EXHIBIT 10.1
ELDORADO ARTESIAN SPRINGS, INC.
1997 STOCK OPTION PLAN
(Amended and Restated as of July 1, 1999)
I. PURPOSE
The ELDORADO ARTESIAN SPRINGS, INC. STOCK OPTION PLAN ("PLAN") provides
for the grant of Stock Options to employees, directors and consultants of
Eldorado Artesian Springs, Inc. (the "COMPANY"), and such of its subsidiaries
(as defined in Section 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 and its Participating Subsidiaries through the
motivation, attraction and retention of key personnel.
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) Nonstatutory 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 only to the extent specified in the Option
Agreement. 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, and the exercise of one does not affect the exercise
of the other.
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
The Plan shall be administered by the Board, or by a committee composed
solely of two or more directors ("COMMITTEE") each of whom is a Non-Employee
Director. 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 Options 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 or 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. The Board shall have the power to reprice and
accelerate the vesting of Stock Options. The Board may reserve to itself any of
the authority granted to the Committee as set forth herein, and it may perform
and discharge all of the functions and responsibilities of the Committee at any
time that a duly constituted Committee is not appointed and serving. All
references in this Plan to the "Committee" shall be deemed to refer to the Board
whenever the Board is discharging the powers and responsibilities of the
Committee, and to any special committee appointed by the Board to administer
particular aspects of this Plan.
All actions taken and all interpretations and determinations made by the
Committee 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 this 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. Rule 16b-3 under the Securities Exchange Act
of 1934 (the "EXCHANGE ACT") provides that the grant of a stock option to a
director or officer of a company will be exempt from the provisions of Section
16(b) of the Exchange Act if the conditions set forth in that Rule are
satisfied. Unless otherwise specified by the Committee, grants of Stock Options
hereunder to individuals who are officers or directors of the Company shall be
made in a manner that satisfies the conditions of that Rule.
IV. DEFINITIONS
4.1. "STOCK OPTION." A Stock Option is the right granted under the Plan
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to an Employee, director, 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 Common Stock determined by the Committee.
4.2. "COMMON STOCK." A share of Common Stock means a share of authorized
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common stock of the Company.
4.3. "FAIR MARKET VALUE." If the Common Stock is traded publicly, the
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Fair Market Value of a share of Common Stock on any date shall be the average of
the representative closing bid and asked prices, as quoted by the National
Association of Securities Dealers, Inc. through NASDAQ (its automated system for
reporting quotes), for the date in question, or, if the Common Stock is listed
on the NASDAQ National 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 there is no market for the Common Stock, the Fair
Market Value of a share of Common Stock on any date shall be determined in good
faith by the Committee after such consultations with outside legal, accounting
and other experts as the Committee may deem advisable, and the Committee may
maintain a written record of its method of determining such value.
4.4. "EMPLOYEE." An Employee is an employee of the Company or any
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Participating Subsidiary.
4.5. "PARTICIPANT." A Participant is an Employee, director or consultant
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to whom a Stock Option is granted.
4.6. "NON-EMPLOYEE DIRECTOR." A Non-Employee Director is a person who
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satisfies the definition of a "non-employee director" set forth in Rule 16b-3
under the Exchange Act or any successor rule or regulation, as it may be amended
from time to time.
4.7 "CORPORATE TRANSACTION." A Corporate Transaction shall mean one or
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more of the following transactions unless persons who were holders of
outstanding voting capital stock of the Company which was outstanding
immediately prior to such transaction are immediately after such transaction
holders of 51% or more of the outstanding voting capital stock of the surviving
or acquiring entity (or equivalent equity interest if the entity is not a
corporation): (i) a merger, consolidation or acquisition (ii) a share exchange
(with or without a stockholder vote) in which 95% or more of the outstanding
capital stock of the Company is exchanged for capital stock of another
corporation; or (iii) the sale, transfer or other disposition of all or
substantially all of the Company's assets.
4.8 "SECURITIES ACT." Securities Act shall mean the Securities Act of
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1933, as amended.
4.9 "CHANGE IN CONTROL." Change in Control shall mean any of the following
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events occurring after October 27, 1997.
A. If any one Person (as defined below), in a single transaction or in
a series of transactions shall purchase or otherwise acquire or become the
beneficial owner of securities of the Company representing sixty percent (60%)
or more of the combined voting power of the Company's then outstanding voting
securities (including any voting securities issuable upon conversion of
convertible securities of the Company held by such Person).
B. If at any annual or special meeting of Company stockholders
following a contested election the Board of Directors of the Company shall cease
to be an Authorized Board. For purposes of this paragraph, a "CONTESTED
ELECTION" shall mean (i) an election contest subject to Rule 14a-11 under the
Exchange Act or (ii) an election which would have been subject to Rule 14a-11 if
at the time of such election the Company had securities registered pursuant to
Section 12 of the Exchange Act.
C. If a change of control of the Company (i) required to be reported
in accordance with Item 6 of Schedule 14A under the Exchange Act, or (ii) which
would be required to be reported in accordance with Item 6 of Schedule 14A if at
the time of such election the Company had securities registered pursuant to
Section 12 of the Exchange Act, has otherwise occurred, unless a Constitutional
Majority of an Authorized Board approves the change of control and specifically
waives the application of this section.
D. A dissolution or liquidation of the Company.
E. A sale of all or substantially all the Company's assets.
F. A determination by the Board or the Committee (as applicable), in
its sole discretion, that there has been a change in control of the Company.
For purposes of this Section 4.9 "PERSON" shall have the meaning
set forth in Sections 13(d) and 14(d)(2) of the Exchange Act, as in effect on
the date thereof, and shall include, without limitation, any "AFFILIATE" or
"ASSOCIATE" of such Person (as those terms are used in Rule 12b-2 under the
Exchange Act); provided, however, that the term "Person" shall not include the
Company or any trustee or other fiduciary holding securities under any employee
benefit plan of the Company. For purposes of this Section 4.9, (i) beneficial
ownership shall be computed in accordance with Rule 13d-3 under the Exchange
Act; and (ii) "AUTHORIZED BOARD" shall mean a Board of Directors of the Company
of which a number of directors equal to a majority of the authorized number of
directors constituting the entire Board, including vacancies (a "CONSTITUTIONAL
MAJORITY"), were either members of the Board of Directors on October 27, 1997 or
were nominated or elected a director by a Constitutional Majority at the date of
nomination or election of an Authorized Board.
4.10 "INITIAL PUBLIC OFFERING". "Initial Public Offering" shall mean the
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Company's first offering of securities to the public which is registered
pursuant to the Securities Act.
V. ELIGIBILITY AND PARTICIPATION
Grants of ISOs may be made to Employees of the Company or any Participating
Subsidiary. Grants of NSOs may be made to Employees or directors of, or
consultants to, the Company or any Participating Subsidiary. Any director of
the Company or of a Participating Subsidiary who is also an Employee shall also
be eligible to receive ISOs. The Committee shall from time to time determine
the Participants to whom Stock Options shall be granted, the number of shares of
Common Stock subject to each Stock Option to be granted to each such
Participant, and the Option Price of such Stock Options, all as provided in this
Plan. The Option Price of any ISO shall be not less than the Fair Market Value
of a share of Common Stock on the date on which the Stock Option is granted, and
the Option Price of an NSO shall be not less than eighty-five percent (85%) of
the Fair Market Value on the date the NSO is granted. 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 Common Stock subject to the ISO at the time such
ISOs are granted, and such ISO shall not be exercisable after five years after
the date on which it was granted. 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 this Plan.
VI. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
6.1. Maximum Number. The maximum aggregate number of shares of Common
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Stock that may be made subject to Stock Options shall be 875,000 authorized
shares, of which no more than 300,000 authorized shares may be made available
for grant of NSOs. To the extent the aggregate Fair Market Value (determined as
of the time the ISO is granted) of the stock with respect to which ISOs are
exercisable for the first time by an individual in a particular calendar year
exceeds $100,000, such excess Stock Options shall be treated as NSOs. If any
shares of Common 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 of
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Common Stock (whether by reason of reorganization, recapitalization, stock
dividend, stock split, combination of shares, exchange of shares, change in
corporate structure or otherwise), appropriate adjustments shall be made in:
(i) the number of shares of Common Stock theretofore made subject to Stock
Options, and in the Option Price of said shares; and (ii) the aggregate number
of shares which may be made subject to Stock Options in the future. 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.
VII. EXERCISE OF STOCK OPTIONS
7.1 Time of Exercise. Subject to the provisions of the Plan, the
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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. Unless
otherwise specified in an Option Agreement, a Stock Option shall become
exercisable (i) with respect to 20% of the shares subject thereto on the
anniversary of the date of grant, and (ii) with respect to 1/48th of the shares
subject thereto at the end of each month after the first anniversary of the date
of grant, (so that all Stock Options are fully vested five (5) years after the
date of grant) subject to continued employment with the Company or a
Participating Subsidiary and Section 7.4 hereof. A Stock Option shall expire,
to the extent not exercised, no later than the tenth anniversary of the date on
which it was granted, except for Stock Options granted to Directors of the
Company which Stock Options shall expire, to the extent not exercised, no later
than the fifth anniversary of 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 Exchange of Outstanding Stock. The Committee, in its sole discretion,
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may permit a Participant to (i) surrender to the Company whole shares of Common
Stock previously acquired by the Participant and/or (ii) request that the
Company withhold whole shares of Common Stock issuable upon exercise of the
Stock Option, as part or full payment for the exercise of a Stock Option. Such
surrendered or withheld shares shall be valued at their Fair Market Value on the
date of exercise. Shares credited to a Participant shall again be available for
grant under the Plan.
7.3. Use of Promissory Note; Exercise Loans. The Committee may, in its
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sole discretion, impose terms and conditions, including conditions relating to
the manner and timing of payments, on the exercise of Stock Options. Such terms
and conditions may include, but are not limited to, permitting a Participant to
deliver to the Company his promissory note as full or partial payment for the
exercise of a Stock Option. The Committee, in its sole discretion, may
authorize the Company to make a loan to a Participant in connection with the
exercise of Stock Options, or authorize the Company to arrange or guarantee
loans to a Participant by a third party. Any loan by the Company or acceptance
of a promissory note shall be made in accordance with the corporate law of the
Company's state of incorporation.
7.4. Termination of Employment before Exercise. If the employment of a
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Participant who was an employee of the Company or a Participating Subsidiary
when the Stock Option was granted shall terminate for any reason other than the
Participant's death or disability, any Stock Option granted to the Participant,
to the extent then exercisable under the applicable Option Agreement(s), shall
remain exercisable after the termination of the Participant's employment for a
period of three (3) months (but not later than the specified expiration date).
If the Participant's employment is terminated because the Participant is
disabled within the meaning of Section 22(e)(3) of the Code, any Stock Option
granted to 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 (12) months (but not later than the specified
expiration date). If the Participant dies while employed by the Company or a
Participating Subsidiary, or during the three-month or twelve-month periods
referred to above, his Stock Options may be exercised by the Participant's
estate, duly appointed representative or beneficiary who acquires the Stock
Options by will or by the laws of descent and distribution, to the extent that
they were exercisable on the date of cessation of his employment, but no further
installments of the Participant's Stock Options will become exercisable and each
of the Participant's Stock Options shall terminate on the first anniversary of
the date of the Participant's death (but not later than the specified expiration
dates). If a Stock Option is not exercised during the applicable period, it
shall be deemed to have been forfeited and of no further force or effect.
Notwithstanding the foregoing provisions of this Section 7.4, but subject
to the other provisions of this Plan, the Option Agreement may specify longer
periods for exercise of a NSO or ISO (unless to do so in the case of an ISO
would cause the ISO not to qualify as an incentive stock option pursuant to
Section 422 of the Code) after any such an event.
Upon action of the Committee in its sole discretion, except as provided in
a written employment or consulting agreement of the Company or a Participating
Subsidiary with the Participant, which is referenced in the Option Agreement,
any Stock Option shall terminate immediately, and may not be exercised, (i) if
prior to the date of exercise Participant is terminated for cause as an Employee
of the Company or its Participating Subsidiary, or if not an Employee, for cause
as a director or consultant for the Company or its Participating Subsidiary; or
(ii) if subsequent to a Participant's termination and prior to the expiration of
the term of the Stock Option conditions arise or are discovered with respect to
a Participant that would have constituted cause for termination. "CAUSE" shall
have the meaning given to it in the Participant's written employment, consultant
or director agreement with the Company or Participating Subsidiary. If no such
written
agreement exists, "cause" shall mean (i) dishonesty which is not the result of
an inadvertent or innocent mistake with respect to the Company or any of its
subsidiaries; (ii) willful misfeasance or nonfeasance of duty intended to injure
or having the effect of injuring in some material fashion the reputation,
business or business relationships of the Company or any of its subsidiaries or
any of their respective officers, directors or employees; (iii) conviction upon
a charge of any crime involving moral turpitude or a crime other than a vehicle
offense which could reflect in some material fashion unfavorably upon the
Company or any of its subsidiaries; or (iv) willful or prolonged absence from
work by the Participant (other than by reason of disability due to physical or
mental illness) or failure, neglect or refusal by the Participant to perform his
duties and responsibilities without the same being corrected upon twenty (20)
days prior written notice. In addition, unless specifically provided otherwise
in reference to this Plan in a written employment, consultant or director
agreement with the Company or Participating Subsidiary, "cause" for purposes of
this Section 7.4 shall exist (and termination of the Stock Option may occur even
if not so provided in the written employment, consultant or director agreement
with the Company or Participating Subsidiary) if the Participant materially
breaches any provision of an agreement with the Company or any of its
subsidiaries with respect to obligations regarding non-competition,
confidentiality, non-solicitation of customers, and non-hire of customers and
employees of the Company or a Subsidiary.
7.5. Disposition of Forfeited Stock Options. Any shares of Common Stock
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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.
7.6. Conditions of Exercise. Notice of exercise shall be in the form
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attached to the Option Agreement and shall, in the discretion of the Company,
contain a representation, in the form provided by the Company, that the shares
are being purchased for investment only and not for resale or distribution, and
such other representations and agreements as the Company may reasonably require,
and may in addition require as a condition of exercise that the Participant
execute any stockholders agreement which is to be applicable to either: (i)
holders of 70% or more of the capital stock of the Company or (ii) holders of
70% or more of the Stock Options granted under this Plan. The Company may also
require as a condition of exercise that the Participant will agree, if requested
by the Company in connection with a public offering of the Company's securities,
to adhere to lock-up arrangements between the Company and an underwriter
involved in such public offering.
VIII. NO CONTRACT OF EMPLOYMENT
Nothing in this Plan shall confer upon the Participant the right to
continue as an employee, consultant or director of the Company or any
Participating Subsidiary, nor shall it interfere in any way with the right of
the Company, or any Participating Subsidiary, to discharge the Participant at
any time for any reason whatsoever, with or without cause. Nothing in this
Article VIII shall affect any rights or obligations of the Company or any
Participant under any written contract of employment.
IX. NO RIGHTS AS A STOCKHOLDER
A Participant shall have no rights as a stockholder with respect to any
shares of Common Stock subject to a Stock Option. Except as provided in Section
6.2, no adjustment shall be made in the number of shares of Common 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
stockholders for which the record date is prior to the date of exercise of the
Participant's Stock Option. The Committee, the Board and the Company have no
continuing duty to provide a Participant with information concerning the
Company.
X. ASSIGNABILITY
No Stock Option granted under this Plan, nor any other rights acquired by
Participant under this Plan, shall be assignable or transferable by a
Participant, other than by will or the laws of descent and distribution.
Notwithstanding the preceding sentence, the Committee, in its sole discretion,
may permit the assignment or transfer of an NSO and the exercise thereof by a
person other than a Participant, on such terms and conditions as the Committee
in its sole discretion may determine. Any such terms shall be set forth in the
Option Agreement. In the event of a Participant's death, the Stock Option may
be exercised by the personal representative of the Participant's estate or by
the successor or successors in interest determined under the Participant's will
or under the applicable laws of descent and distribution. The terms of any
rights under this Plan in the hands of a transferee or assignee shall be
determined as if held by the Participant and shall be of no greater extent or
term than if the transfer or assignment had not taken place.
XI. CORPORATE TRANSACTIONS AND CHANGES IN CONTROL
11.1. At least ten (10) days prior to the consummation of a Corporate
Transaction, the Company shall give Participants written notice of the proposed
Corporate Transaction. The vesting schedules of all Stock Options shall
automatically be accelerated so that the Stock Options shall become exercisable
as to those shares which could be purchased under those vesting schedules 12
months after the date of consummation of the Corporation Transaction. In
addition, at the sole discretion of the Committee, the vesting schedule of some
or all other Stock Options may be accelerated so that all or any portion of
Stock Options outstanding under the Plan immediately prior to the consummation
of the Corporate Transaction shall, for all purposes under this Plan, become
exercisable as of such time. If a Corporate Transaction is to occur, in lieu of
allowing a Participant to exercise the Participant's Stock Options, the Board
may, in its sole discretion, require some or all Participants to accept a cash
payment in consideration for the termination of the Participant's Stock Options.
The termination shall occur immediately prior to the consummation of the
Corporate Transaction and the cash payment shall be equal to the difference
between the price per share of Common Stock in the Corporate Transaction as
determined by the Board and the exercise price of a Participant's Stock Options.
All Stock Options, to the extent not previously exercised, shall terminate upon
the consummation of such Corporate Transaction and cease to be exercisable
unless expressly assumed by the successor corporation or parent thereof.
Provided, however, that if the Corporate Transaction is to be accounted for as a
"pooling-of-interest," then unexercised stock options shall be exchanged for
similar options of the acquiror or surviving entity or voting common stock of
the acquiror or surviving entity based on the value of the options, as and to
the extent required by APB No. 16, accounting pronouncements of the Securities
and Exchange Commission,
and other authoritative principles and pronouncements concerning pooling-of-
interest accounting. Notwithstanding the foregoing, the vesting of a
Participant's Stock Options shall not be accelerated (if and to the extent
requested in writing by the Participant) upon a Corporate Transaction if the
participant is a "disqualified individual" as that term is defined in Section
280G of the Internal Revenue Code.
11.2. The vesting schedules of all Stock Options shall be automatically
accelerated so that the Stock Options shall become exercisable as to all shares
subject to the Stock Options if the Participant's employment is terminated
without cause by the Company within one (1) year following a Change in Control.
"Without cause" means that "cause" did not exist as defined in Section 7.4.
11.3 The employment, consulting or directorship agreement, or the Option
Agreement of a Participant may contain terms which vary from Sections 11.1 and
11.2 upon approval of the Board and the Committee.
XII. AMENDMENT
The Board of Directors 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 stockholders of
the Company, (i) increase the maximum number of shares of Common Stock that may
be made subject to Stock Options (unless necessary to effect the adjustments
required by Section 6.2), (ii) materially modify the requirements as to
eligibility for participation in the Plan, or (iii) materially increase the
benefits accruing to Participants under the Plan.
XIII. 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 and applicable state securities laws 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 Securities Act and
from the registration or qualification requirements of applicable state
securities laws. Any certificates for such shares shall bear such legends as
deemed appropriate by the Committee.
XIV. WITHHOLDING TAXES
14.1 Satisfaction of Withholding Obligations. The Company or
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Participating Subsidiary may take such steps as it may deem necessary or
appropriate for the withholding of any taxes or funds which the Company or the
Participating Subsidiary is required by any law or regulation of any
governmental authority, whether federal, state or local, domestic or foreign, to
withhold in connection with any Stock Options (collectively, "WITHHOLDING
OBLIGATIONS"). Such steps may include, by way of example only and not
limitation, (i) requiring a Participant to remit to the Company in
cash an amount sufficient to satisfy such Withholding Obligations; (ii) allowing
the Participant to tender to the Company shares of Common Stock, the Fair Market
Value of which at the tender date the Committee determines to be sufficient to
satisfy such Withholding Obligations; (iii) withholding shares of Common Stock
otherwise issuable upon the exercise of a Stock Option and which have a Fair
Market Value at the exercise date sufficient to satisfy such Withholding
Obligations; or (iv) any combination of the foregoing.
14.2 Securities Law Restrictions on Satisfaction of Withholding
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Obligations. Notwithstanding any other provisions of the Plan, a Participant who
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is subject to Section 16(b) of the Exchange Act shall not be permitted to
satisfy Withholding Obligations in the manner set forth in clauses (ii) or (iii)
of Section 14.1 hereof prior to the expiration of six months after the date on
which the applicable Stock Option was granted, except in the event of the death
or Disability of the Participant, unless the Company is advised by its counsel
that such elections may be permitted pursuant to Section 16 of the Exchange Act
or any rule or interpretation of the U.S. Securities and Exchange Commission
thereunder. Except with the consent of the Committee, a Participant who is
subject to Section 16(b) of the Exchange Act may not satisfy Withholding
Obligations in the manner set forth in clauses (ii) or (iii) of Section 14.1
other than (i) during the 10-day window period beginning on the third business
day following the date of release for publication of the Company's quarterly and
annual summary statements of sales and earnings and ending on the twelfth
business day following such date or (ii) at least six months prior to the date
as of which the income attributable to the exercise of such Stock Option is
recognized under the Code.
14.3 Notification of Inquiries and Agreements. Each Participant shall
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notify the Company in writing within 10 days after the date such Participant (i)
first obtains knowledge of any Internal Revenue Service inquiry, audit,
assertion, determination, investigation, or question relating in any manner to
the value of any shares of Common Stock or Stock Options granted or received
hereunder; (ii) includes or agrees (including, without limitation, in any
settlement, closing or other similar agreement) to include in gross income with
respect to any shares of Common Stock or Stock Options received or granted
hereunder (A) any amount in excess of the amount reported on Form 1099 or Form
W-2 to such Participant by the Company, or (B) if no such Form was received, any
amount; (iii) exercises, sells, disposes of, or otherwise transfers (other than
to such Person's successors, heirs, executors or administrators, as the case may
be) a Stock Option acquired pursuant to this Plan; or (iv) sells, disposes of,
or otherwise transfers (other than to such Person's successors, heirs, executors
or administrators, as the case may be) shares of Common Stock acquired pursuant
to the exercise of an Incentive Stock Option within the Disqualified Period.
Upon request, a Participant shall provide to the Company any information or
document relating to any event described in the preceding sentence which the
Company (in its sole discretion) requires in order to calculate and substantiate
any change in the Company's tax liability as a result of such event.
"DISQUALIFIED PERIOD" means, in the case of any Incentive Stock Option, the
period beginning on the date such Stock Option is granted and ending on the
later of the date (i) two years after the date such Stock Option is granted, or
(ii) one year after the transfer of any Common Stock to a Participant pursuant
to the exercise of such Stock Option.
XV. BROKERAGE ARRANGEMENTS
The Committee, 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 the exercise of Stock Options including,
without limitation, arrangements for the simultaneous exercise of Stock Options
and the sale of shares acquired upon exercise.
XVI. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor the submission of the
Plan to stockholders 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 of Directors 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 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 or long-term incentive plans.
XVII. EFFECTIVE DATE
This Plan was adopted by the Board of Directors on September 10, 1997 and
became effective on that date subject to the approval of the Company's
stockholders within twelve (12) months thereafter. The Company's stockholders
approved the Plan on October 27, 1997. 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.