required regulatory approval and (ii) if amendments to
the Code or to the Securities Act or Exchange Act, or regulations issued
thereunder, are adopted after the Effective Date of the Plan under Section 9
hereof, which amendments permit termination, suspension or modification of the
Plan, including but not limited to the changes referred to above, without
shareholder approval, no authorization by the Company's shareholders of any
Board action hereunder shall be required.
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No termination, suspension or modification of the Plan shall adversely
affect any right acquired by any Grantee or any Successor under an Option
granted before the date of such termination, suspension or modification unless
such Grantee or Successor shall consent, but it shall be conclusively presumed
that any adjustment for changes in capitalization as provided for herein does
not adversely affect any such right.
13. TAXES
13.1 The Company may pay, withhold or require a Grantee to remit to it
amounts sufficient to satisfy the Company's federal, state, local or
other tax withholding obligations attributable to any Option exercise,
after giving notice to the Grantee, and the Company may defer issuance
of Shares or other securities in connection with an Option exercise if
any such tax, charge or assessment may be pending, until indemnified to
its satisfaction.
13.2 In connection with the exercise of an Option, a Grantee may make an
irrevocable election to have Shares or Units otherwise issuable
withheld, or tender back to the Company Shares received, or deliver to
the Company previously-acquired Shares, having a Fair Market Value at
the time sufficient to satisfy all or part of the Company's total
federal, state, local and other tax withholding obligations associated
with the transaction.
14. APPLICATION OF PROCEEDS
The proceeds received by the Company from the issuance of Shares or Units
under the Plan shall be used for general corporate purposes of the Company and
its Subsidiaries.
15. OTHER ACTIONS
Nothing in the Plan shall be construed to limit the authority of the Company
to exercise its corporate rights and powers, including, by way of illustration
and not by way of limitation, the right to grant options for proper corporate
purposes otherwise than under the Plan to any employee or any other person,
firm, corporation, association or other entity, or to grant options to, or
assume options of, any person in connection with the acquisition by purchase,
lease, merger, consolidation or otherwise, of all or any part of the business
and assets of any person, firm, corporation, association or other entity.
16. GENDER AND NUMBER
Except when otherwise indicated by the context, words in the masculine
gender when used in the Plan shall include the feminine gender, the singular
shall include the plural, and the plural shall include the singular.
17. REQUIREMENTS OF LAW, GOVERNING LAW
The granting of Options and the issuance of Shares or Units shall be subject
to all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges and self-regulating
entities as may be required. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Missouri.
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