EXHIBIT 10.6
PERSONNEL MANAGEMENT, INC.
1998 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
This Stock Option Plan ("Plan") is designed to provide an incentive to
persons employed by Personnel Management, Inc. (the "Corporation") and any of
its subsidiaries, including officers and employee Directors, and to offer an
additional inducement in obtaining the services of key personnel and
professional advisors by granting such persons options to purchase shares of the
Corporation's common stock ("Common Shares"). The Plan provides for the grant of
(i) options intended to qualify as "Incentive Stock Options" within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and
(ii) non-qualified options.
2. STOCK SUBJECT TO THE PLAN
The Common Shares to be issued upon exercise of options granted under
the Plan (the "Options") shall be made available, at the discretion of a
committee of the Board of Directors appointed hereunder, from either authorized
but unissued Common Shares or Common Shares held in the treasury of the
Corporation or any subsidiary of the Corporation, including Common Shares
purchased in the open market or otherwise.
Subject to the provisions of the next succeeding paragraph of this
Section 2, the aggregate number of shares for which Options may be granted under
the Plan shall be 200,000. If, prior to December 17, 2007, the Plan remains in
effect and an Option granted under the Plan shall have terminated for any reason
without having been exercised in full, then the unpurchased shares covered by
the terminated Option shall become available for option to other employees.
In the event that an optionee tenders Common Shares owned by the
optionee in payment of the purchase price of shares the optionee has elected to
purchase pursuant to an Option, only the net shares issued in connection with
such transaction (calculated by subtracting the number of shares tendered in
payment from the number of shares purchased under the Option) shall be
considered to be shares for which Options have been granted under the Plan, and
the remaining number of shares issued under such Option shall be considered
unpurchased shares that shall again become available for grants of Options to
other employees.
In the event that the outstanding Common Shares hereafter are changed
into or exchanged for a different number or kind of shares or other securities
of the Corporation by reason of any recapitalization, reclassification,
combination of shares, stock split-up, stock dividend, or other reorganization
or (in the discretion of the Committee) in the event of any spin-off or other
distribution of a substantial portion of the assets of the Corporation to the
holders of the shares of the Corporation then subject to Options granted
hereunder:
(a) the aggregate number and kind of shares subject to Options which
may be granted hereunder shall be adjusted appropriately; and
(b) rights under outstanding Options granted hereunder, both as to the
number of subject shares and the Option price, shall be adjusted
appropriately.
The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined solely by the Committee, and any such
adjustment may provide for the elimination of fractional share interests.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a committee of the Board of Directors
(the "Committee") consisting of two or more members, each of whom shall qualify
at all times as a "Non-Employee Director" within the meaning of Rule 16b-3
adopted under the Securities Exchange Act of 1934, as amended, or any successor
rule ("Rule 16b-3"). The members of the Committee shall be appointed by, and may
be changed from time to time in the discretion of, the Board of Directors of the
Corporation. A majority of the members shall constitute a quorum, and the acts
of a majority of the members present at any meeting at which a quorum is
present, and any acts approved in writing by all of the members without a
meeting, shall be the acts of the Committee.
4. OPTION PRICE
The purchase price under each Option shall be determined by the
Committee at the time of grant. In the case of Incentive Stock Options, the
purchase price must be set as follows:
(a) for persons who at the time of grant own stock possessing ten
percent or less of the total combined voting power of all classes of stock
of the Corporation or any parent or subsidiary corporation, the Option
price at the time the Option is granted must be set at no less than the
fair market value of the Common Shares subject to the Option; and
(b) for optionees who own stock possessing more than ten percent of
the total combined voting power of all classes of stock of the Corporation
or of any parent or subsidiary corporation, the Option price at the time
the Option is granted must be at least 110 percent of the fair market value
of the Common Shares subject to the Option.
The purchase price for nonqualified Options shall be set at the fair market
value of the Common Shares covered by the Option at the time of grant. Fair
market value shall be determined for purposes of Section 4 by the Committee in
good faith in accordance with all applicable requirements of the Code.
5. OPTIONS AND ELIGIBILITY OF OPTIONEES
The Committee may, consistent with the purposes of the Plan, from time
to time (a) grant Options to any or all employees (including officers and
employee Directors) of the Corporation and any of its future subsidiaries as
defined in applicable sections of the Code, and (b) grant nonqualified Options
to persons who act as consultants (not including non-employee Directors) to the
Corporation but who are not employed by the Corporation. There shall be no
limitation on the aggregate number of shares for which an Option or Options may
be granted to any one individual; provided, however, that the aggregate fair
market value (determined at the time the Option is granted) of the shares with
respect to which Incentive Stock Options are exercisable for the first time
during any calendar year (under all such plans of the Corporation and any parent
or subsidiary corporation) shall not exceed $100,000 (the "Qualifying Limit").
Incentive Stock Options may not be granted under the Plan after December 17,
2007. Notwithstanding the above and in order that the Corporation retains the
flexibility to provide additional inducement to key personnel, the aggregate
fair market value of shares of which any individual may be granted Options that
first become exercisable in any calendar year may exceed the Qualifying Limit;
provided, however, that the Options granted in excess of the Qualifying Limit
shall not be treated as "Incentive Stock Options." Employees may receive more
than one Option under the Plan.
The Committee, at the time of each grant under this Plan, shall specify
whether such grant is intended to qualify as an Incentive Stock Option or
constitute a non-qualified Option.
The Board of Directors, without further approval of the shareholders,
may substitute new Options for prior options of a constituent corporation or
assume the prior options of a constituent corporation. For the purposes of this
Section 5, a constituent corporation shall include any corporation which has
been merged into or consolidated with the Corporation or one or more
subsidiaries of the Corporation, or whose assets or stock has been acquired by
or liquidated into the Corporation, or by or into any one or more subsidiaries
of the Corporation, or any parent or any subsidiary of such corporation.
Subject to the terms, provisions and conditions of the Plan, the
Committee shall have exclusive jurisdiction (i) to select the persons to whom
Options may be granted, (ii) to determine the number of shares subject to each
Option, (iii) to determine the time or times when Options will be granted, (iv)
to determine the Option price of the shares subject to each Option, which price
in the case of Incentive Stock Options shall be not less than the minimum
specified in Section 4 of the Plan, (v) to determine the time when each option
may be exercised within the limits stated in the Plan, (vi) to prescribe the
form, which shall be consistent with the Plan, of the instruments evidencing any
Options granted under the Plan, and (vi) to take any other action or make any
other determination under this Plan not expressly delegated to others by the
Articles of Incorporation or Bylaws of the Corporation, or by this Plan, or by
applicable law. The Committee's determination or interpretation of any matter
within the Committee's jurisdiction under the Plan shall be conclusive, final
and binding upon the Corporation, the optionees and all other interested
persons.
6. RESTRICTIONS ON TRANSFERABILITY OF OPTIONS
No Option, including any Replacement Option (as defined in Section 7),
granted under the Plan shall be transferable by the optionee unless the
Committee, in its sole discretion, authorizes such transfer and such transfer is
permitted by, or is not in violation of, the provisions of the Code and Rule
16b-3 (to the extent that such are applicable to the Option). Except as
specifically authorized by the Committee, an Option, including any Replacement
Option, shall be exercisable during the optionee's lifetime only by the optionee
or, in the case of the optionee's legal disability, by the optionee's guardian
or legal representative.
7. EXERCISE OF OPTIONS; REPLACEMENT OPTIONS
Each Option granted under the Plan shall expire not later than ten
years from the date the Option was granted. The Committee may, in its
discretion, prescribe a shorter period for the expiration of any Option or
Options.
Subject to the provisions of this Section 7 and of Section 8 hereof,
each Option may be exercised in whole or from time to time in part with respect
to the number of shares as to which it is then exercisable in accordance with
the terms of the Plan and the determinations of the Committee. Except as
otherwise provided in Section 8 hereof, no Option that is intended to qualify as
an Incentive Stock Option may be exercised unless the optionee shall have been
in the employ of the Corporation or one of its subsidiaries at all times during
the period beginning with the date of grant of such Option and ending on the
date three (3) months prior to the date of exercise of such Option. The
Committee may impose additional conditions upon the right of an optionee to
exercise any Option granted hereunder that are not inconsistent with the terms
of the Plan or, in the case of an Option intended to qualify as an Incentive
Stock Option, with the requirements for qualification as an Incentive Stock
Option under Section 422 of the Code.
A person exercising an Option shall give written notice to the
Corporation of such exercise and the number of shares the optionee has elected
to purchase and shall at the time of purchase tender an amount in cash, in
Common Shares of the Corporation owned by such person, or in any combination of
cash and such Common Shares, equal in value to the purchase price of the shares
the optionee has elected to purchase. Until the purchaser has made such payment
and has been issued a certificate or certificates for the shares so purchased,
the optionee shall possess no shareholder rights with respect to any such share
or shares.
In the event that an optionee tenders Common Shares owned by such
optionee in payment (in whole or in part) of the purchase price of shares that
the optionee has elected to purchase under an Option, the Corporation shall be
obligated to use its best efforts to issue to such optionee a replacement option
of the same type (Incentive Stock Option or nonqualified Option) (a "Replacement
Option") as the Option exercised (the "Exercised Option") and with the same
expiration date as the Exercised Option. Such Replacement Option shall entitle
the optionee to purchase a number of shares equal to the number of shares
tendered to the Corporation to purchase shares under the Exercised Option, and
shall specify an exercise price equal to the fair market value of the Common
Shares on the date of exercise of the Exercised Option. Such Replacement Option
shall not be exercisable during the twelve-month period following the date of
exercise of the Exercised Option; if, during such period, the optionee should
sell any Common Shares of the Corporation (other than in payment of the exercise
price of another Option under the Plan, or pursuant to a corporate transaction
in which all holders of Common Shares are obligated to sell or otherwise dispose
of their shares), then the Replacement Option shall never become exercisable
with respect to the number of shares that are equal to the aggregate number of
Common Shares that were sold by the optionee during such period (subject to
appropriate adjustment for any subsequent changes in the Common Shares of the
type described by Section 2 of this Plan) but shall become exercisable as to the
remainder of the Common Shares covered by the Replacement Option. Except as
specifically provided otherwise in this Section 7, all provisions of this Plan
applicable to an Option shall apply to a Replacement Option of the same type
(Incentive Stock Option or nonqualified Option). Replacement Options shall be
issuable upon exercise of other Replacement Options granted under this paragraph
if all conditions for such issuance are satisfied.
8. TERMINATION OF EMPLOYMENT
(a) Termination Other Than for Disability, Retirement or Upon
Death. In the event that any optionee's employment by the Corporation
and its subsidiaries shall terminate for any reason, other than
permanent and total disability as such term is defined in Section
22(e)(3) of the Code ("Permanent and Total Disability"), retirement or
death, all of such optionee's Options (regardless of whether they are
intended to be Incentive Stock Options), and all of such optionee's
rights to purchase or receive Common Shares pursuant thereto, as the
case may be, may be exercised, to the extent that the Optionee was
entitled to exercise such Options at the date of such termination of
employment, by the optionee until the earlier of (i) the respective
expiration dates of such Options or (ii) (x) if the Option is an
Incentive Stock Option, on the date that is three (3) months after the
date of such termination of employment or (y) if the Option is a
nonqualified Option, on the date that is one (1) year after the date
of such termination of employment. If, however, an optionee's
employment is terminated for cause, the provisions of the preceding
sentence shall not apply and any Option held by such optionee will
terminate automatically upon the termination of the optionee's
employment. Options granted under the Plan shall not be affected by
any change in service or employment so long as the optionee continues
to be employed by or in the service of the Corporation or any of its
subsidiaries, or a corporation (or a parent or subsidiary of such
corporation) issuing or assuming an Option in a transaction in
accordance with applicable Code requirements.
(b) Disability. In the event that any optionee's employment shall
terminate as a result of the Permanent and Total Disability of such
optionee, such optionee (or the optionee's guardian or legal
representative) may exercise, to the extent that the optionee was
entitled to exercise any such Options at the date of such termination
of employment, any Options granted to the optionee pursuant to the
Plan at any time prior to the earlier of (i) the respective expiration
dates of any such Options or (ii) (x) if the Option is an Incentive
Stock Option, on the date that is one year after the date of such
termination of employment or (y) if the Option is a nonqualified
Option, on the date that is three (3) years after the date of such
termination of employment.
(c) Death. In the event that any optionee's employment shall
terminate as a result of the death of the optionee, any Options
granted to any such optionee may be exercised, to the extent that the
optionee was entitled to exercise any such Options at the date of
death, by the person or persons to whom the optionee's rights under
any such Options pass by will or by the laws of descent and
distribution (including the optionee's estate during the period of
administration) at any time prior to the earlier of (i) the respective
expiration dates of any such Options or (ii) the date which is three
(3) years after date of death of such optionee.
(d) Retirement. In the event that any optionee's employment
terminates as a result of the optionee's retirement on or after
attaining the age of 62 and after the optionee has been employed by
the Corporation for at least three (3) years, such optionee (or the
optionee's guardian or legal representative) may exercise, to the
extent that the optionee was entitled to exercise any such Option at
the date of such termination of employment, any Options granted to the
optionee pursuant to the Plan at any time prior to the earlier of (i)
the respective expiration dates of any such Options or (ii) the date
which is three (3) years after the date of such termination of
employment. In the event that an optionee's employment terminates as a
result of the optionee's retirement and such optionee has not been
employed by the Corporation for at least three (3) years at the time
of such retirement, then, on the date of such optionee's retirement,
all of such optionee's Options and rights to purchase or receive
Common Shares pursuant thereto shall terminate.
(e) Nonqualified Options. Notwithstanding the above provisions of
this Section 8, the Committee in its sole discretion may extend the
termination date of any nonqualified Option to a date not later than
the scheduled expiration date of the nonqualified Option.
(f) Termination of Options. To the extent that any Option granted
under the Plan to any optionee whose employment by the Corporation
terminates shall not have been exercised within the applicable period
set forth in this Section 8, as it may be extended by the Committee
hereunder, any such Option, and all rights to purchase shares pursuant
thereto, shall terminate on the last date of the applicable period.
9. EFFECT OF CORPORATE REORGANIZATIONS
Upon the dissolution or liquidation of the Corporation, or upon a
reorganization, merger or consolidation of the Corporation as a result of which
the outstanding securities of the class then subject to Options hereunder are
changed into or exchanged for cash or property or securities not of the
Corporation's issue, or upon a sale of substantially all the property of the
Corporation to another corporation or person, the Plan shall terminate, unless
provision shall be made in writing in connection with such transaction for the
continuance of the Plan and/or for the assumption of Options theretofore
granted, or the substitution for such Options of options covering the stock of a
successor employer corporation, or a parent or a subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices, in which
event the Plan and Options theretofore granted shall continue in the manner and
under the terms so provided. If the Plan and unexercised Options shall terminate
pursuant to the foregoing sentence, all persons entitled to exercise any
unexercised portions of Options then outstanding shall have the right, at such
time prior to the consummation of the transaction causing such termination as
the Corporation shall designate, to exercise the unexercised portions of their
Options, including the portions thereof which would, but for this Section 9, not
yet be exercisable.
10. OTHER EMPLOYEE STOCK BENEFIT PLANS
The Corporation reserves the right, in the discretion of its Board of
Directors, to establish other plans during the term of this Plan under which
employees and others providing services to the Corporation and its subsidiaries
(including officers and Directors thereof) may be entitled (in addition to their
rights under Options granted under this Plan) to receive or purchase shares of
the Corporation's capital stock or other securities, or cash amounts determined
in relation to the earnings, dividends, net worth or market appreciation of
shares of the Corporation's capital stock or other securities, including, but
not limited to, restricted stock, stock appreciation rights, stock bonuses, book
value stock, and the like.
11. AMENDMENTS TO PLAN
The Committee may from time to time prescribe, amend and rescind rules
and regulations relating to the Plan and, subject to the approval of the Board
of Directors of the Corporation, may at any time terminate, modify or suspend
the operation of the Plan, provided that no such modification shall be effected
without approval of the shareholders if such modification would cause the Plan
to no longer to comply with any regulatory or legal requirements.
12. MISCELLANEOUS
(a) Compliance with Law.
(i) The Corporation shall not be required to sell or issue any
shares under any Option if the issuance of such shares shall
constitute or result in a violation by the optionee or the Corporation
of any provisions of any law, statute or regulation of any
governmental authority. Without limiting the generality of the
foregoing, in connection with the Securities Act of 1933 (the
"Securities Act"), upon exercise of any Option, the Corporation shall
not be required to issue shares unless the Committee has received
evidence satisfactory to it to the effect that registration under the
Securities Act and applicable state securities laws is not required or
that such registration is effective. Any determination in this
connection by the Committee shall be final, binding and conclusive. If
shares are issued under any Option without registration under the
Securities Act or applicable state securities laws, the Optionee may
be required to accept the shares subject to such restrictions on
transferability as may in the reasonable judgment of the Committee be
required to comply with exemptions from registration under such laws.
The Corporation may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Securities Act or
applicable state securities laws. The Corporation shall not be
obligated to take any other 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.
(ii) With respect to persons subject to Section 16 of the
Securities Exchange Act of 1934 (the "1934 Act"), transactions under
this Plan are intended to comply with all applicable conditions of
Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of the Plan or action by the Committee fails to so comply,
it shall be deemed null and void to the extent permitted by law and
deemed advisable by the Committee.
(b) Vesting. The Committee, in its sole discretion, shall determine
the conditions, if any, for the vesting of rights in Options granted
pursuant to the Plan.
(c) Tenure. Nothing in the Plan or in any Option granted hereunder or
in any agreement relating thereto shall confer upon any officer or employee
the right to continue in such position with the Corporation or any
subsidiary thereof.
(d) Withholding Taxes. Where an optionee is entitled to receive shares
pursuant to the exercise of an Option pursuant to the Plan, the Corporation
shall have the right to require the optionee to pay the Corporation the
amount of any taxes which the Corporation is required to withhold with
respect to such shares, or, in lieu thereof, to retain, or sell without
notice, a number of such shares sufficient to cover the amount required to
be withheld.
(e) Singular, Plural; Gender. Whenever used herein, nouns in the
singular shall include the plural, and the feminine pronoun shall include
the masculine gender.
(f) Headings, Etc., No Part of the Plan. Headings of sections and
paragraphs hereof are inserted for convenience of reference; they
constitute no part of the Plan.
(g) Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Indiana except to the extent that
Federal law shall be deemed to apply.
13. EFFECTIVE DATE
The Plan shall become effective on the date of adoption by the Board of
Directors (the "Effective Date"), subject to approval by the shareholders of the
Corporation either (a) by the affirmative vote of a majority of the votes cast
at a duly held meeting at which a quorum representing a majority of all
outstanding shares entitled to vote thereon is present in person or by proxy and
voting on the Plan or (b) by unanimous written consent. The Plan shall expire on
December 17, 2007, after which no Options may be granted under the Plan.