ADVANCED INFORMATION MANAGEMENT SOLUTIONS, INC.
STOCK OPTION PLAN
1. PURPOSES. Advanced Information Management Solutions, Inc. (the
"Company") has adopted this Plan to enhance the interest and concern of the
Company's employees, officers, directors and consultants in the success of the
Company by giving them an ownership interest in the Company, and to give them an
incentive to continue their service to the Company.
2. STOCK SUBJECT TO PLAN. The Company shall reserve 1,000,000 shares of
its no par value Common Stock (the "Shares") to be issued upon exercise of
options which may be granted from time to time under this Plan. As it may from
time to time determine, the Board of Directors of the Company (the "Board") may
authorize that the Shares may be comprised, in whole or in part, of authorized
but unissued shares of the Company's Common Stock or of issued shares which have
been reacquired. If options granted under this Plan terminate or expire before
being exercised in whole or in part, the Shares subject to those options which
have not been issued may be subjected to options subsequently granted under the
Plan.
3. ADMINISTRATION OF THE PLAN. The Board shall appoint a Stock Option
Committee (the "Committee") which shall consist of not fewer than two (2)
members of the Board, or, at the election of the Board or if the Board consists
of fewer than two directors, may consist of the entire Board, to administer this
Plan. Subject to the express provisions of this Plan and guidelines which may be
adopted from time to time by the Board, the Committee shall have plenary
authority in its discretion (a) to determine the individuals to whom, and the
times at which, options are granted, and the number and purchase price of the
Shares subject to each option; (b) to determine whether the options granted
shall be "incentive stock options" within the meaning of Section 422A of the
Internal Revenue Code of 1986 (the "Code"), or non-statutory stock options, or
both; (c) to interpret the Plan and prescribe, amend and rescind rules and
regulations relating to it; (d) to determine the terms and provisions (and
amendments thereof) of the respective option agreements subject to Section 6 of
the Plan, which need not be identical, including, if the Committee shall
determine that a particular option is to be an incentive stock option, such
terms and provisions (and amendments thereof) as the Committee deems necessary
to provide for an incentive stock option or to conform to any change in any law,
regulation, ruling or interpretation applicable to incentive stock options; and
(e) to make any and all determinations which the Committee deems necessary or
advisable in administering the Plan. The Committee's determination on the
foregoing matters shall be conclusive. The Committee may delegate any of the
foregoing authority to the President with respect to options granted to or which
are held by non-officers and non-directors.
4. PERSONS ELIGIBLE. Employees of the Company or its subsidiaries
(including officers) may be granted either incentive or non-statutory options.
Consultants of the Company and its subsidiaries (including directors) may be
granted only non-statutory options, except directors who are also employees, who
may be granted either incentive or non-statutory options. For this purpose,
"employee" shall conform to the requirements of Section 422A of the Code, and
"subsidiary" means subsidiary corporations as defined in Section 424 of the
Code.
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The aggregate fair market value (determined as of the time the
option is granted) of the Shares with respect to which incentive stock options
are exercisable for the first time by an optionee during any calendar year
(under all incentive stock option plans of the Company or its parent or
subsidiaries) shall not exceed $100,000.
5. CHANGES IN CAPITAL STRUCTURE.
(a) EFFECT ON THE PLAN. In the event of changes in the
outstanding capital stock of the Company by reason of any stock dividend, stock
split or reverse split, reclassification, recapitalization, merger or
consolidation, acquisition of 80 percent or more of its gross assets or stock,
reorganization or liquidation, the Committee and/or the Board shall make such
adjustments in the aggregate number and class of shares available under the Plan
as it deems appropriate, and such determination shall be final, binding and
conclusive.
(b) EFFECT ON OUTSTANDING OPTIONS.
(i) STOCK SPLITS AND LIKE EVENTS. Should a
stock dividend, stock split, reverse stock split, or reclassification occur,
then the Committee and/or the Board shall make such adjustments in (A) the
number and class of shares to which optionees will thereafter be entitled upon
exercise of their outstanding options and (B) the price which optionees shall be
required to pay upon such exercise, as it in its sole discretion in good faith
deems appropriate, and such determination shall be final, binding and
conclusive. Such adjustments shall have the effect that the aggregate exercise
price paid by, and number and class of shares received by, an optionee who
exercises an option subsequent to such occurrence shall be the same as if such
optionee had exercised the option immediately prior to such occurrence.
(ii) RECAPITALIZATIONS. In the event of (A) a
dissolution, liquidation, or sale of all or substantially all of the assets of
the Company, or (B) a merger or consolidation in which the Company is not the
surviving entity, or (C) a merger in which the Company is the surviving entity
but the shares of the Company's common stock outstanding immediately preceding
the merger are converted by virtue of the merger into other securities, cash, or
other property, then, at the sole discretion of the Board and to the extent
permitted by applicable law, options granted under this Plan:
(1) shall terminate upon such event and may be exercised prior thereto
only to the extent such options are then exercisable; or
(2) shall terminate upon such event, or such date prior to the
consummation of the event as the Board may determine, but shall become
fully exercisable as to all shares upon the consummation of such event
or on such date determined by the Board; or
(3) shall continue in full force and effect and, if applicable, the
surviving entity shall assume such options and/or shall substitute
similar options for such options; or
(4) shall be treated as provided in the applicable agreement or plan of
merger, consolidation, dissolution, liquidation, sale of assets or
other similar agreement.
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Notwithstanding the above, upon the occurrence of any such event, each optionee
shall have such greater rights as may be provided in such optionee's stock
option agreement, which at the discretion of the Board and/or Committee, may
include any one or more of the above provisions.
(c) SUBSTITUTION OR ASSUMPTION OF OPTIONS BY THE COMPANY. The
Company, from time to time, also may substitute or assume outstanding awards
granted by another company, whether in connection with an acquisition of such
other company or otherwise, by either (A) granting an option under the Plan in
substitution of such other company's award, or (B) assuming such award as if it
had been granted under the Plan if the terms of such assumed award could be
applied to an option granted under the Plan. Such substitution or assumption
shall be permissible if the holder of the substituted or assumed option would
have been eligible to be granted an option under the Plan if the other company
had applied the rules of the Plan to such grant. In the event the Company
assumes an award granted by another company, the terms and conditions of such
award shall remain unchanged (except that the exercise price and the number and
nature of shares issuable upon exercise of any such option will be adjusted
appropriately pursuant to Section 424(a) of the Code). In the event the Company
elects to grant a new option rather than assuming an existing option, such new
option may be granted with a similarly adjusted exercise price.
6. TERMS AND CONDITIONS OF OPTIONS. Each option granted under this Plan
shall be evidenced by a stock option agreement (hereinafter called "Agreement")
which is not inconsistent with this Plan, and the form of which the Committee
and/or Board may from time to time determine, provided that the Agreement shall
contain the substance of the following:
(a) OPTION PRICE. The option price shall be not less than 100%
of the fair market value of the Shares at the time the option is granted, which
shall be the date the Committee and/or Board, or its delegate, awards the grant,
except in the case of non-statutory stock options granted to employees, in which
case the option price shall be not less than 85% of the fair market value of the
Shares at the time the option is granted. If the optionee, at the time the
option is granted, owns stock possessing more than ten percent (10%) of the
total combined voting power of all the classes of stock of the Company or of its
parent or subsidiaries (a "Principal Shareholder"), the option price of either
incentive or non-statutory stock options shall be not less than 110% of the fair
market value of the Shares at the time the option is granted. The fair market
value of the Shares shall be determined and the option price of the Shares set
by the Committee and/or Board in accordance with the valuation methods described
in Section 20.2031-2 of the Treasury Regulations.
(b) METHOD OF EXERCISE. At the time of purchase, Shares
purchased under options shall be paid for in full either (i) in cash, (ii) at
the discretion of the Board, with a promissory note secured by the Shares
purchased, (iii) at the discretion of the Committee and/or Board, with
outstanding stock of the Company at such value as the Board shall determine in
its sole discretion to be the fair market value of such stock, or (iv) a
combination of promissory note (if permitted pursuant to (ii) above), stock (if
permitted pursuant to (iii) above), and/or cash. To the extent that the right to
purchase Shares has accrued under an option, the optionee may exercise said
option from time to time by giving written notice to the Company stating the
number of Shares with respect to which the optionee is exercising the option,
and submitting
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with said notice payment of the full purchase price of said Shares either in
cash or, at the discretion of the Board and/or Committee as described above,
with a promissory note, outstanding stock of the Company, or a combination of
cash, promissory note, and/or such stock. As soon as practicable after
receiving such notice and payment, the Company shall issue, without transfer
or issue tax to the optionee (or other person entitled to exercise the
option), and at the main office of the Company or such other place as shall
be mutually acceptable, a certificate or certificates representing such
Shares out of authorized but unissued Shares or reacquired Shares of its
capital stock, as the Board and/or Committee, or its delegate, may elect, for
the number of Shares to be delivered. The time of such delivery may be
postponed by the Company for such period as may be required for it with
reasonable diligence to comply with such procedures as may, in the opinion of
counsel to the Company, be desirable in view of federal and state laws,
including corporate securities laws and revenue and taxation laws. If the
optionee (or other person entitled to exercise the option) fails to accept
delivery of any or all of the number of Shares specified in such notice upon
tender of delivery of the certificates representing them, the right to
exercise the option with respect to such undelivered Shares may be terminated.
(c) OPTION TERM. The Committee and/or Board may grant options
for any term, but shall not grant any options for a term longer than ten (10)
years from the date the option is granted (except in the case of an incentive or
non-statutory option granted to a Principal Shareholder in which case the term
shall be no longer than five (5) years from the date the option is granted).
Each option shall be subject to earlier termination as provided in this section
6 of this Plan.
(d) EXERCISE OF OPTIONS. Each option granted under this Plan
shall be exercisable on such date or dates, upon or after the occurrence of
certain events, or upon or after the achievement of certain performance
milestones (which dates may be advanced or which occurrences or achievements may
be waived in whole or in part or extended at the discretion of the Committee
and/or Board) and during such period and for such number of Shares as shall be
determined by the Committee and/or Board. An incentive option granted to a
non-officer may not be exercised at any time unless the optionee shall have
continuously served, to the extent determined by the Committee and/or Board, as
an employee of the Company or its subsidiary throughout a period commencing on
the date an option is granted and ending at a specified time no more than three
(3) months and no fewer than thirty (30) days before an attempted exercise of
the option, and, if applicable, unless the Committee and/or Board shall
determine and notify the optionee in writing that certain events have occurred
or certain performance milestones have been achieved.
(e) NONASSIGNABILITY OF OPTION RIGHTS. No option shall be
assignable or transferable by the optionee except by will or by the laws of
descent and distribution. During the life of an optionee, the option shall be
exercisable only by the optionee.
(f) EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH OR
DISABILITY. In the event the optionee's employment with the Company and its
subsidiaries ceases, as determined by the Committee, during the optionee's life
for any reason (except disability or death), including retirement, any incentive
option or unexercised portion thereof granted to a non-officer optionee which is
otherwise exercisable shall terminate unless exercised within a specified period
not to
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exceed three (3) months nor to be fewer than thirty (30) days from the date
on which such employment ceased but not later than the date of expiration of
the option period. In the event of the death or disability of the optionee
while employed or within a specified period not to exceed three (3) months
nor to be fewer than thirty (30) days from the date on which such employment
ceases, any option or unexercised portion thereof granted to the optionee, if
otherwise exercisable by the optionee at the date of death or disability, may
be exercised by the optionee (or by the optionee's personal representatives,
heirs or legatees) at any time prior to the expiration of one year from the
date of death or disability of the optionee but not later than the date of
expiration of the option period. For purposes of this Plan, "disability"
shall be defined as those conditions described in Code Section 22(e)(3), and
such other conditions as the Committee may reasonably determine constitute a
disability.
(g) RIGHTS OF OPTIONEE. The optionees shall have no rights as
a stockholder with respect to any Shares subject to an option until the date of
issuance of a stock certificate to the optionee for such Shares. No adjustment
shall be made for dividends or other rights of which the record date is prior to
the date such stock certificate is issued. Neither this Plan, nor any action or
agreement thereunder, shall confer any rights of employment, any rights to
election or retention as an officer or director, or any rights to serve as a
consultant.
7. USE OF PROCEEDS. The proceeds from the sale of stock pursuant to
options granted under the Plan shall constitute general funds of the Company.
8. AMENDMENT OF PLAN. The Board of Directors may at any time amend the
Plan, provided that no amendment may affect any then outstanding options or any
unexercised portions thereof. In addition, any amendment to the Plan increasing
the number of Shares reserved under the Plan, altering the employees or class of
employee eligible to be granted incentive stock options under the Plan, causing
options granted to employees and intended to be incentive options under the Plan
not to qualify as "incentive stock options" under Section 422A of the Code, or
amending this Section 8 shall be subject to shareholder approval as shall any
amendment which would cause the Plan not to satisfy the conditions of Rule 16b-3
once the Company registers a class of equity securities pursuant to Section 12
of the Securities Exchange Act of 1934.
9. FINANCIAL INFORMATION. Whenever the Company provides financial
statements, whether audited or unaudited, to all of its shareholders as a group,
the Company shall concurrently provide each optionee with a copy of such
financial statements. Notwithstanding the foregoing, the Company shall provide
each optionee at the end of its fiscal year with a copy of its financial
statements, either audited or unaudited, for such fiscal year, within ninety
(90) days after the end of such fiscal year if such person is then an optionee.
In connection with such provision, the Company may require the optionee to enter
into a nondisclosure agreement; provided, however, that such nondisclosure
agreement may not contain provisions which are more stringent than those the
Company imposes on its shareholders which are also receiving the financial
statements.
10. EFFECTIVE DATE AND TERMINATION OF PLAN. This Plan was adopted by
the Board of Directors on January 1, 1998, and approved by the shareholders on
January 1, 1998. The Board
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may terminate this Plan at any time. If not earlier terminated, the Plan
shall terminate on January 1, 2008. Termination of the Plan will not affect
rights and obligations theretofore granted and then in effect.
This Plan, the granting of any option hereunder, and the
issuance of stock upon the exercise of any option, shall be subject to such
approval or other conditions as may be required or imposed by any regulatory
authority having jurisdiction to issue regulations or rules with respect
thereto, including the securities laws of various governmental entities.
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