EXHIBIT 10.17
AEI HOLDING COMPANY, INC.
STOCK OPTION PLAN
AEI Holding Company, Inc. (the "Company") hereby establishes a stock option
plan (the "Plan") for the benefit of certain employees and advisors of the
Company, its Subsidiaries and its Parent (both as defined below).
Section I -- PURPOSE
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The Company adopts this compensation program for the Employees (as defined
below) to, among other things, (a) increase the profitability and growth of the
Company, any Subsidiary and any Parent; (b) provide competitive compensation
while obtaining the benefits of tax deferral; (c) attract and retain exceptional
personnel and encourage excellence in the performance of individual
responsibilities; and (d) motivate key employees to contribute to the success of
the Company, its Subsidiaries and its Parent.
Section 2 -- DEFINITIONS
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For purposes of the Plan, the following terms shall have the meanings below
unless the context clearly indicates otherwise:
2.1 "Addington" shall mean Larry Addington, Robert Addington, Bruce
Addington, Stephen Addington, their ancestors and descendants, their spouses,
the spouses of their descendants, and Addington Enterprises, Inc.
2.2 "Advisor" shall mean an advisor or consultant to the Company, any
Subsidiary or any Parent who has been designated by the Committee, under the
criteria set forth in Section 5, as eligible to participate in the Plan.
2.3 "Affiliate" shall mean, with respect to a particular Person, (i) a
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is controlled by a Person that controls, that particular
Person; and (ii) any trust or estate in which that particular Person has a
beneficial interest or as to which that particular Person serves as a trustee or
in another fiduciary capacity.
2.4 "Board" shall mean the Board of Directors of the Company.
2.5 "Chairman" shall mean the Chairman of the Committee or, if there is no
Committee, the Chairman of the Board.
2.6 "Change of Control" shall be deemed to have occurred if. (a) any
"person," as such term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), other than Addington or
an Affiliate of Addington and other than any trustee or
other fiduciary holding securities of the Company under any employee benefit
plan of the Company, becomes the "beneficial owner" as defined in Rule 13d-3
under the Exchange Act, directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the combined voting power of the
Company's then outstanding stock; (b) the Company sells all or substantially all
of its assets to a Person other than an Affiliate of Addington; or (c) the
Company enters into any merger, consolidation or similar transaction with any
Person other than an Affiliate of Addington, in which the Company is not the
surviving entity or becomes owned entirely by another entity, unless at least
fifty percent (50%) of the outstanding voting securities of the surviving entity
(or its parent) immediately following such merger, consolidation or similar
transaction are beneficially held by such Persons in the same proportion as such
Persons beneficially held the voting securities of the Company immediately prior
to Such merger, consolidation or similar transaction.
2.7 "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
2.8 "Committee" shall mean the Benefits Committee appointed by the Board,
pursuant to Section 4.1, to administer the Plan.
2.9 "Disability" shall mean a physical or mental condition of an Employee
or Advisor resulting in bodily injury or disease or mental disorder which
renders such Employee or Advisor incapable of continuing the further performance
of the Employee's or the Advisor's normal activities as an employee of or
advisor to the Company, any Subsidiary or any Parent. The determination of the
Committee on any question involving disability shall be conclusive and binding.
2.10 "Employee" shall mean an employee of the Company, any Subsidiary or
any Parent who has been designated by the Committee, under the criteria listed
in Section 5, as eligible to participate in the Plan.
2.11 "Fair Market Value" shall have the meaning specified in Section 6.1.
2.12 "Fair Value" shall have the meaning specified in Section 9.2.
2.13 "Incentive Stock Option" mean an option to purchase Stock granted
under Section 6 of the Plan which is designated as an Incentive Stock Option and
is intended to meet the requirements of Section 422 of the Code.
2.14 "NationsBank" means NationsBank, N.A. (successor in interest by merger
to NationsBank of Texas, N.A.), individually and as agent under any credit
facilities outstanding or owing from time to time.
2.15 "Nonqualified Stock Option" shall mean an option to purchase Stock
granted under Section 6 of the Plan which is not intended to be an Incentive
Stock Option.
2.16 "Option" shall mean an Incentive Stock Option or a Nonqualified Stock
Option.
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2.17 "Option Period" shall mean the period from the date of the grant of an
Option to the date when the Option expires as stated in the terms of the Stock
Option Agreement.
2.18 "Option Price" shall have the meaning specified in Section 6.1.
2.19 "Option Stock" shall mean Stock acquired pursuant to the exercise of
an Option.
2.20 "Optionee" shall mean an Employee or Advisor who has been granted an
option to purchase shares of Stock under the provisions of the Plan.
2.21 "Parent" shall mean any corporation that is a "parent corporation," as
defined in Section 424(e) of the Code, with respect to the Company, and
currently includes Addington Enterprises, Inc.
2.22 "Person" shall mean any individual, firm, trust, partnership,
corporation, limited liability company or other business entity.
2.23 "Plan" shall mean this AEI Holding Company, Inc. Stock Option Plan.
2.24 "Pledge Agreement" shall mean the agreement in such form as
NationsBank from time to time may prescribe, by an Optionee being issued Option
Stock and pursuant to which such Optionee grants to NationsBank a pledge of such
Stock to secure any credit facilities and loans from time to time existing or
owing to NationsBank by the Company, its Subsidiaries or its Parent.
2.25 "Retirement" shall mean an Employee's Termination of Employment with
the Company, any Subsidiary or any Parent after attaining age 65 (or earlier
with the consent of the Company, such Subsidiary or such Parent).
2.26 "Stock" shall mean the Company's voting common stock of Zero Dollars
and One Cent ($.01) par value per share.
2.27 "Stock Option Agreement" shall mean an agreement between an Optionee
and the Company covering the specific terms and conditions of an Option.
2.28 "Subsidiary" shall mean any corporation that is a "subsidiary
corporation", as defined in Section 424 (f) of the Code, with respect to the
Company, and currently includes Addington Mining, Inc., Tennessee Mining, Inc.,
Mining Technologies, Inc., Ikerd-Bandy Co., Inc., Leslie Resources, Inc;, Leslie
Resources Management, Inc., Pro-Land, Inc. d/b/a Kem Coal Company, Aceco, Inc.,
Mountain-Clay, Inc. d/b/a Mountain Clay, Inc., Highland Coal, Inc., River Coal
Company, Inc. and Bowie Resources, Limited.
2.29 "Termination of Employment" shall be deemed to have occurred at the
close of business on the last day on which (a) an Employee is carried as an
active employee on the records
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of the Company, any Subsidiary or any Parent or (b) an Advisor ceases to provide
advisory or consulting services to the Company, any Subsidiary or any Parent.
The Committee shall determine whether an authorized leave of absence, or other
absence on military or government service, constitutes severance of the
employment/advisory relationship between the Employee or Advisor, on the one
hand, and the Company, a Subsidiary or a Parent, on the other hand.
Section 3 -- STOCK SUBJECT TO THE PLAN
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3.1 Authorized Stock. Subject to adjustment as provided in Section 3.3,
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neither the aggregate number of shares of Stock subject to Options under the
Plan nor the number of shares covered by Incentive Stock Options shall exceed
sixty thousand (60,000) shares. Stock delivered under the Plan may consist, in
whole or in part, of authorized and unissued shares or shares acquired from
shareholders upon such terms as the Board deems appropriate for reserve in
connection with exercises hereunder.
3.2 Effect of Expirations. If any Option granted under the Plan expires
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or terminates without exercise, the Stock no longer subject to such Option shall
be available to be re-awarded under the Plan.
3.3 Adjustments in Authorized Shares, Restructuring. In the event of any
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merger, reorganization, consolidation, recapitalization, separation,
liquidation, stock dividend, stock split, split-up, share exchange, or other
change in the corporate structure of the Company affecting the number of shares
of Stock or the kind of shares or securities Issuable upon exercise of an
Option, an appropriate and proportionate adjustment shall be made by the
Committee in the number and kind of shares which may be delivered under the
Plan, and in the number, kind or price of shares subject to outstanding Options;
provided that the number of shares subject to any Option shall always be a whole
number. Any adjustment of an Incentive Stock Option under this Section shall be
made in such a manner so as not to constitute a "modification" within the
meaning of Section 424(h) of the Code. If the Company shall at any time merge,
consolidate with or into another corporation or association, or enter into a
statutory share exchange or any other similar transaction in which shares of
Stock are converted as a matter of law into securities and/or other property
(including, without limitation, an exchange of all the outstanding Stock of the
Company for all of the stock of another company), each Optionee will thereafter
receive, upon the exercise of an Option, the securities or property to which a
holder of the number of shares of Stock then deliverable upon the exercise of
such Option would have been entitled if such Option had been exercised
immediately prior to such merger, consolidation, share exchange or other similar
transaction, and the Company shall take such steps in connection with such
merger, consolidation, share exchange or other similar transaction as may be
necessary to assure that the provisions of this Plan shall thereafter be
applicable, as nearly as is reasonably possible, in relation to any securities
or property thereafter deliverable upon the exercise of such Option. A sale of
all or substantially all the assets of the Company for a consideration (apart
from the assumption of obligations) consisting primarily of securities shall be
deemed a merger or consolidation for the foregoing purposes.
Section 4 -- ADMINISTRATION
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4.1 Committee Governance. This Plan shall be administered by the
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Committee. The Board shall add or remove members from the Committee as the
Board sees fit, and vacancies shall be filled by the Board. The Chairman of the
Committee shall hold meetings at such times and places as he may determine. The
Committee may appoint a secretary and, subject to the provisions of the Plan and
to policies determined by the Board, may make such rules and regulations, for
the conduct of its business as it shall deem advisable. Written action of the
Committee may be taken by a majority of its members, and actions so taken shall
be fully effective as if taken by a vote of a majority of the members at a
meeting duly called and held. A majority of Committee members shall constitute
a quorum for purposes of meeting. The act of a majority of the members present
at any meeting for which there is a quorum shall be a valid act of the
Committee.
4.2 Committee To Interpret Plan. Subject to the express terms and
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conditions of the Plan, the Committee shall have sole power to: (a) construe
and interpret the Plan; (b) establish, amend or waive rules for its
administration; (c) determine and accelerate the exercisability of any Option;
(d) correct inconsistencies in the Plan or In any Stock Option Agreement, or any
other instrument relating to an Option; and (e) subject to the provisions of
Section 8, amend the terms and conditions of any outstanding Option, to the
extent such terms and conditions are within the discretion of the Committee as
provided in the Plan. Notwithstanding the foregoing, no action of the Board or
the Committee may, without the consent of the individual or individuals entitled
to exercise any outstanding Option, adversely affect the rights of such
individual or individuals.
4.3 Exculpation. No member of the Board or the Committee shall be liable
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for actions or determinations made in good faith with respect to the Plan, or
for awards under it.
4.4 Selection of Optionees. The Committee shall have the authority to
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grant Options from time to time to such Employees or Advisors as may be selected
by it in its sole discretion.
4.5 Decisions Binding. All determinations and decisions made by the Board
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or the Committee pursuant to the provisions of the Plan shall be final,
conclusive and binding on all persons, including the Company, its shareholders,
Optionees and their estates and beneficiaries.
4.6 Stock Option Agreements. Each Option under the Plan shall be
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evidenced by a Stock Option Agreement which shall be signed by the Chairman of
the Committee and by the Optionee, and shall contain such terms and conditions
as may be approved by the Committee, which need not be the same in all cases.
Any Stock Option Agreement may be supplemented or amended in writing from time
to time as approved by the Committee, provided that the terms of such Agreements
as amended or supplemented, as well as the terms of the original Stock Option
Agreement, are not inconsistent with the provisions of the Plan. No Employee or
Advisor who receives an Option under the Plan shall, with respect to the Option,
be deemed to have become an Optionee, or to have any rights with respect to the
Option, unless and until such Employee or Advisor has executed a Stock Option
Agreement or other instrument evidencing the Option and delivered an executed
copy thereof to the Company, and has otherwise complied with the applicable
terms and conditions of the Option.
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The Committee may condition any Option grant upon the agreement by the Optionee
to such confidentiality, noncompetition and non-solicitation covenants as the
Committee deems appropriate.
Section 5 -- ELIGIBILITY
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Employees of, or Advisors to, the Company, any Subsidiary or any Parent who
are expected to contribute substantially to the growth and profitability of the
Company, any Subsidiary or any Parent are eligible for selection by the
Committee under Section 4.4 to receive Options.
Section 6 -- GRANT OF OPTIONS
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6.1 Option Price. The purchase price per share (the "Option Price") of
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Stock covered by an Option shall be determined by the Committee but shall not be
less than one hundred percent (100%) of the fair market value (the "Fair Market
Value") of such Stock on the date the Option is granted. The Fair Market Value
shall be determined by the Committee in its sole discretion, provided that, if
the Stock is publicly traded on an established securities market, the Fair
Market Value shall be the closing market price of the Stock as reported on the
date of grant, or, if no trades were reported on that date, the closing price on
the most recent trading day immediately preceding the date of the grant. An
Incentive Stock Option granted to any individual who, at the time the Option is
granted, owns or is deemed to own within the meaning of Section 424(d) of the
Code, stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, any Subsidiary or any Parent,
shall have an exercise price which is at least one hundred ten percent (110%) of
the Fair Market Value of the Stock subject to the Option on the date the Option
is granted.
6.2 Option Period. The Option Period shall be determined by the
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Committee, but no Option shall be exercisable later than ten (10) years from the
date of grant. Notwithstanding the foregoing, in the case of an Optionee owning
(within the meaning of Section 424(d) of the Code), at the time an Incentive
Stock Option is granted, more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company, any Subsidiary or any
Parent, such Incentive Stock Option shall not be exercisable later than five (5)
years from the date of grant. No Option may be exercised at any time unless
such Option is valid and outstanding as provided in this Plan.
6.3 Limitation on Amount of Incentive Stock Options. The aggregate Fair
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Market Value (determined as of the time the Option is granted) of the Stock with
respect to which an Optionee's Incentive Stock Options are exercisable for the
first time during any calendar year (under this and all other stock option plans
of the Company) shall not exceed One Hundred Thousand Dollars ($100,000.00).
Options or portions of Options exercisable as a result of the vesting schedule
established in the Stock Option Agreement or acceleration under Section 10.8 in
excess of the One Hundred Thousand Dollar ($100,000.00) limit described herein
shall be treated as a Nonqualified Stock Option for tax purposes.
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6.4 Non-transferability of Options. No Option-shall be transferable by
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the Optionee other than by will or by the laws of descent and distribution, and
such Option shall be exercisable, during the Optionee's lifetime, only by the
Optionee.
Section 7 -- EXERCISE OF OPTIONS
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7.1 Exercise. An Option may be exercised, so long as it is valid and
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outstanding, from time to time in part or as a whole, subject to any limitations
with respect to the number of shares for which the Option may be exercised at a
particular time and to such other conditions (e.g., exercise could be
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conditioned on performance) as the Committee in its discretion may specify upon
granting the Option or as otherwise provided in this Section 7.
7.2 Method of Exercise. To exercise an Option, the Optionee or the other
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Person(s) entitled to exercise the Option shall give written notice of exercise
to the Committee, specifying the number of full shares to be purchased. Such
notice shall be accompanied by payment in full in cash for the Stock being
purchased (unless the Committee approves some alternate method of payment) plus,
in the case of Nonqualified Stock Options, any required withholding tax as
provided in Section 11. If permitted by the Committee, in its sole discretion,
payment in full or in part may be made in the form of Stock owned by the
Optionee for at least 6 months (based on the Fair Market Value of the Stock on
the date the Option is exercised) evidenced by negotiable Stock certificates
registered either in the sole name of the Optionee or the names of the Optionee
and spouse, or by any combination of cash or such Stock. No shares of Stock
shall be issued unless the Optionee has fully compiled with the provisions of
this Section 7.2.
7.3 Termination of Employment. Except as otherwise specifically provided
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in the Stock Option Agreement, after an Optionee's Termination of Employment, an
Option may be exercised (subject to adjustment as provided in Section 3.3 or
10.8) prior to the expiration of the Option as specified in the Stock Option
Agreement, but only with respect to the number of shares of Stock which the
Optionee could have acquired by an exercise of the Option immediately before the
Termination of Employment. Except to the extent different periods are provided
in the Stock Option Agreement by the Committee, an Employee's or an Advisor's
right to exercise an Option upon Termination of Employment shall terminate:
(a) At the sooner to occur of (i) the expiration of the Option Period
and (ii) the expiration of two (2) years after the Employee's or the Advisor's
Termination of Employment due to Disability; provided, however, if an Incentive
Stock Option is not exercised within one (1) year after such Termination of
Employment, it will be treated as a Nonqualified Stock Option for purposes of
the Plan when it is exercised;
(b) At the sooner to occur of (i) the expiration of the Option Period
and (ii), the expiration of two (2) years after the Employee's or the Advisor's
death, if the Employee's or the Advisor's Termination of Employment occurs by
reason of death, provided, however, if an Incentive Stock Option is not
exercised within one (1) year after such Termination of Employment, it will be
treated as a Nonqualified Stock Option for purposes of the Plan when it is
exercised; any Option
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exercised under this subparagraph (b) may be exercised in full by the legal
representative of the estate of the Employee or the Advisor or by the Person(s)
who acquire(s) the right to exercise such Option by bequest or inheritance; or
(c) At the sooner to occur of (i) the expiration of the Option Period
and (ii) the expiration of two (2) years after the Employee's or the Advisor's
Termination of Employment for any reason other than the reasons set forth in
Sections 7.3(a) and 7.3(b); provided, however, if an Incentive Stock Option is
not exercised within three (3) months after such Termination of Employment, it
will be treated as a Nonqualified Stock Option for purposes of the Plan when it
is exercised.
7.4 Pledge Agreement. Notwithstanding any other provision of this Plan or
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any Stock Option Agreement to the contrary, no shares of stock of AEI Holding
Company, Inc. or its Subsidiaries shall be issued to an Optionee pursuant to
this Plan unless and until such Optionee has executed and delivered to
NationsBank a Pledge Agreement (and all accompanying documents required under
the Pledge Agreement, including without limitation a stock power) in a form
acceptable to NationsBank, provided the provisions of this Section shall only
apply so long as any credit facilities or loans are existing or owing to
NationsBank by the Company, Subsidiaries or its Parent, and further provided
that this Section 7.4 shall not apply to tile issuance of shares of stock of any
parent of AEI Holding Company, Inc.
Section 8 -- AMENDMENTS AND TERMINATION
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8.1 Amendments and Termination. The Committee may terminate, suspend,
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amend or alter the Plan, but no action of the Committee may:
(a) Impair or adversely affect the rights of an Optionee under an
Option, without the Optionee's consent; or
(b) Without the majority approval of the shareholders of the Company:
(i) Increase the total amount of Stock which may be delivered
under the Plan except as is provided in Section 3 of the Plan;
(ii) Decrease the option price of any Option to less than the
option price on the date the Option was granted;
(iii) Extend the maximum Option Period; or
(iv) Extend the period during which Options may be granted, as
specified in Section 13.
8.2 Conditions on Options. In granting an Option, the Committee may
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establish any conditions that it determines are consistent with the purposes and
provisions of the Plan, including,
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without limitation, a condition that the granting of an Option is subject to the
surrender for cancellation of any or all outstanding Options held by the
Optionee. Any new Option made under this section may contain such terms and
conditions as the Committee may determine, including an. exercise price that is
lower than that of any surrendered Option.
8.3 Selective Amendments. Any amendment or alteration of the Plan may be
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limited to, or may exclude from its effect, particular classes of Optionees.
Section 9 -- RESTRICTIONS ON TRANSFER
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9.1 Restrictions on Transfer.
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(a) Subject to Section 9.5, an Optionee shall not sell, assign,
transfer or otherwise dispose of any Option Stock until (i) the Optionee has
delivered to the Company an irrevocable written offer, exercisable at any time
during the 60-day period following the delivery of the offer, to sell any such
shares of Option Stock at a price per share equal to the fair market value of
the Company (the "Fair Value") (which shall be based on a valuation of tile
Company prepared by an independent appraiser selected and paid by tile Company,
who shall make such determination as of the Company's most recent fiscal year
end) divided by the total number of shares of Stock outstanding as of the date
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of determination, and (ii) the Company shall have failed to accept such offer
within the 60-day period, in which case the Option Stock so offered may be sold
by the Optionee on the terms offered to the Company within 60 days of the
earlier of the expiration of the 60-day period or the date the Company notifies
the Optionee that it will not exercise its right to purchase the Option Stock.
A bona fide written offer from an independent prospective buyer shall be deemed
to be the Fair Value solely for purposes of this Section 9.1(a). To accept the
offer, the Company shall deliver notice of its acceptance of the offer within 60
days after it is delivered. Payment for the offered Option Stock shall be made
as provided in Section 9.3. The restrictions imposed by this Section 9.1(a)
shall not apply to the transfer by operation of law to a deceased Optionees
personal representative of the Optionee's interest in the Option Stock.
(b) If in connection with any public offering of securities of the
Company (or any successor entity) the underwriter or underwriters managing such
offering so request(s), then each Optionee and each holder of Option Stock will
agree not to sell, assign, transfer or otherwise dispose of any such Option
Stock (other than Option Stock included in such underwriting), without the prior
written consent of such underwriter, for such period of time as may be requested
by the underwriter commencing on the effective date of the registration
statement filed with the Securities and Exchange Commission in connection with
such offering.
9.2 Death, Disability, and Termination. In the event of an Optionee's
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Termination of Employment due to such Optionee's death or Disability, the
Optionee or such Optionee's personal representative shall offer to sell the
Optionee's Option Stock and the Company shall purchase such Option Stock at a
price per share equal to the fair market value of the Company (the "Fair Value")
(which shall be based on a valuation of the Company prepared by an independent
appraiser selected and paid by the Company, who shall make such determination as
of the Company's most recent
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fiscal year end), divided by the total number of shares of Stock outstanding as
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of the date Fair Value is determined; in the event of an Optionee's Termination
of Employment for any other reason, the Company may, at its option, for a two-
year period following such termination, purchase such Optionee's Option Stock at
Fair Value divided by the total number of shares of Stock outstanding as of the
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date Fair Value is determined. Payment for the Option Stock shall be made as
provided in Section 9.3. Notwithstanding the first sentence of this Section 9.2,
in the event of the Optionee's Termination of Employment for any reason within
the twelve month period following a Change of Control, where the Change of
Control occurs as a result of the sale of securities of the Company for cash,
the purchase price to be paid by the Company for such Optionee's Option Stock
shall be the greater of (a) Fair Value divided by the number of shares
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outstanding as of the date Fair Value is determined and (b) the cash sale price
per share of Stock involved in the Change of Control transaction.
9.3 Payment for Option Stock. Unless otherwise agreed by the Company and
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the Optionee, the Company shall make payment in cash for any Option Stock that
it purchases pursuant to this Section 9 within thirty (30) days after the date
when the Company delivers notice of its acceptance of the offer given pursuant
to Section 9.2. The Optionee shall surrender certificates representing the
offered Option Stock at the time the Company makes such payment.
9.4 Restriction on Pledge. Except as otherwise provided in this Plan, no
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Optionee shall, without the prior written consent of the Company, pledge,
mortgage or otherwise encumber any of his Option Stock.
9.5 Termination of Restrictions. The restrictions and obligations imposed
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by this Section 9 shall not apply (a) to the transfer by operation of law to a
deceased Optionee's personal representative of the Optionee's interest in the
Option Stock; (b) to any transfer pursuant to a foreclosure of a pledge of the
Option Stock by NationsBank or any other lender that has provided a credit
facility to the Company; (c) beyond one (1) year after a Change of Control
results in the Option Stock being converted into the stock of another entity,
which stock has a public securities market; and (d) after the later to occur of
(i) the expiration of the one year period following the closing of the issuance
of the Company's shares of Stock pursuant to an initial public offering
registered with the United States Securities and Exchange Commission and (ii)
the receipt by an Optionee of any required consent of an underwriter, pursuant
to Section 9.1 (b), to sell, assign, transfer or otherwise dispose of any Option
Stock.
Section 10 -- GENERAL PROVISIONS
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10.1 Unfunded Status of Plan. The Plan is intended to constitute an
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"unfunded" plan for incentive compensation, and the Plan is not intended to
constitute a plan subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended, and shall not extend, with respect to any
payments not yet made to an Optionee, any rights that are greater than those of
a general creditor of the Company.
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10.2 Transfers, Leaves of Absence and Other Changes in Employment Status.
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For purposes of the Plan (a) a transfer of an Employee from the Company to a
Subsidiary or a Parent, or vice versa, or from a Parent to a Subsidiary, "or
vice versa, or from one Subsidiary or Parent to another; or (b) a leave of
absence, duly authorized in writing by the Company, a Subsidiary or Parent, for
military service or sickness, or for any other purpose approved by the Company,
a Subsidiary or a Parent if the period of such leave does not exceed ninety (90)
days; or (c) any leave of absence in excess of ninety (90) days approved by the
Company, a Subsidiary or a Parent, shall not be deemed a Termination of
Employment. The Committee, in its sole discretion, subject to the terms of the
Stock Option Agreement, shall determine the disposition of all Options. made
under the Plan in all cases involving any substantial change in employment
status other than as specified herein.
10.3 Securities Law Restrictions, Investment Intent. By accepting an
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Option and/or Option Stock under this Plan, the Optionee will be deemed to
represent, warrant and agree that, unless a registration statement is in effect
with respect to the offer and sale of Option Stock: (a) neither the Option nor
any such Option Stock will be freely tradeable and must be held indefinitely
unless such Option and such Option Stock are either registered under the
Securities Act of 1993, as amended (the "Securities Act") or an exemption from
such registration is available; (b) the Company is under no obligation to
register the Option or any such Option Stock; (c) upon exercise of the Option,
the Optionee will purchase the Option Stock for his or her own account and not
with a view to distribution within the meaning of the Securities Act, other than
as may be effected in compliance with the Securities Act and the rules and
regulations promulgated thereunder; (d) no one else will have any beneficial
interest in the Option Stock; (e) the Optionee has no present intention of
disposing of the Option Stock at any particular time; and (f) neither the Option
nor the Option Stock has been qualified under the securities laws of any state
and may only be offered and sold pursuant to an exception from qualification
under applicable state securities laws. No Stock shall be issued or transferred
pursuant to an Option unless the Committee determines, in its sole discretion,
that such issuance or transfer complies with all relevant provisions of law,
including but not limited to, the (a) limitations, if any, imposed in the state
of issuance or transfer, (b) restrictions, if any, imposed by the Securities
Act, the Exchange Act, and the rules and regulations promulgated thereunder, and
(c) requirements of any stock exchange upon which any of the Company's shares of
stock may then be listed. The certificates for such Stock may include any
legend which the Committee deems appropriate to reflect any restrictions on
transfer.
10.4 Assignment Prohibited. Subject to the provisions of the Plan and the
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Stock Option Agreement, no Option shall be assigned, transferred, pledged or
otherwise encumbered by the Optionee otherwise than by will or by the laws of
descent and distribution, and such Options shall be exercisable, during the
Optionee's lifetime, only by the Optionee. Options shall not be pledged or
hypothecated in any way, and shall not be subject to any execution, attachment,
or similar process. Any attempted transfer, assignment, pledge, hypothecation or
other disposition of an Option contrary to the provisions of the Plan, or the
levy of any process upon an Option, shall be null, void and without effect.
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10.5 Other Compensation Plans. Nothing contained in the Plan shall
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prevent the Company from adopting other compensation arrangements.
10.6 Limitation of Authority. No person shall at any time have any right
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to receive an Option hereunder and no person shall have authority to enter into
an agreement on behalf of the Company for the granting of an Option or to make
any representation or warranty with respect there(6, except as granted by the
Board or the Committee. Optionees shall have no rights in respect to any Option
except as set forth in the Plan and the applicable Stock Option Agreement.
10.7 No Right to Employment. Neither the action of the Company in
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establishing the Plan, nor any action taken by it or by the Board or the
Committee under the Plan or any Stock Option Agreement, or any provision of the
Plan, shall be construed as giving to any Person the right to be retained in the
employ of, or as an advisor or consultant to, the Company, any Subsidiary or any
Parent.
10.8 Acceleration. If granted by the Committee in the Stock Option
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Agreement, in the event of a Change of Control or Termination of Employment,
Options granted under the Plan shall become exercisable in full whether or not
otherwise exercisable at such time, and any such Option shall remain exercisable
in full thereafter until it expires pursuant to its terms.
10.9 Option Period. No Option granted under the Plan shall be exercisable
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or payable more than ten (10) years from the date of grant.
10.10 Not a Shareholder. The Person(s) entitled to exercise, or who have
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exercised, an Option shall not be entitled to any rights as a shareholder of the
Company with respect to any shares subject to the Option until such Person(s)
shall have become the holder of record of such shares.
10.11 Headings. The headings in this Plan have been Inserted solely for
--------
convenience of reference and shall not be considered in the interpretation or
construction of this Plan.
10.12 Governing Law. The validity, Interpretation, construction and
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administration of this Plan shall be governed by the laws of the Company's state
of incorporation, as it may change from time to time.
Section 11 -- TAXES
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11.1 Tax Withholding. All Optionees shall make arrangements satisfactory
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to the Committee to pay to the Company, at the time of exercise in the case of a
Nonqualified Stock Option, any federal, state or local taxes required to be
withheld with respect to any Option. If such Optionee shall fall to make such
tax payments as are required, the Company, all Subsidiaries and all Parents
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the Optionee.
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11.2 Share Withholding. If permitted by the Committee, the tax withholding
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obligation may be satisfied by the Company retaining shares of Stock with a fair
market value equal to the amount required to be withheld.
Section 12 -- EFFECTIVE DATE OF PLAN
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The Plan shall be effective or, the date when the Board adopts the Plan
(the "Effective Date"), subject to approval of the Plan by a majority of the
total votes entitled to vote thereon following adoption of the Plan by the
Board, which approval shall be obtained within twelve (12) months of the
Effective Date; provided, however, that Options may be granted before obtaining
shareholder approval of the Plan, but any such Options shall be contingent upon
such shareholder approval being obtained and may not be exercised before such
approval.
Section 13 -- TERM OF PLAN
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Unless terminated earlier by the Committee, no Option shall be granted
under the Plan more than ten (10) years after the Effective Date as defined in
Section 12.
* * * * *
Board Approval: /s/ Illegible
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(Date) (Secretary's Initials)
Shareholder Approval: /s/ Illegible
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(Date) (Secretary's Initials)
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