EXHIBIT 4
1997 STOCK INCENTIVE PLAN
of
AMERICAN CLAIMS EVALUATION, INC.
1. PURPOSES OF THE PLAN.
This stock incentive plan (the "Plan") is designed to provide an
incentive to key employees (including directors and officers who
are key employees), non-employee directors, independent
contractors and consultants of American Claims Evaluation, Inc., a
New York corporation (the "Company"), and its present and future
subsidiary corporations, as defined in Paragraph 19
("Subsidiaries"), and to offer an additional inducement in
obtaining the services of such individuals. The Plan provides for
the grant of (i) "incentive stock options" ("ISOs") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") to key employees of the Company (including
directors and officers who are key employees) and (ii) "non
statutory options" ("Nonqualified Options") to key employees of
the Company (including directors and officers who are key
employees), non-employee directors, independent contractors and
consultants of the Company. The Company makes no warranty as to
the qualification of any option as an "incentive stock option"
under the Code.
2. STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Paragraph 12, the aggregate number of
shares of Common Stock, $.01 par value per share, of the Company
("Common Stock") for which options may be granted under the Plan
shall not exceed 750,000. Such shares of Common Stock may, in the
discretion of the Board of Directors of the Company (the "Board of
Directors"), consist either in whole or in part of authorized but
unissued shares of Common Stock or shares of Common Stock held in
the treasury of the Company. The Company shall at all times during
the term of the Plan reserve and keep available such number of
shares of Common Stock as will be sufficient to satisfy the
requirements of the Plan. Subject to the provisions of Paragraph
13, any shares of Common Stock subject to an option which for any
reason expires, is canceled or is terminated unexercised or which
ceases for any reason to be exercisable shall again become
available for the granting of options under the Plan.
3. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a committee appointed by the
Board of Directors (the "Committee"). A majority of the members of
the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum
is present, and any acts approved in writing by all members
without a meeting, shall be the acts of the Committee.
Subject to the express provisions of the Plan, the Committee shall
have the authority, in its sole discretion, to determine the key
employees, non-employee directors, independent contractors and
consultants who shall receive options; the times when they shall
receive options; whether an option shall be an ISO or a
Nonqualified Option (provided, however, that non-employee
directors, independent contractors and consultants may only
receive Nonqualified Options); the number of shares of Common
Stock to be subject to each option; the term of each option; the
date each option shall become exercisable; whether an option shall
be exercisable in whole, in part or in installments, and, if in
installments, the number of shares of Common Stock to be subject
to each installment; whether the installments shall be cumulative;
the date each installment shall become exercisable and the term of
each installment; whether to accelerate the date of exercise of
any installment; whether shares of Common Stock may be issued on
exercise of an option as partly paid, and, if so, the dates when
future installments of the exercise price shall become due and the
amounts of such installments; the exercise price of each option;
the form of payment of the exercise price; the amount, if any,
necessary to satisfy the Company's obligation to withhold taxes;
whether a Nonqualified Option is transferable and, if so, the
terms of such transfer; whether to restrict the sale or other
disposition of the shares of Common Stock acquired upon the
exercise of an option and to waive any such restriction; whether
to subject the exercise of all or any portion of an option to the
fulfillment of contingencies as specified in the contract referred
to in Paragraph 11 (the "Contract"), including, without
limitation, contingencies relating to entering into a covenant not
to compete with the Company and its Parent and Subsidiaries, to
financial objectives for the Company, a Subsidiary, a division, a
product line or other category, and/or the period of continued
employment of the optionee with the Company, its Parent or its
Subsidiaries, and to determine whether such contingencies have
been met; to construe the respective Contracts and the Plan; with
the consent of the optionee, to cancel or modify an option,
provided such option as modified would be permitted to be granted
on such date under the terms of the Plan; to prescribe, amend and
rescind rules and regulations relating to the Plan; and to make
all other determinations necessary or advisable for administering
the Plan. The determinations of the Committee on the matters
referred to in this Paragraph 3 shall be conclusive.
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4. ELIGIBILITY.
The Committee may, consistent with the purposes of the Plan, grant
options from time to time, to key employees, non-employee
directors, independent contractors and consultants (including
directors and officers who are key employees) of the Company or
any of its Subsidiaries. Options granted shall cover such number
of shares of Common Stock as the Committee may determine;
provided, however, that the aggregate market value (determined at
the time the option is granted) of the shares of Common Stock for
which any eligible person may be granted ISOs under the Plan or
any other plan of the Company, or of a Parent or a Subsidiary of
the Company, which are exercisable for the first time by such
optionee during any calendar year shall not exceed $100,000. The
$100,000 ISO limitation shall be applied by taking ISOs into
account in the order in which they were granted. Any option (or
the portion thereof) granted in excess of such amount shall be
treated as a Nonqualified Option.
5. EXERCISE PRICE.
The exercise price of the shares of Common Stock under each option
shall be determined by the Committee; provided, however, that the
exercise price shall not be less than 100% of the fair market
value of the Common Stock subject to such option on the date of
grant; and further provided, that if, at the time an ISO is
granted, the optionee owns (or is deemed to own under Section
424(d) of the Code) stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, of
any of its Subsidiaries or of a Parent, the exercise price of such
ISO shall not be less than 110% of the fair market value of the
Common Stock subject to such ISO on the date of grant.
The fair market value of the Common Stock on any day shall be (a)
if the principal market for the Common Stock is a national
securities exchange, including the National Market System of
NASDAQ, the last trade on such day as reported by such exchange or
on a consolidated tape reflecting transactions on such exchange,
(b) if the principal market for the Common Stock is not a national
securities exchange and the Common Stock is quoted on the Small
Capitalization market of NASDAQ, and (i) if actual sales price
information is available with respect to the Common Stock, the
average between the high and low sales prices of the Common Stock
on such day on NASDAQ, or (ii) if such information is not
available, the average between the highest bid and the lowest
asked prices for the Common Stock on such day on NASDAQ, or (c) if
the principal market for the Common Stock is not a national
securities exchange and the Common Stock is not quoted on NASDAQ,
the average between the highest bid and lowest asked prices for
the Common Stock on such day as reported on the NASDAQ OTC
Bulletin Board Service or by National Quotation Bureau,
Incorporated or a comparable service; provided that if clauses
(a), (b) and (c) of this Paragraph are all inapplicable, or if no
trades have been made or no quotes are available for such day, the
fair market value of the Common Stock shall be determined by the
Committee by any method consistent with
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applicable regulations adopted by the Treasury Department relating
to stock options. The determination of the Committee shall be
conclusive in determining the fair market value of the Common
Stock.
6. TERM.
The term of each option granted pursuant to the Plan shall be such
term as is established by the Committee, in its sole discretion,
at or before the time such option is granted; provided, however,
that the term of each ISO granted pursuant to the Plan shall be
for a period not exceeding 10 years from the date of grant
thereof, and further, provided, that if, at the time an ISO is
granted, the optionee owns (or is deemed to own under Section
424(d) of the Code) stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, of
any of its Subsidiaries or of a Parent, the term of the ISO shall
be for a period not exceeding five years from the date of grant.
Options shall be subject to earlier termination as hereinafter
provided.
7. EXERCISE.
An option (or any part or installment thereof), to the extent then
exercisable, shall be exercised by giving written notice to the
Company at its principal office (at present One Jericho Plaza,
Jericho, New York 11753, Attn: Secretary), stating which ISO or
Nonqualified Option is being exercised, specifying the number of
shares of Common Stock as to which such option is being exercised
and accompanied by payment in full of the aggregate exercise price
therefor (or the amount due on exercise if the Contract permits
installment payments) (a) in cash or by certified check or (b) if
the Contract (at the time of grant) so permits, with previously
acquired shares of Common Stock having an aggregate fair market
value, on the date of exercise, equal to the aggregate exercise
price of all options being exercised, or with any combination of
cash, certified check or shares of Common Stock.
A person entitled to receive Common Stock upon the exercise of an
option shall not have the rights of a shareholder with respect to
such shares of Common Stock until the date of issuance of a stock
certificate to him for such shares; provided, however, that until
such stock certificate is issued, any option holder using
previously acquired shares of Common Stock in payment of an option
exercise price shall continue to have the rights of a shareholder
with respect to such previously acquired shares.
In no case may a fraction of a share of Common Stock be purchased
or issued under the Plan.
8. TERMINATION OF EMPLOYMENT.
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Any holder of an option whose employment with the Company (and its
Parent and Subsidiaries) has terminated for any reason other than
his death or Disability (as defined in Paragraph 19) may exercise
such option, to the extent exercisable on the date of such
termination, at any time within 90 days after the date of
termination, but not thereafter and in no event after the date the
option would otherwise have expired; provided, however, that if
his employment shall be terminated either (a) for cause, or (b)
without the consent of the Company, said option shall terminate
immediately. Options granted under the Plan shall not be affected
by any change in the status of the holder so long as he continues
to be a full-time employee of the Company, its Parent or any of
its Subsidiaries (regardless of having been transferred from one
corporation to another).
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the
time of the determination, the individual was an employee of such
corporation for purposes of Section 422(a) of the Code. As a
result, an individual on military, sick leave or other bona fide
leave of absence shall continue to be considered an employee for
purposes of the Plan during such leave if the period of the leave
does not exceed 90 days, or, if longer, so long as the
individual's right to reemployment with the Company (or a related
corporation) is guaranteed either by statute or by contract. If
the period of leave exceeds 90 days and the individual's right to
reemployment is not guaranteed by statute or by contract, the
employment relationship shall be deemed to have terminated on the
91st day of such leave.
Nothing in the Plan or in any option granted under the Plan shall
confer on any individual any right to continue in the employ of
the Company, its Parent or any of its Subsidiaries, or interfere
in any way with the right of the Company, its Parent or any of its
Subsidiaries to terminate the employee's employment at any time
for any reason whatsoever without liability to the Company, its
Parent or any of its Subsidiaries.
9. DEATH OR DISABILITY OF AN OPTIONEE.
If an optionee dies (a) while he is employed by the Company, its
Parent or any of its Subsidiaries, (b) within 90 days after the
termination of his employment (unless such termination was for
cause or without the consent of the Company) or (c) within one
year following the termination of his employment by reason of
Disability, the option may be exercised, to the extent exercisable
on the date of his death, by his executor, administrator or other
person at the time entitled by law to his rights under such
option, at any time within one year after death, but not
thereafter and in no event after the date the option would
otherwise have expired.
Any optionee whose employment has terminated by reason of
Disability may exercise his option, to the extent exercisable upon
the effective date of such termination, at any
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time within one year after such date, but not thereafter and in no
event after the date the option would otherwise have expired.
10. COMPLIANCE WITH SECURITIES LAWS.
The Committee may require, in its discretion, as a condition to
the exercise of any option that either (a) a Registration
Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Common Stock to
be issued upon such exercise shall be effective and current at the
time of exercise, or (b) there is an exemption from registration
under the Securities Act for the issuance of shares of Common
Stock upon such exercise. Nothing herein shall be construed as
requiring the Company to register shares subject to any option
under the Securities Act.
The Committee may require the optionee to execute and deliver to
the Company his representation and warranty, in form and substance
satisfactory to the Committee, that the shares of Common Stock to
be issued upon the exercise of the option are being acquired by
the optionee for his own account, for investment only and not with
a view to the resale or distribution thereof. In addition, the
Committee may require the optionee to represent and warrant in
writing that any subsequent resale or distribution of shares of
Common Stock by such optionee will be made only pursuant to (i) a
Registration Statement under the Securities Act which is effective
and current with respect to the shares of Common Stock being sold,
or (ii) a specific exemption from the registration requirements of
the Securities Act, but in claiming such exemption, the optionee
shall, prior to any offer of sale or sale of such shares of Common
Stock, provide the Company with a favorable written opinion of
counsel, in form and substance satisfactory to the Company, as to
the applicability of such exemption to the proposed sale or
distribution.
In addition, if at any time the Committee shall determine in its
discretion that the listing or qualification of the shares of
Common Stock subject to such option on any securities exchange or
under any applicable law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition to, or in connection with, the granting of an option or
the issue of shares of Common Stock thereunder, such option may
not be exercised in whole or in part unless such listing,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
11. STOCK OPTION CONTRACTS.
Each option shall be evidenced by an appropriate Contract which
shall be duly executed by the Company and the optionee, and shall
contain such terms and conditions not inconsistent herewith as may
be determined by the Committee.
12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.
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Notwithstanding any other provisions of the Plan, in the event of
any change in the outstanding Common Stock by reason of a stock
dividend, recapitalization, merger or consolidation in which the
Company is the surviving corporation, split-up, combination or
exchange of shares or the like, the aggregate number and kind of
shares subject to the Plan, the aggregate number and kind of
shares subject to each outstanding option and the exercise price
thereof shall be appropriately adjusted by the Committee, whose
determination shall be conclusive.
In the event of (a) the liquidation or dissolution of the Company,
(b) a merger or consolidation in which the Company is not the
surviving corporation, or (c) any other capital reorganization in
which more than 50% of the shares of Common Stock of the Company
entitled to vote are exchanged, any outstanding options shall vest
in their entirety and become exercisable within the period of
thirty (30) days commencing upon the date of the action of the
shareholders (or the Board of Directors if shareholders' action
is not required) is taken to approve the transaction and upon the
expiration of that period all options and all rights thereto shall
automatically terminate, unless other provision is made therefor
in the transaction.
13. AMENDMENTS AND TERMINATION OF THE PLAN.
The Plan was adopted by the Committee on February 10, 1997. No
option may be granted under the Plan after February 9, 2007. The
Committee, without further approval of the Company's shareholders,
may at any time suspend or terminate the Plan, in whole or in
part, or amend it from time to time in such respects as it may
deem advisable, including, without limitation, in order that ISOs
granted hereunder meet the requirements for "incentive stock
options" under the Code, to comply with applicable requirements of
the Securities Act and the Securities Exchange Act of 1934, as
amended, and to conform to any change in applicable law or to
regulations or rulings of administrative agencies; provided,
however, that no amendment shall be effective without the
requisite prior or subsequent shareholder approval which would
(a) except as contemplated in Paragraph 12, increase the maximum
number of shares of Common Stock for which options may be granted
under the Plan, (b) materially increase the benefits to
participants under the Plan or (c) change the eligibility
requirements for individuals entitled to receive options
hereunder. No termination, suspension or amendment of the Plan
shall, without the consent of the holder of an existing option
affected thereby, adversely affect his rights under such option.
The power of the Committee to construe and administer any options
granted under the Plan prior to the termination or suspension of
the Plan nevertheless shall continue after such termination or
during such suspension.
14. NON-TRANSFERABILITY OF OPTIONS.
No ISO granted under the Plan shall be transferable otherwise than
by will or the laws of descent and distribution or a qualified
domestic relations order ("QDRO") as defined
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by the Code or Title I of the Employee Retirement Income Security
Act of 1974, as amended, or the rules thereunder, and options may
be exercised, during the lifetime of the holder thereof, only by
him or his legal representatives or pursuant to a QDRO. A
Nonqualified Option shall be transferable to the extent determined
by the Committee and set forth in the Contract. Except to the
extent provided above, options may not be assigned, transferred,
pledged, hypothecated or disposed of in any way (whether by
operation of law or otherwise) and shall not be subject to
execution, attachment or similar process.
15. WITHHOLDING TAXES.
The Company may withhold cash and/or shares of Common Stock to be
issued with respect thereto having an aggregate fair market value
equal to the amount which it determines is necessary to satisfy
its obligation to withhold Federal, state and local income taxes
or other taxes incurred by reason of the grant or exercise of an
option, its disposition, or the disposition of the underlying
shares of Common Stock. Alternatively, the Company may require the
holder to pay to the Company such amount, in cash, promptly upon
demand. The Company shall not be required to issue any shares of
Common Stock pursuant to any such option until all required
payments have been made. Fair market value of the shares of Common
Stock shall be determined in accordance with Paragraph 5.
16. LEGENDS; PAYMENT OF EXPENSES.
The Company may endorse such legend or legends upon the
certificates for shares of Common Stock issued upon exercise of an
option under the Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as it
determines, in its discretion, to be necessary or appropriate to
(a) prevent a violation of, or to perfect an exemption from, the
registration requirements of the Securities Act, (b) implement the
provisions of the Plan or any agreement between the Company and
the optionee with respect to such shares of Common Stock, or (c)
permit the Company to determine the occurrence of a "disqualifying
disposition," as described in Section 421(b) of the Code, of the
shares of Common Stock transferred upon the exercise of an ISO
granted under the Plan.
The Company shall pay all issuance taxes with respect to the
issuance of shares of Common Stock upon the exercise of an option
granted under the Plan, as well as all fees and expenses incurred
by the Company in connection with such issuance.
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17. USE OF PROCEEDS.
The cash proceeds from the sale of shares of Common Stock pursuant
to the exercise of options under the Plan shall be added to the
general funds of the Company and used for such corporate purposes
as the Committee may determine.
18. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN
CONSTITUENT CORPORATIONS.
Anything in this Plan to the contrary notwithstanding, the
Committee may, without further approval by the shareholders,
substitute new options for prior options of a Constituent
Corporation (as defined in Paragraph 19) or assume the prior
options of such Constituent Corporation.
19. DEFINITIONS.
a. Subsidiary. The term "Subsidiary" shall have the same
definition as "subsidiary corporation" in Section 424(f) of
the Code.
b. Parent. The term "Parent" shall have the same definition as
"parent corporation" in Section 424(e) of the Code.
c. Constituent Corporation. The term "Constituent Corporation"
shall mean any corporation which engages with the Company, its
Parent or any Subsidiary in a transaction to which Section
424(a) of the Code applies (or would apply if the option
assumed or substituted were an ISO), or any Parent or any
Subsidiary of such corporation.
d. Disability. The term "Disability" shall mean a permanent and
total disability within the meaning of Section 22(e)(3) of the
Code.
20. GOVERNING LAW.
The Plan, such options as may be granted hereunder and all related
matters shall be governed by, and construed in accordance with,
the laws of the State of New York.
21. PARTIAL INVALIDITY.
The invalidity or illegality of any provision herein shall not
affect the validity of any other provision.
22. SHAREHOLDER APPROVAL.
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The Plan shall be subject to approval by the holders of a majority
of the Company's stock outstanding and entitled to vote thereon at
the next meeting of its shareholders. No options granted hereunder
may be exercised prior to such approval, provided that the date of
grant of any options granted hereunder shall be determined as if
the Plan had not been subject to such approval. Notwithstanding
the foregoing, if the Plan is not approved by a vote of the
shareholders of the Company on or before May 6, 1998, the Plan and
any options granted hereunder shall terminate.
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