Exhibit 4.03
FORM OF TRO LEARNING, INC.
1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
1. PURPOSE. The purpose of the TRO Learning, Inc. 1997 Non-Employee
Directors Stock Option Plan (the "Plan") is to attract and retain highly
qualified people who are not employees of TRO Learning, Inc. (the "Company") or
any of its subsidiaries to serve as Non-Employee Directors of the Company, and
to encourage Non-Employee Directors to own shares of the Company's Common Stock,
$.01 par value (the "Stock").
2. ADMINISTRATION. Grants of Options under the Plan shall be made in the
manner provided in Section 5. All questions of interpretation of the Plan or of
any options issued hereunder shall be determined by a committee (the
"Compensation Committee") consisting of two or more members appointed by the
Board of Directors of the Company (the "Board").
3. ELIGIBILITY. Only a member of the Board who is not an employee of the
Company or any of its subsidiaries (a "Non-Employee Director") shall be eligible
to participate in the Plan.
4. SHARES AVAILABLE FOR OPTIONS.
4.1 AVAILABLE SHARES. "Option" shall mean an option granted under
the provisions of Section 5 of this Plan to purchase Stock. "Date of Grant"
shall mean the date of grant of an Option. The Company intends that Options
shall constitute nonqualified stock options (and not incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code")). Subject to adjustment under Section 4.2, Options may be
granted under the Plan in respect of a maximum of 100,000 shares of Stock.
Shares subject to an Option that expires or terminates unexercised shall again
be available for Options hereunder to the extent of such expiration or
termination. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
4.2 ADJUSTMENTS. In the event of any stock dividend, stock split,
recapitalization, reorganization, merger, consolidation, combination or
exchanges of shares, or any other similar change affecting the Stock, an
appropriate adjustment to reflect any such change shall be made in the total
number and class of shares for which Options may be granted and the number and
class of shares and the price per share of any Option theretofore granted to the
extent unexercised. Such adjustment shall be as determined by the Compensation
Committee; provided that any such computation shall be rounded to the nearest
whole share and no such modification shall require the issuance of fractional
shares.
5. STOCK OPTIONS. Each Option granted under the Plan shall be approved
by the entire Board or the Compensation Committee, and evidenced by a written
agreement in such form as the Compensation Committee shall approve, and shall be
subject to Section 4 and the following terms and conditions:
5.1 TERMS AND CONDITIONS. The exercise price for each share of Stock
subject to the Option shall be the Fair Market Value of a share of Stock on the
Date of Grant of such Option, and the Option shall become exercisable according
to the schedule approved by the Board (or the Compensation Committee) and set
forth in the Option agreement.
5.2 EXERCISE OF OPTIONS. An option, or portion thereof, shall be
exercised by delivery of a written notice of exercise to the Secretary of the
Company and payment of the full purchase price (the "Exercise Price") for the
shares being purchased pursuant to the Option. The Exercise Price may be paid
either (1) in cash, (2) in shares of Stock already owned by the Non-Employee
Director who is granted an Option (including any other person entitled to
exercise the Option, the "Optionee") and to which the Optionee has good title,
free and clear of all liens and encumbrances, or partly in cash and partly in
such shares of Stock, (3) by authorizing the Company to retain whole shares of
Stock which would otherwise be issuable upon exercise of the Option having a
fair market value determined as of the date of exercise, (4) in cash submitted
by a broker-dealer to whom the Optionee has submitted an irrevocable notice of
exercise, or (5) a combination of (1), (2) and (3); provided that the method of
paying the Exercise Price shall be in compliance with Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules
and regulations thereunder. The value of shares delivered in payment of the
Exercise Price shall be their Fair Market Value as of the date of exercise of
the Option. Payments in cash may be made by the delivery of a check payable to
the order of the Company. Subject to Section 6, upon receipt of notice and
payment, the Company shall promptly issue and deliver to the Optionee (or other
person entitled to exercise the Option) a certificate or certificates for the
number of shares as to which the exercise is made. An Option may not be
exercised for fractional shares of Stock.
5.3 TERMINATION OF SERVICE. Each Option terminates ten years from
the date of grant, or if earlier, upon the later to occur of (1) three years
after the initial grantee of the Option (the "Grantee") ceases service as a
director of the Company for any reason, if the holder served for six years or
more; (2) one year after the Grantee ceases service as a director of the Company
as a result of death or disability; or (3) 90 days after the Grantee ceases
service as a director of the Company for any reason other than death or
disability. The rights of the Non-Employee Director may be exercised by such
director's guardian or legal representative in the case of disability or death.
5.4 FAIR MARKET VALUE. "Fair Market Value," for all purposes under
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 of Stock
were made on such date, the closing price of a share of Stock as reported for
the preceding day on which a sale of shares of Stock occurred shall be used.
6. TAX WITHHOLDING. The Company shall be entitled, if necessary or
desirable, to withhold from any Optionee from any amounts due and payable by the
Company to such Optionee (or secure payment from such Optionee in lieu of
withholding) the amount of any withholding or other tax due from the Optionee
with respect to any shares of Stock issuable under the Plan. The Optionee may
satisfy any withholding tax obligation by (1) a cash payment to the Company; (2)
delivery of previously-owned shares of Stock and to which the Optionee has good
title, free and clear of all liens and encumbrances; or (3) by authorizing the
Company to retain shares of Stock which would otherwise be issuable upon
exercise of the Option.
7. TRANSFERABILITY AND EXERCISABILITY. Options 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 to any trust or estate
in which the original option 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 of 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 Option so
transferred shall continue to be subject to all the terms and conditions
contained in the instrument evidencing such Option.
If so permitted by the Compensation Committee, an Optionee may designate a
beneficiary or beneficiaries to exercise the rights of the Optionee and receive
any distribution under the Plan upon the death of the Optionee.
8. LEGAL REQUIREMENTS. Notwithstanding any other provision of the Plan,
the Company shall not be obligated to offer or sell any shares of Stock upon
exercise of an Option unless the shares to be issued upon such exercise are at
that time effectively registered or exempt from 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 securities covered by this Plan under the
federal securities laws or take any other steps as may be necessary to enable
the securities covered by this Plan to be offered and sold under federal or
other securities laws. Upon exercising all or any portion of an Option, an
Optionee may be required to furnish representations or undertakings deemed
appropriate by the Company to enable the offer and sale of the shares of Stock
upon exercise of the Option or subsequent transfers of any interest in such
shares to comply with the Securities Act and other applicable securities laws.
Certificates evidencing shares of Stock issued pursuant to Options shall bear
any legend required by, or useful for the purposes of compliance with,
applicable securities laws, this Plan or the agreements evidencing the Options.
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It is the intention of the Company that the Plan comply in all respects
with Rule 16b-3 promulgated under Section 16(b) of the Exchange Act. Therefore,
if any Plan provision should be found to not be in compliance with Rule 16b-3,
that provision shall be deemed null and void, and in all events the Plan shall
be construed in favor of its meeting the requirements of Rule 16b-3.
9. EFFECTIVE DATE; DURATION; SUSPENSION AND AMENDMENT. The Plan shall
become effective upon approval by the Board and the shareholders of the Company.
The Plan shall terminate automatically on the tenth anniversary of the effective
date unless terminated earlier by the Board. The Board may suspend the Plan at
any time. The Board may amend or terminate the Plan at any time, but such
amendment or termination shall not affect Options already granted and such
Options shall remain in full force and effect as if the Plan had not been
terminated. No shares of Stock shall be issued or sold under this Plan after
the termination of the Plan, except upon exercise of Options granted before
termination. Any shares of Stock authorized under Section 4 of the Plan (or any
amendment thereof) with respect to which an Option is not granted prior to
termination of the Plan, or with respect to which an Option is terminated,
forfeited or canceled after termination of the Plan, shall automatically be
transferred to any subsequent stock option plan for Non-Employee Directors of
the Company.
10. LIMITATION OF RIGHTS. Neither the Plan nor the granting of any Option
hereunder shall constitute an agreement or understanding that the Company will
retain a Non-Employee Director for any period of time or at any particular rate
of compensation. The holder of an Option shall not thereby have any rights as a
stockholder until the holder receives shares of Stock upon exercise of such
Option.
11. 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 Optionee or other person. To
the extent any person holds any rights by virtue of an Option granted under the
Plan, such rights shall be no greater than the rights of an unsecured general
creditor of the Company.
12. 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.
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