Exhibit 10.55
MCLEOD, INC.
1996 EMPLOYEE STOCK OPTION PLAN
Rev. May 29, 1997
TABLE OF CONTENTS
Page
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1. PURPOSE............................................ 4
2. DEFINITIONS....................................... 4
3. ADMINISTRATION.................................... 6
3.1. Committee................................... 6
3.2. No Liability................................ 6
4. STOCK............................................. 6
5. ELIGIBILITY....................................... 7
6. EFFECTIVE DATE AND TERM........................... 7
6.1. Effective Date.............................. 7
6.2. Term........................................ 7
7. GRANT OF OPTIONS.................................. 7
8. LIMITATION ON INCENTIVE STOCK OPTIONS............. 8
9. OPTION AGREEMENTS................................. 8
10. OPTION PRICE...................................... 8
11. TERM AND EXERCISE OF OPTIONS...................... 9
11.1. Term........................................ 9
11.2. Exercise by Optionee........................ 9
11.3. Option Period and Limitations on Exercise... 9
11.4. Method of Exercise.......................... 9
12. TRANSFERABILITY OF OPTIONS........................ 10
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13. TERMINATION OF EMPLOYMENT......................... 10
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY........ 11
14.1. Death....................................... 11
14.2. Disability.................................. 11
15. USE OF PROCEEDS................................... 12
16. SECURITIES LAWS................................... 12
17. EXCHANGE ACT: RULE 16B-3.......................... 13
17.1. General..................................... 13
17.2. Compensation Committee...................... 13
17.3. Restriction on Transfer of Stock............ 13
17.4. Requirement of Stockholders' Approval....... 13
18. AMENDMENT AND TERMINATION......................... 13
19. EFFECT OF CHANGES IN CAPITALIZATION............... 14
19.1. Changes in Stock............................ 14
19.2. Reorganization With Corporation Surviving... 14
19.3. Other Reorganizations; Sale of Assets or
Stock...................................... 15
19.4. Adjustments................................. 15
19.5. No Limitations on Corporation............... 15
20. WITHHOLDING....................................... 16
21. DISCLAIMER OF RIGHTS.............................. 16
22. NONEXCLUSIVITY.................................... 16
23. GOVERNING LAW..................................... 17
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MCLEOD, INC.
1996 STOCK OPTION PLAN
McLeodUSA Incorporated, a Delaware corporation (the "Corporation"), sets
forth herein the terms of the 1996 Employee Stock Option Plan (the "Plan") as
follows:
1. PURPOSE
The Plan is intended to advance the interests of the Corporation by
providing eligible individuals (as designated pursuant to Section 5 hereof) an
opportunity to acquire or increase a proprietary interest in the Corporation,
which thereby will create a stronger incentive to expend maximum effort for the
growth and success of the Corporation and its subsidiaries and will encourage
such eligible individuals to continue to service the Corporation. Each stock
option granted under the Plan is intended to be an Incentive Stock Option within
the meaning of Section 422 of the Code, except (a) to the extent that any such
Option would exceed the limitations set forth in Section 8 hereof and (b) for
Options specifically designated at the time of grant as not being Incentive
Stock Options.
2. DEFINITIONS
For purposes of interpreting the Plan and related documents (including
Option Agreements), the following definitions shall apply:
2.1. "Affiliate" means McLeodUSA Incorporated and any company or other
trade or business that is controlled by or under common control with the
Corporation, (determined in accordance with the principles of Section 414(b) and
414(c) of the Code and the regulations thereunder) or is an affiliate of the
Corporation within the meaning of Rule 405 of Regulation C under the 1933 Act.
2.2. "Board" means the Board of Directors of the Corporation.
2.3. "Code" means the Internal Revenue Code of 1986, as now in effect or
as hereafter amended.
2.4. "Committee" means the Compensation Committee of the Board which must
consist of no fewer than two members of the Board and shall be appointed by the
Board.
2.5. "Corporation" means McLeodUSA Incorporated.
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2.6. "Effective Date" means the date of adoption of the Plan by the
Board.
2.7. "Employer" means McLeodUSA Incorporated or other Affiliate which
employs the designated recipient of an Option.
2.8. "Exchange Act" means the Securities Exchange Act of 1934, as now in
effect or as hereafter amended.
2.9. "Fair Market Value" means the value of each share of Stock subject to
the Plan determined as follows: if on the Grant Date or other determination date
the shares of Stock are listed on an established national or regional stock
exchange, are admitted to quotation on the National Association of Securities
Dealers Automated Quotation System, or are publicly traded on an established
securities market, the Fair Market Value of the shares of Stock shall be the
closing price of the shares of Stock on such exchange or in such market (the
highest such closing price if there is more than one such exchange or market) on
the trading day immediately preceding the Grant Date or such other determination
date (or if there is no such reported closing price, the Fair Market Value shall
be the mean between the highest bid and lowest asked prices or between the high
and low sale prices on such trading day) or, if no sale of the shares of Stock
is reported for such trading day, on the next preceding day on which any sale
shall have been reported. If the shares of Stock are not listed on such an
exchange, quoted on such System or traded on such a market, Fair Market Value
shall be determined by the Board in good faith.
2.10. "Grant Date" means the later of (i) the date as of which the
Committee approves the grant and (ii) the date as of which the Optionee and the
Corporation or Affiliate enter the relationship resulting in the Optionee being
eligible for grants.
2.11. "Incentive Stock Option" means an "incentive stock option" within the
meaning of section 422 of the Code.
2.12. "Option" means an option to purchase one or more shares of Stock
pursuant to the Plan.
2.13. "Option Agreement" means the written agreement evidencing the grant
of an Option hereunder.
2.14. "Optionee" means a person who holds an Option under the Plan.
2.15. "Option Period" means the period during which Options may be
exercised as defined in Section11.
2.16. "Option Price" means the purchase price for each share of Stock
subject to an Option.
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2.17. "Plan" means the McLeod, Inc. 1996 Employee Stock Option Plan.
2.18. "1933 Act" means the Securities Act of 1933, as now in effect or as
hereafter amended.
2.19. "Stock" mean the shares of Class A common stock, par value $.01 per
share, of the Corporation.
2.20. "Subsidiary" means any "subsidiary corporation" of the Corporation
within the meaning of Section 425(f) of the Code.
3. ADMINISTRATION
3.1. COMMITTEE
The Plan shall be administered by the Committee appointed by the
Board, which shall have the full power and authority to take all actions and to
make all determinations required or provided for under the Plan or any Option
granted or Option Agreement entered into hereunder and all such other actions
and determinations not inconsistent with the specific terms and provisions of
the Plan deemed by the Committee to be necessary or appropriate to the
administration of the Plan or any Option granted or Option Agreement entered
into hereunder. The interpretation and construction by the Committee of any
provision of the Plan or of any Option granted or Option Agreement entered into
hereunder shall be final and conclusive.
3.2. NO LIABILITY
No member of the Board or of the Committee shall be liable for any
action or determination made, or any failure to take or make an action or
determination, in good faith with respect to the Plan or any Option granted or
Option Agreement entered into hereunder.
4. STOCK
The stock that may be issued pursuant to Options granted under the Plan
shall be Stock, which shares may be treasury shares or authorized but unissued
shares. The number of shares of Stock that may be issued pursuant to Options
granted under the Plan shall not exceed in the aggregate 37,500,000 shares of
Stock, which number of shares is subject to adjustment as provided in Section 19
hereof. If any Option expires, terminates or is terminated for any reason prior
to exercise in full, the shares of Stock that were subject to the unexercised
portion of such Option shall be available for future Options granted under the
Plan.
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5. ELIGIBILITY
Options may be granted under the Plan to (i) any officer or key employee of
the Corporation or any Subsidiary (including any such officer or key employee
who is also a director of the Corporation or any Subsidiary) or (ii) any other
individual whose participation in the Plan is determined to be in the best
interests of the Corporation by the Committee and who is not subject to Section
16 of the Exchange Act. An individual may hold more than one Option, subject to
such restrictions as are provided herein.
6. EFFECTIVE DATE AND TERM
6.1. EFFECTIVE DATE
The Plan shall become effective as of the date of adoption by the
Board, subject to stockholders' approval of the Plan within one year of such
effective date by a majority of the votes cast at a duly held meeting of the
stockholders of the Corporation at which a quorum representing a majority of all
outstanding stock is present, either in person or by proxy, and voting on the
matter, or by written consent in accordance with applicable state law and the
Certificate of Incorporation and By-Laws of the Corporation and in a manner that
satisfies the requirements of Rule 16b-3(b) of the Exchange Act; provided,
however, that upon approval of the Plan by the stockholders of the Corporation,
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all Options granted under the Plan on or after the effective date shall be fully
effective as if the stockholders of the Corporation had approved the Plan on the
effective date. If the stockholders fail to approve the Plan within one year of
such effective date, any Options granted hereunder shall be null, void and of no
effect.
6.2. TERM
The Plan shall terminate on the date 10 years after the effective
date.
7. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Committee may, at any
time and from time to time prior to the date of termination of the Plan, grant
to such eligible individuals as the Committee may determine Options to purchase
such number of shares of Stock on such terms and conditions as the Committee may
determine, including any terms or conditions which may be necessary to qualify
such Options as Incentive Stock Options. Without limiting the foregoing, the
Committee may at any time, with the consent of the Optionee, amend the terms of
outstanding Options or issue new Options in exchange for the surrender and
cancellation of outstanding Options. The date on which the Committee approves
the grant of an Option (or such later date as is specified by the Committee)
shall be considered the date on which such Option is granted. The maximum number
of shares of Stock subject to Options that can be awarded under the Plan to any
person is 2,000,000 shares.
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8. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option (other than an Option described in Section 1 hereof) shall
constitute an Incentive Stock Option only to the extent that the aggregate fair
market value (determined at the time the Option is granted) of the Stock with
respect to which Incentive Stock Options are exercisable for the first time by
any Optionee during any calendar year (under the Plan and all other plans of the
Optionee's employer corporation and its parent and subsidiary corporations
within the meaning of Section 422(d) of the Code) does not exceed $100,000. This
limitation shall be applied by taking Options into account in the order in which
such Options were granted.
9. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by written
agreements to be executed by the Corporation and the Optionee, in such form or
forms as the Committee shall from time to time determine. Option Agreements
covering Options granted from time to time or at the same time need not contain
similar provisions; provided, however, that all such Option Agreements shall
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comply with all terms of the Plan.
10. OPTION PRICE
The purchase price of each share of Stock subject to an Option shall be
fixed by the Committee and stated in each Option Agreement. In the case of an
Option that is intended to constitute an Incentive Stock Option, the Option
Price shall be not less than the greater of par value or 100 percent of the Fair
Market Value of a share of the Stock covered by the Option on the date the
Option is granted (as determined in good faith by the Committee); provided,
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however, that in the event the Optionee would otherwise be ineligible to receive
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an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and
424(d) of the Code (relating to stock ownership of more than 10 percent), the
Option Price of an Option which is intended to be an Incentive Stock Option
shall be not less than the greater of par value or 110 percent of the Fair
Market Value of a share of the Stock covered by the Option at the time such
Option is granted. In the case of an Option not intended to constitute an
Incentive Stock Option, the Option Price shall be not less than the greater of
par value or 50 percent of the Fair Market Value of a share of the Stock covered
by the Option on the date the Option is granted (as determined in good faith by
the Committee).
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11. TERM AND EXERCISE OF OPTIONS
11.1. TERM
Each Option granted under the Plan shall terminate and all rights to
purchase shares thereunder shall cease upon the expiration of 10 years from the
date such Option is granted, or on such date prior thereto as may be fixed by
the Committee and stated in the Option Agreement relating to such Option;
provided, however, that in the event the Optionee would otherwise be ineligible
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to receive an Incentive Stock Option by reason of the provisions of Sections
422(b)(6) and 424(d) of the Code (relating to stock ownership of more than 10
percent), an Option granted to such Optionee which is intended to be an
Incentive Stock Option shall in no event be exercisable after the expiration of
five years from the date it is granted.
11.2. EXERCISE BY OPTIONEE
Only the Optionee receiving an Option (or, in the event of the
Optionee's legal incapacity or incompetency, the Optionee's guardian or legal
representative, and in the case of the Optionee's death, the Optionee's estate)
may exercise the Option.
11.3. OPTION PERIOD AND LIMITATIONS ON EXERCISE
Each Option granted under the Plan shall be exercisable in whole or
in part at any time and from time to time over a period commencing on or after
the date of grant of the Option and ending upon the expiration or termination of
the Option, as the Committee shall determine and set forth in the Option
Agreement relating to such Option. Without limitation of the foregoing, the
Committee, subject to the terms and conditions of the Plan, may in its sole
discretion provide that an Option may not be exercised in whole or in part for
any period or periods of time during which such Option is outstanding as the
Committee shall determine and set forth in the Option Agreement relating to such
Option. Any such limitation on the exercise of an Option contained in any Option
Agreement may be rescinded, modified or waived by the Committee, in its sole
discretion, at any time and from time to time after the date of grant of such
Option. Notwithstanding any other provisions of the Plan, no Option shall be
exercisable in whole or in part prior to the date the Plan is approved by the
stockholders of the Corporation as provided in Section 6.1 hereof.
11.4. METHOD OF EXERCISE
An Option that is exercisable hereunder may be exercised by delivery
to the Corporation on any business day, at its principal office addressed to the
attention of the Committee, of written notice of exercise, which notice shall
specify the number of shares for which the Option is being exercised, and shall
be accompanied by payment in full of the Option Price of the shares for which
the Option is being exercised. Payment of the Option Price for the shares of
Stock purchased pursuant to the exercise
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of an Option shall be made, as determined by the Committee and set forth in the
Option Agreement pertaining to an Option, (a) in cash or by certified check
payable to the order of the Corporation; (b) through the tender to the
Corporation of shares of Stock, which shares shall be valued, for purposes of
determining the extent to which the Option Price has been paid thereby, at their
Fair Market Value on the date of exercise; or (c) by a combination of the
methods described in Sections 11.4(a) and 11.4(b) hereof; provided, however,
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that the Committee may in its discretion impose and set forth in the Option
Agreement pertaining to an Option such limitations or prohibitions on the use of
shares of Stock to exercise Options as it deems appropriate. Payment in full of
the Option Price need not accompany the written notice of exercise provided the
notice directs that the Stock certificate or certificates for the shares for
which the Option is exercised be delivered to a licensed broker acceptable to
the Corporation as the agent for the individual exercising the Option and, at
the time such Stock certificate or certificates are delivered, the broker
tenders to the Corporation cash (or cash equivalents acceptable to the
Corporation) equal to the Option Price plus the amount (if any) of federal
and/or other taxes which the Corporation may, in its judgment, be required to
withhold with respect to the exercise of the Option. An attempt to exercise any
Option granted hereunder other than as set forth above shall be invalid and of
no force and effect. Promptly after the exercise of an Option and the payment in
full of the Option Price of the shares of Stock covered thereby, the individual
exercising the Option shall be entitled to the issuance of a Stock certificate
or certificates evidencing such individual's ownership of such shares. A
separate Stock certificate or certificates shall be issued for any shares
purchased pursuant to the exercise of an Option which is an Incentive Stock
Option, which certificate or certificates shall not include any shares which
were purchased pursuant to the exercise of an Option which is not an Incentive
Stock Option. An individual holding or exercising an Option shall have none of
the rights of a stockholder until the shares of Stock covered thereby are fully
paid and issued to such individual and, except as provided in Section 19 hereof,
no adjustment shall be made for dividends or other rights for which the record
date is prior to the date of such issuance.
12. TRANSFERABILITY OF OPTIONS
No Option shall be assignable or transferable by the Optionee to whom it is
granted, other than by will or the laws of descent and distribution.
13. TERMINATION OF EMPLOYMENT
The Committee may provide, by inclusion of appropriate language in any
Option Agreement, that an Optionee may (subject to the general limitations on
exercise set forth in Section 11.3 hereof), in the event of termination of
employment of the Optionee with the Corporation or a Subsidiary, exercise an
Option, in whole or in part, at any time subsequent to such termination of
employment and prior to termination of the Option pursuant to Section 11.1
hereof, either subject to or without regard to any installment limitation on
exercise imposed pursuant to Section 11.3 hereof, as the Committee, in its
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sole and absolute discretion, shall determine and set forth in the Option
Agreement. Whether a leave of absence or leave on military or government service
shall constitute a termination of employment for purposes of the Plan shall be
determined by the Committee, which determination shall be final and conclusive.
For purposes of the Plan, a termination of employment with the Corporation or a
Subsidiary shall not be deemed to occur if the Optionee is immediately
thereafter employed with the Corporation or any other Subsidiary.
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
14.1. DEATH
If an Optionee dies while employed by the Corporation or a
Subsidiary or within the period following the termination of employment during
which the Option is exercisable under Section 13 or 14.2 hereof, the executors,
administrators, legatees or distributees of such Optionee's estate shall have
the right (subject to the general limitations on exercise set forth in Section
11.3 hereof), at any time within three months after the date of such Optionee's
death and prior to termination of the Option pursuant to Section 11.1 hereof, to
exercise any Option held by such Optionee at the date of such Optionee's death,
to the extent such Option was exercisable immediately prior to such Optionee's
death; provided, however, that the Committee may provide by inclusion of
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appropriate language in any Option Agreement that, in the event of the death of
an Optionee, the executors, administrators, legatees or distributees of such
Optionee's estate may exercise an Option (subject to the general limitations on
exercise set forth in Section 11.3 hereof), in whole or in part, at any time
subsequent to such Optionee's death and prior to termination of the Option
pursuant to Section 11.1 hereof, either subject to or without regard to any
installment limitation on exercise imposed pursuant to Section 11.3 hereof, as
the Committee, in its sole and absolute discretion, shall determine and set
forth in the Option Agreement.
14.2. DISABILITY
If an Optionee terminates employment with the Corporation or a
Subsidiary by reason of the "permanent and total disability" (within the meaning
of Section 22(e) (3) of the Code) of such Optionee, then such Optionee shall
have the right (subject to the general limitations on exercise set forth in
Section 11.3 hereof), at any time within three months after such termination of
employment and prior to termination of the Option pursuant to Section 11.1
hereof, to exercise, in whole or in part, any Option held by such Optionee at
the date of such termination of employment, to the extent such Option was
exercisable immediately prior to such termination of employment; provided,
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however, that the Committee may provide, by inclusion of appropriate language in
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any Option Agreement, that an Optionee may (subject to the general limitations
on exercise set forth in Section 11.3 hereof), in the event of the termination
of employment of the Optionee with the Corporation or a Subsidiary by reason of
the "permanent and total disability" (within the meaning of Section 22(e)(3) of
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the Code) of such Optionee, exercise an Option, in whole or in part, at any time
subsequent to such termination of employment and prior to termination of the
Option pursuant to Section 11.1 hereof, either subject to or without regard to
any installment limitation on exercise imposed pursuant to Section 11.3 hereof,
as the Committee, in its sole and absolute discretion, shall determine and set
forth in the Option Agreement. Whether a termination of employment is to be
considered by reason of "permanent and total disability" for purposes of the
Plan shall be determined by the Committee, which determination shall be final
and conclusive.
15. USE OF PROCEEDS
The proceeds received by the Corporation from the sale of Stock pursuant to
Options granted under the Plan shall constitute general funds of the
Corporation.
16. SECURITIES LAWS
The Corporation shall not be required to sell or issue any shares of Stock
under any Option if the sale or issuance of such shares would constitute a
violation by the individual exercising the Option or by the Corporation of any
provisions of any law or regulation of any governmental authority, including,
without limitation, any federal or state securities laws or regulations. If at
any time the Corporation shall determine, in its discretion, that the listing,
registration or qualification of any shares subject to the Option upon any
securities exchange or under any state or federal law, or the consent of any
government regulatory body, is necessary or desirable as a condition of, or in
connection with, the issuance or purchase of shares, the Option may not be
exercised in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Corporation, and any delay caused thereby shall in no way
affect the date of termination of the Option. Specifically in connection with
the Securities Act, upon exercise of any Option, unless a registration statement
under the Securities Act is in effect with respect to the shares of Stock
covered by such Option, the Corporation shall not be required to sell or issue
such shares unless the Corporation has received evidence satisfactory to the
Corporation that the Optionee may acquire such shares pursuant to an exemption
from registration under the Securities Act. Any determination in this connection
by the Corporation shall be final and conclusive. The Corporation may, but shall
in no event be obligated to, register any securities covered hereby pursuant to
the Securities Act. The Corporation shall not be obligated to take any
affirmative action in order to cause the exercise of an Option or the issuance
of shares pursuant thereto to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option shall not be exercisable unless and until the shares
of Stock covered by such Option are registered or are subject to an available
exemption from registration, the exercise of such Option (under circumstances in
which the laws of such jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.
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17. EXCHANGE ACT: RULE 16B-3
17.1. GENERAL
The Plan is intended to comply with Rule 16b-3 ("Rule 16b-3") (and
any successor thereto) under the Exchange Act. Any provision inconsistent with
Rule 16b-3 shall, to the extent permitted by law and determined to be advisable
by the Committee (constituted in accordance with Section 17.2 hereof), be
inoperative and void.
17.2. COMPENSATION COMMITTEE
The Committee appointed in accordance with Section 3.1 hereof shall
consist of not fewer than two members of the Board each of whom shall qualify
(at the time of appointment to the Committee and during all periods of service
on the Committee) in all respects as a "disinterested person" as defined in Rule
16b-3.
17.3. RESTRICTION ON TRANSFER OF STOCK
No director, officer or other "insider" of the Corporation subject
to Section 16 of the Exchange Act shall be permitted to sell Stock (which such
"insider" had received upon exercise of an Option) during the six months
immediately following the grant of such Option.
17.4. REQUIREMENT OF STOCKHOLDERS' APPROVAL
No amendment by the Board shall, without approval by a majority of
the votes cast at a duly held meeting of the stockholders of the Corporation at
which a quorum representing a majority of all outstanding stock is present,
either in person or by proxy, and voting on the amendment, or by written consent
in accordance with applicable state law and the Certificate of Incorporation and
By-Laws of the Corporation, materially increase the benefits accruing to Section
16 "insiders" under the Plan or take any other action that would require the
approval of such stockholders pursuant to Rule 16b-3.
18. AMENDMENT AND TERMINATION
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Options have not been
granted; provided, however, that no amendment by the Board shall, without
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approval by a majority of the votes cast at a duly held meeting of the
stockholders of the Corporation at which a quorum representing a majority of all
outstanding stock is present, either in person or by proxy, and voting on the
amendment, or by written consent in accordance with applicable state law and the
Certificate of Incorporation and By-Laws of the Corporation, materially change
the requirements as to eligibility to receive Options or
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increase the maximum number of shares of Stock in the aggregate that may be sold
pursuant to Options granted under the Plan (except as permitted under Section 19
hereof). The Corporation also may retain the right in an Option Agreement to
cause a forfeiture of the shares or gain realized by an Optionee on account of
the Optionee taking actions in "competition with the Corporation," as defined in
the applicable Option Agreement. Furthermore, the Corporation may, in the Option
Agreement, retain the right to annul the grant of an Option if the holder of
such grant was an employee of the Corporation or a Subsidiary and is terminated
"for cause," as defined in the applicable Option Agreement. Except as permitted
under Section 19 hereof, no amendment, suspension or termination of the Plan
shall, without the consent of the Optionee, alter or impair rights or
obligations under any Option theretofore granted under the Plan.
19. EFFECT OF CHANGES IN CAPITALIZATION
19.1. CHANGES IN STOCK
If the number of outstanding shares of Stock is increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Corporation by reason of any recapitalization,
reclassification, stock split-up, combination of shares, exchange of shares,
stock dividend or other distribution payable in capital stock, or other increase
or decrease in such shares effected without receipt of consideration by the
Corporation, occurring after the effective date of the Plan, a proportionate and
appropriate adjustment shall be made by the Corporation in the number and kind
of shares for which Options are outstanding, so that the proportionate interest
of the Optionee immediately following such event shall, to the extent
practicable, be the same as immediately prior to such event. Any such adjustment
in outstanding Options shall not change the aggregate Option Price payable with
respect to shares subject to the unexercised portion of the Option outstanding
but shall include a corresponding proportionate adjustment in the Option Price
per share.
19.2. REORGANIZATION WITH CORPORATION SURVIVING
Subject to Section 19.3 hereof, if the Corporation shall be the
surviving entity in any reorganization, merger or consolidation of the
Corporation with one or more other entities, any Option theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Option would have been
entitled immediately following such reorganization, merger or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger or consolidation.
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19.3. OTHER REORGANIZATIONS; SALE OF ASSETS OR STOCK
Upon the dissolution or liquidation of the Corporation, or upon a
merger, consolidation or reorganization of the Corporation with one or more
other entities in which the Corporation is not the surviving entity, or upon a
sale of substantially all of the assets of the Corporation to another entity, or
upon any transaction (including, without limitation, a merger or reorganization
in which the Corporation is the surviving entity) approved by the Board that
results in any person or entity (other than persons who are holders of stock of
the Corporation at the time the Plan is approved by the Stockholders and other
than an Affiliate) owning 80 percent or more of the combined voting power of all
classes of stock of the Corporation, the Plan and all Options outstanding
hereunder shall terminate, except to the extent provision is made in connection
with such transaction for the continuation of the Plan and/or the assumption of
the Options theretofore granted, or for the substitution for such Options of new
options covering the stock of a successor entity, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of shares and
exercise prices, in which event the Plan and Options theretofore granted shall
continue in the manner and under the terms so provided. In the event of any
such termination of the Plan, each Optionee shall have the right (subject to the
general limitations on exercise set forth in Section 11.3 hereof and except as
otherwise specifically provided in the Option Agreement relating to such
Option), immediately prior to the occurrence of such termination and during such
period occurring prior to such termination as the Committee in its sole
discretion shall designate, to exercise such Option in whole or in part, to the
extent such Option was otherwise exercisable at the time such termination
occurs, but subject to any additional provisions that the Committee may, in its
sole discretion, include in any Option Agreement. The Committee shall send
written notice of an event that will result in such a termination to all
Optionees not later than the time at which the Corporation gives notice thereof
to its stockholders.
19.4. ADJUSTMENTS
Adjustments under this Section 19 relating to stock or securities of
the Corporation shall be made by the Committee, whose determination in that
respect shall be final and conclusive. No fractional shares of Stock or units
of other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share or unit.
19.5. NO LIMITATIONS ON CORPORATION
The grant of an Option pursuant to the Plan shall not affect or limit in any way
the right or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
consolidate, dissolve or liquidate, or to sell or transfer all or any part of
its business or assets.
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20. WITHHOLDING
The Corporation or a Subsidiary may be obligated to withhold federal and
local income taxes and Social Security taxes to the extent that an Optionee
realizes ordinary income in connection with the exercise of an Option. The
Corporation or a Subsidiary may withhold amounts needed to cover such taxes from
payments otherwise due and owing to an Optionee, and upon demand the Optionee
will promptly pay to the Corporation or a Subsidiary having such obligation any
additional amounts as may be necessary to satisfy such withholding tax
obligation. Such payment shall be made in cash or cash equivalents.
21. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ of the Corporation or any
Subsidiary, or to interfere in any way with the right and authority of the
Corporation or any Subsidiary either to increase or decrease the compensation of
any individual at any time, or to terminate any employment or other relationship
between any individual and the Corporation or any Subsidiary. The obligation of
the Corporation to pay any benefits pursuant to the Plan shall be interpreted as
a contractual obligation to pay only those amounts described herein, in the
manner and under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Corporation to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any
participant or beneficiary under the terms of the Plan.
22. NONEXCLUSIVITY
Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Corporation for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan.
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23. GOVERNING LAW
This Plan and all Options to be granted hereunder shall be governed by the
laws of the State of Delaware (but not including the choice of law rules
thereof).
The Plan was duly adopted and approved by the Board on March 28, 1996 and
was duly approved by the stockholders of the Corporation on April 30, 1996.
The Plan was duly amended by the Board on March 27, 1997 and the amendment
was duly approved by the Stockholders of the Corporation on May 29, 1997.
___________________________
CASEY D. MAHON, ESQ.
Secretary
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