JONES INTERNATIONAL NETWORKS, LTD.
1996 STOCK OPTION PLAN
I. Purpose
The 1996 Stock Option Plan (the "Plan") provides for the grant of
Stock Options and Stock Appreciation Rights to Employees and Consultants of
Jones International Networks, Ltd. (the "Company"), its parent and such of its
subsidiaries (as defined in Sections 424(e) and 424(f) of the Internal Revenue
Code of 1986, as amended (the "Code")) as the Board of Directors of the Company
(the "Board") shall from time to time designate ("Participating Subsidiaries"),
in order to advance the interests of the Company, its parent and its
Participating Subsidiaries through the motivation, attraction and retention of
their respective Employees and the provision of equity incentives to their
Consultants.
II. Incentive Stock Options and Non-Incentive Stock Options
The Stock Options granted under the Plan may be either:
(a) Incentive Stock Options ("ISOs") which are intended to be
"Incentive Stock Options" as that term is defined in Section 422 of the Code; or
(b) Non-statutory Stock Options ("NSOs") which are intended to be
options that do not qualify as "Incentive Stock Options" under Section 422 of
the Code.
All Stock Options shall be ISOs unless the Option Agreement clearly designates
the Stock Options granted thereunder, or a specified portion thereof, as NSOs.
Subject to the other provisions of the Plan, a Participant may receive ISOs and
NSOs at the same time, provided that the ISOs and NSOs are clearly designated as
such.
Except as otherwise expressly provided herein, all of the provisions
and requirements of the Plan relating to Stock Options shall apply to ISOs and
NSOs.
III. Administration
3.1 Committee. Any transaction involving a grant of Stock Options
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and/or Stock Appreciation Rights shall be approved by the Board of Directors, or
a committee of the Board of Directors that is composed solely of two or more
Non-Employee Directors, as defined below (the "Committee"). The Committee or
the Board, as the case may be, shall have full authority to administer the Plan,
including authority to interpret and construe any provision of the Plan and any
Stock Option or Stock Appreciation Rights granted thereunder, and to adopt such
rules and regulations for administering the Plan as it may deem necessary in
order to comply with the requirements of the Code, in order that Stock Options
that are intended to be ISOs will be classified as incentive stock options under
the Code, or in order to conform to any regulation or to any change in any law
or regulation applicable thereto.
3.2 Actions of Committee. All actions taken and all interpretations
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and determinations made by the Board or the Committee, as the case may be, in
good faith (including determinations of Fair Market Value) shall be final and
binding upon all Participants, the Company and all other interested persons. No
member of the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan, and all members
of the Committee shall, in addition to their rights as directors, be fully
protected by the Company with respect to any such action, determination or
interpretation.
3.3 References to the Committee. All references in the Plan to the
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"Committee" shall be deemed to also refer to the Board of Directors whenever the
Board is discharging its powers and responsibilities hereunder.
IV. Definitions
4.1 Stock Option. A Stock Option is the right granted under the Plan
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to an Employee or Consultant to purchase, at such time or times and at such
price or prices ("Option Price") as are determined by the Committee, the number
of shares of Capital Stock determined by the Committee.
4.2 Stock Appreciation Right. A Stock Appreciation Right is the
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right to receive payment, in shares of Capital Stock, cash or a combination of
shares
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of Capital Stock and cash, of the Redemption Value of a specified number
of shares of Capital Stock then purchasable under a Stock Option.
4.3 Redemption Value. The Redemption Value of shares of Capital
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Stock purchasable under a Stock Option shall be the amount, if any, by which the
Fair Market Value of one share of Capital Stock on the date on which the Stock
Option is exercised exceeds the Option Price for such share.
4.4 Capital Stock. A share of Capital Stock means a share of
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authorized but unissued Class A Common Stock, $.01 par value per share, of the
Company.
4.5 Fair Market Value. If the Capital Stock is traded publicly, the
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Fair Market Value of a share of Capital Stock on any date shall be the average
of the closing bid and asked prices, as quoted by the National Association of
Securities Dealers through NASDAQ (its automated system for reporting quotes)
for the date in question or, if the Capital Stock is listed on the NASDAQ
National Market System or is listed on a national stock exchange, the officially
quoted closing price on NASDAQ or such exchange, as the case may be, on the date
in question. If the Capital Stock is not traded publicly, the Fair Market Value
of a share of Capital Stock on any date shall be determined, in good faith, by
the Committee after such consultation with outside legal, accounting and other
experts as the Committee may deem advisable, and the Committee shall maintain a
written record of its method of determining such value.
4.6 Employee. An Employee is an employee of the Company, its parent or
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any Participating Subsidiary.
4.7 Participant. A Participant is an Employee or Consultant to whom
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a Stock Option or Stock Appreciation Right is granted.
4.8 Non-Employee Directors. A Non-Employee Director is a director
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who (a) is not currently an officer of the Company or a parent or subsidiary of
the Company, or otherwise currently employed by the Company or a parent or
subsidiary of the Company; (b) does not receive compensation, either directly or
indirectly, from the Company or a parent or subsidiary of the Company, for
services rendered as a consultant or in any capacity other than as a director,
except for an amount for which disclosure would not be required pursuant to Item
404(a) of Regulation S-K of the Securities and Exchange Commission ("Regulation
S-K"); does not possess an interest in any other transaction for which
disclosure would be required pursuant to Item 404(a) of Regulation S-K;
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and is not engaged in a business relationship for which disclosure would be
required pursuant to Item 404(b) of Regulation S-K.
4.9 Change of Control. The term "Change of Control" shall mean any of
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the following events.
(a) The acquisition (after shareholder approval of the Plan) by any
person as Beneficial Owner (as defined in Rule 13d-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended), directly or
indirectly, in one or more transactions, without the approval or consent of the
Company's Board of Directors, of shares of Common Stock and/or Class A Common
Stock of the Company representing thirty-five percent (35%) or more of the total
votes to be cast by all shareholders of the Company voting as a single class,
where a share of Common Stock has one vote and a share of Class A Common Stock
has 1/10th of a vote.
(b) The shareholders of the Company approve a Transaction.
For purposes of this Plan, the Board of Directors may, by resolution, clarify
the date as of which a Change of Control shall be deemed to have occurred.
4.10 Transaction. A Transaction is (a) any consolidation or merger
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of the Company in which the Company is not the surviving corporation other than
a merger solely to effect a reincorporation or a merger of the Company as to
which shareholder approval is not required pursuant to the Colorado Business
Corporation Act, or (b) the adoption of any plan or proposal for the liquidation
or dissolution of the Company.
4.11 Consultant. A Consultant is an individual who performs
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consulting services for the Company, its parent or any Participating Subsidiary.
V. Eligibility and Participation
5.1 Grants of Stock Options and Stock Appreciation Rights may be made
to Employees and Consultants of the Company, its parent or any Participating
Subsidiary, including directors of the Company who are also Employees. The
Committee shall from time to time determine the Participants to whom Stock
Options shall be granted, the number of shares of Capital Stock subject to each
Stock Option to be granted to each such Participant, the Option Price of such
Stock Options and the terms and provisions of such Stock Options, all as
provided in the Plan. The Option Price of any ISO shall be not less than
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the Fair Market Value of a share of Capital Stock on the date on which the Stock
Option is granted, but the Option Price of an NSO may be less than the Fair
Market Value on the date the NSO is granted if the Committee so determines. If
an ISO is granted to an Employee who then owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or any
parent or subsidiary corporation of the Company, the Option Price of such ISO
shall be at least 110% of the Fair Market Value of the Capital Stock subject to
the ISO at the time such ISO is granted, and such ISO shall not be exercisable
after five years after the date on which it was granted.
5.2 Except for the limitations set forth in Section 5.1, the terms
and provisions of Stock Options shall be as determined from time to time by the
Committee or Board, and each Stock Option issued may contain terms and
provisions different from other Stock Options granted to the same or other Stock
Option recipients. Each Stock Option shall be evidenced by a written agreement
("Option Agreement") containing such terms and provisions as the Committee may
determine, subject to the provisions of the Plan.
VI. Shares of Capital Stock Subject to the Plan
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6.1 Maximum Number. The maximum aggregate number of shares of
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Capital Stock that may be made subject to Stock Options shall be _________. If
any shares of Capital Stock subject to Stock Options are not purchased or
otherwise paid for before such Stock Options expire, such shares may again be
made subject to Stock Options.
6.2 Capital Changes. In the event any changes are made to the shares
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of Capital Stock (whether by reason of merger, consolidation, reorganization,
recapitalization, stock dividend in excess of ten percent (10%) at any single
time, stock split, combination of shares, exchange of shares, change in
corporate structure of otherwise), appropriate adjustments shall be made in: (i)
the number of shares of Capital Stock theretofore made subject to Stock Options,
and in the purchase price of said shares; and (ii) the aggregate number of
shares which may be made subject to Stock Options. If any of the foregoing
adjustments shall result in a fractional share, the fraction shall be
disregarded, and the Company shall have no obligation to make any cash or other
payment with respect to such a fractional share.
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VII. Exercise of Stock Options
7.1 Time of Exercise. Subject to the provisions of the Plan,
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including without limitation Section 7.5, the Committee, in its discretion,
shall determine the time when a Stock Option, or a portion of a Stock Option,
shall become exercisable, and the time when a Stock Option, or a portion of a
Stock Option, shall expire. Such time or times shall be set forth in the Option
Agreement evidencing such Stock Option. An ISO shall expire, to the extent not
exercised, no later than ten years after the date on which it was granted, and
an NSO shall expire, to the extent not exercised, no later than ten years after
the date on which it was granted. The Committee may accelerate the vesting of
any Participant's Stock Option by giving written notice to the Participant.
Upon receipt of such notice, the Participant and the Company shall amend the
Option Agreement to reflect the new vesting schedule. The acceleration of the
exercise period of a Stock Option shall not affect the expiration date of that
Stock Option.
7.2 Six Month Holding Period. The shares of Capital Stock issued
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upon the exercise of a Stock Option to an officer or director of the Company, or
to a person who is directly or indirectly the beneficial owner of more than ten
percent of the Company's Capital Stock, may not be sold or otherwise disposed of
within six months after the date of grant of the Stock Option.
7.3 Exchange of Outstanding Capital Stock. The Committee, in its
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sole discretion, may permit a Participant to surrender to the Company shares of
Capital Stock previously acquired by the Participant as part or full payment for
the exercise of a Stock Option. Such surrendered shares shall be valued at
their Fair Market Value on the date of exercise.
7.4 Capital Stock Restriction Agreement. The Committee may provide
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that shares of Capital Stock issuable upon the exercise of a Stock Option shall,
under certain conditions, be subject to restrictions whereby the Company has a
right of first refusal with respect to such shares or a right or obligation to
repurchase all or a portion of such shares, which restrictions may survive a
Participant's term of employment with the Company. The acceleration of time or
times at which a Stock Option becomes exercisable may be conditioned upon the
Participant's agreement to such restrictions.
7.5 Termination of Employment Before Exercise. If a Participant's
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employment or engagement with the Company, its parent or a Participating
Subsidiary shall terminate for any reason other than the Participant's voluntary
separation, retirement, death or disability, any Stock Option then held by the
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Participant, to the extent then exercisable under the applicable Option
Agreement(s), shall remain exercisable after the termination of his employment
or engagement for a period of ten business days (so long as such period is not
more than ten years from the date of grant of the Stock Option). If the
Participant's employment or engagement is terminated because the Participant
dies or is disabled within the meaning of Section 22(e)(3) of the Code, any
Stock Option then held by the Participant, to the extent then exercisable under
the applicable Option Agreement(s), shall remain exercisable after the
termination of his employment for a period of twelve months (so long as such
period is not more than ten years from the date of grant of the Stock Option).
If the Participant's employment or engagement is terminated by reason of
voluntary separation or retirement, any Stock Option held by the Participant,
to the extent then exercisable under the applicable Option Agreement(s), shall
remain exercisable after the termination of his employment for a period of three
months (so long as such period is not more than ten years from the date of grant
of the Stock Option). If the Stock Option is not exercised during the
applicable period, it shall be deemed to have been forfeited and of no further
force or effect.
7.6 Disposition of Forfeited Stock Options. Any shares of Capital
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Stock subject to Stock Options forfeited by a Participant shall not thereafter
be eligible for purchase by the Participant but may be made subject to Stock
Options granted to other Participants.
7.7 Option Vesting Upon Change of Control of the Company. In the
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event of a Change of Control of the Company, as that term is defined in Section
4.9 of this Plan, the vesting of Stock Options granted pursuant to the Plan
shall automatically be accelerated, so that all Stock Options outstanding at the
time of such Change of Control will be exercisable immediately.
VIII. Stock Appreciation Rights
8.1 Grant of Stock Appreciation Rights. The Committee may, from time
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to time, grant Stock Appreciation Rights to a Participant with respect to not
more than the number of shares of Capital Stock which are, or may become,
purchasable under any Stock Option held by the Participant. The Committee may,
in its sole discretion, specify the terms and conditions of such rights,
including without limitation the time period or time periods during which such
rights may be exercised and the date or dates upon which such rights shall
expire and become void and unexercisable; provided, however, that in no event
shall such rights expire and become void and unexercisable later than the time
when
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the related Stock Option is exercised, expires or terminates. Each Participant
to whom Stock Appreciation Rights are granted shall be given written notice
advising him of the grant of such rights and specifying the terms and conditions
of the rights, which shall be subject to all the provisions of this Plan.
8.2 Exercise of Stock Appreciation Rights. Subject to Section 8.3,
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and in lieu of purchasing shares of Capital Stock upon the exercise of a Stock
Option held by him, a Participant may elect to exercise the Stock Appreciation
Rights, if any, he has been granted and receive payment of the Redemption Value
of all, or any portion, of the number of shares of Capital Stock subject to such
Stock Option with respect to which he has been granted Stock Appreciation
Rights; provided, however, that the Stock Appreciation Rights may be exercised
only when the Fair Market Value of the Capital Stock subject to such Stock
Option exceeds the exercise price of the Stock Option. A Participant shall
exercise his Stock Appreciation Rights by delivering a written notice to the
Company, specifying the number of shares with respect to which he exercises
Stock Appreciation Rights and agreeing to surrender the right to purchase an
equivalent number of shares of Capital Stock subject to his Stock Option. If a
Participant exercises Stock Appreciation Rights, payment of his Stock
Appreciation Rights shall be made in accordance with Section 8.3 on or before
the 90th day after the date of exercise of the Stock Appreciation Rights.
8.3 Form of Payment. It a Participant elects to exercise Stock
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Appreciation Rights as provided in Section 8.2, the Committee may, in its
absolute discretion, elect to pay any part or all of the Redemption Value of the
shares with respect to which the Participant has exercised Stock Appreciation
Rights in: (i) cash; (ii) shares of Capital Stock; or (iii) any combination of
cash and shares of Capital Stock. The election pursuant to this Section 8.3
shall be made by giving written notice to the Participant within said 90-day
period, which notice shall specify the portion which the Committee elects to pay
in cash, shares of Capital Stock or a combination thereof. In the event any
portion is to be paid in shares of Capital Stock, the number of shares to be
delivered shall be determined by dividing the amount which the Committee elects
to pay in shares of Capital Stock by the Fair Market Value of one share of
Capital Stock on the date of exercise of the Stock Appreciation Rights. Any
fractional share resulting from any such calculation shall be disregarded. Said
shares, together with any cash payable to the Participant, shall be delivered
within said 90-day period.
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IX. No Contract of Employment
Nothing in this Plan shall confer upon the Participant the right to
be, or to continue to be, in the employ of the Company, its parent or any
Participating Subsidiary, nor shall it interfere in any way with the right of
the Company, its parent or any such Participating Subsidiary, to discharge the
Participant at any time for any reason whatsoever, with or without cause.
Nothing in this Article IX shall affect any rights or obligations of the Company
or any Participant under any written contract of employment.
X. No Rights as a Shareholder
A Participant shall have no rights as a shareholder with respect to
any shares of Capital Stock subject to a Stock Option. Except as provided in
Section 6.2, no adjustment shall be made in the number of shares of Capital
Stock issued to a Participant, or in any other rights of the Participant upon
exercise of a Stock Option by reason of any dividend, distribution or other
right granted to shareholders for which the record date is prior to the date of
exercise of the Participant's Stock Option.
XI. Assignability
No Stock Option or Stock Appreciation Right granted under this Plan,
nor any other rights acquired by a Participant under this Plan shall be
assignable or transferable by a Participant, other than by will or the laws of
descent and distribution or, in the case of an NSO, pursuant to a qualified
domestic relations order as defined by the Code, Title I of the Employee
Retirement Income Security Act ("ERISA"), or the rules thereunder.
Notwithstanding the preceding sentence, the Committee may, in its sole
discretion, permit the assignment or transfer of an NSO by a Participant other
than an officer or director, and the exercise thereof by a person other than
such Participant, on such terms and conditions as the Committee in its sole
discretion may determine. Any such terms shall be determined at the time the
NSO is granted, and shall be set forth in the Option Agreement. In the event of
his death, the Stock Option or any Stock Appreciation Right may be exercised by
the Personal Representative of the Participant's estate or, if no Personal
Representative has been appointed, by the successor or successors in interest
determined under the Participant's will or under the applicable laws of descent
and distribution.
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XII. Certain Events Affecting the Company
Subject to the provisions of Section 7.7 hereof, if the Company or its
shareholders enter into an agreement to dispose of all, or substantially all, of
the assets or outstanding shares of stock of the Company by means of a sale or
liquidation, or a merger or reorganization in which the Company is not the
surviving corporation, the Board shall have the power and discretion to
prescribe the terms and conditions for the exercise of, or modification of, the
Options and other rights granted hereunder. By way of illustration, and not by
way of limitation, the Board may provide for the complete or partial
acceleration of the dates of exercise of the Options or other rights, or may
provide that such Options or other rights will be exchanged for or converted
into options or rights to acquire securities of the surviving or acquiring
corporation, or may provide for a payment or distribution in respect of
outstanding Options or rights (or the portion thereof that is currently
exercisable) in cancellation thereof. The Board may provide that Options or
other rights granted hereunder must be exercised in connection with the closing
of such transaction, and that if not so exercised such Options or rights will
expire. Any such determinations by the Board may be made generally with respect
to all Participants, or may be made on a case-by-case basis with respect to
particular Participants. The provisions of this Article XII shall not apply to
any transaction undertaken for the purpose of reincorporating the Company under
the laws of another jurisdiction.
XIII. Amendment
The Board may from time to time alter, amend, suspend or discontinue
the Plan, including, where applicable, any modifications or amendments as it
shall deem advisable in order that ISOs will be classified as incentive stock
options under the Code, or in order to conform to any regulation or to any
change in any law or regulation applicable thereto; provided, however, that no
such action shall adversely affect the rights and obligations with respect to
Stock Options at any time outstanding under the Plan; and provided further that
no such action shall, without the approval of the shareholders of the Company,
(i) increase the maximum number of shares of Capital Stock that may be made
subject to Stock Options (unless necessary to effect the adjustments required by
Section 6.2), (ii) materially increase the benefits accruing to Participants
under the Plan, or (iii) materially modify the requirements as to eligibility
for participation in the Plan.
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XIV. Registration of Optioned Shares
The Stock Options shall not be exercisable unless the purchase of such
optioned shares is pursuant to an applicable effective registration statement
under the Securities Act of 1933, as amended (the "Act"), or unless, in the
opinion of counsel to the Company, the proposed purchase of such optioned shares
would be exempt from the registration requirements of the Act and from the
registration or qualification requirements of applicable state securities laws.
XV. Withholding Taxes
The Company, its parent or Participating Subsidiary may take such
steps as it may deem necessary or appropriate for the withholding of any taxes
which the Company, its parent or the Participating Subsidiary is required by any
law or regulation or any governmental authority, whether federal, state or
local, domestic or foreign, to withhold in connection with any Stock Option or
Stock Appreciation Right, including, but not limited to, the withholding of all
or any portion of any payment or the withholding of issuance of shares of
Capital Stock to be issued upon the exercise of any Stock Option or Stock
Appreciation Right, until the Participant reimburses the Company, its parent or
Participating Subsidiary for the amount the Company, its parent or Participating
Subsidiary is required to withhold with respect to such taxes, or cancelling any
portion of such payment or issuance in an amount sufficient to reimburse itself
for the amount it is required to so withhold.
XVI. Brokerage Arrangements
The Company, in its discretion, may enter into arrangements with one
or more banks, brokers or other financial institutions to facilitate the
disposition of shares acquired upon exercise of Stock Options or Stock
Appreciation Rights, including, without limitation, arrangements for the
simultaneous exercise of Stock Options or Stock Appreciation Rights, and sale of
the shares acquired upon such exercise.
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XVII. Nonexclusivity of the Plan
Neither the adoption of the Plan by the Board nor the submission of
the Plan to shareholders of the Company for approval shall be construed as
creating any limitations on the power or authority of the Board to adopt such
other or additional incentive or other compensation arrangements of whatever
nature as the Board may deem necessary or desirable or preclude or limit the
continuation of any other plan, practice or arrangement for the payment of
compensation or fringe benefits to employees generally, or to any class or group
of employees, which the Company, its parent or any Participating Subsidiary now
has lawfully put into effect, including, without limitation, any retirement,
pension, savings and stock purchase plan, insurance, death and disability
benefits and executive short-term incentive plans.
XVIII.Rule 16b-3 of the Securities Exchange Act of 1934
Notwithstanding anything in the Plan to the contrary, no action may be
taken with respect to the Plan which would cause the Plan to cease to be
qualified under Rule 16b-3 under the Exchange Act or any successor rule, without
the express acknowledgment of the Board of Directors that such disqualification
may occur.
IL. Effective Date
This Plan was adopted by the Board of Directors on ___________, 1996
and was approved by the Company's shareholders on ____________, 1996. No Stock
Options shall be granted subsequent to ten years after the effective date of the
Plan. Stock Options outstanding subsequent to ten years after the effective
date of the Plan shall continue to be governed by the provisions of the Plan.
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