EXHIBIT 10.2
ProsoftTraining.com
1996 STOCK OPTION PLAN
1. Purpose. The purposes of this Plan are to attract and retain the best
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available personnel for positions of substantial responsibility, to provide
additional incentive to the Employees, Directors and Consultants of the Company
and to promote the success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written option agreement.
2. Definitions. As used herein, the following definitions shall apply:
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(a) "Board" shall mean the Board of Directors of the Company.
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(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
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(c) "Committee" shall mean the Committee appointed by the Board of
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Directors in accordance with paragraph (b) of Section 3 of the Plan, if one is
appointed.
(d) "Common Stock" shall mean the Common Stock of the Company.
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(e) "Company" shall mean prosofttraining.com, a Nevada
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corporation.
(f) "Consultant" shall mean any person who is engaged by the Company
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or any Parent or Subsidiary to render consulting services and is compensated for
such consulting services, including compensation through Options granted under
this Plan; provided that the term Consultant shall not include Directors who are
not compensated for their services or are paid only a director's fee by the
Company.
(g) "Continuous Status as an Employee, Director or Consultant" shall
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mean the absence of any interruption or termination of service as an Employee,
Director or Consultant (as the case may be). Continuous Status as an Employee,
Director or Consultant shall not be considered interrupted in the case of sick
leave, military leave, or any other leave of absence approved by the Board;
provided that such leave is for a period of not more than 90 days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute.
(h) "Director" shall mean a member of the Board.
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(i) "Disability" shall mean a total and permanent disability as that
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term is defined in Section 22(e)(3) of the Code.
(j) "Disinterested Person" shall have the meaning set forth in Rule
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16b-3 and shall mean a Director who has not, during the one-year period prior to
the date he or she is appointed to the Committee or during the period he or she
is on the Committee, received an option grant or stock issuance under this Plan
or any other stock plan of the Company or any Parent or Subsidiary of the
Company, other than as permitted by Rule 16b-3; provided, however, if Rule 16b-3
is amended after the effective date of this Plan, "Disinterested Person" shall
have the meaning set forth in such amended Rule 16b-3.
(k) "Employee" shall mean any person, including officers and
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directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended.
(m) "Fair Market Value" shall mean: (i) if Shares are exchange-traded
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or traded on the NASDAQ National Market System ("NMS"), the closing sale or last
sale price per share of the Shares; (ii) if Shares are regularly traded in any
over-the-counter market other than NMS, the average of the bid and asked prices
per share of the Shares; and (iii) if Shares are not traded as described in (i)
and (ii) of this Section 2(m), the per share fair market value of the Shares as
determined in good faith by the Board on such basis as the Board in its sole
discretion shall choose. Fair Market Value as of a given date with respect to
subparagraphs (i), (ii) and (iii) shall be determined as of the close of
business on the day prior to the date of determination, or if no trading in the
Shares takes place on such date, on the next preceding trading day on which
there has been such trading.
(n) "Incentive Stock Option" shall mean an Option intended to qualify
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as an incentive stock option within the meaning of Section 422(b) of the Code.
(o) "Nonstatutory Stock Option" shall mean an Option not intended to
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qualify as an Incentive Stock Option.
(p) "Option" shall mean a stock option granted pursuant to the Plan.
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(q) "Optionee" shall mean an Employee, Director or Consultant who
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receives an Option.
(r) "Option Termination Date" shall mean the date of expiration of the
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term of such Option as set forth in the written option agreement.
(s) "Parent" shall mean a "parent corporation", whether now or
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hereafter existing, as defined in Section 424(e) of the Code.
(t) "Plan" shall mean this ProsoftTraining.com 1996 Stock
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Option Plan.
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(u) "Restricted Shareholder" shall mean an Optionee who, at the time
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the Option is granted, owns stock representing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
Parent or Subsidiary of the Company.
(v) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities
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and Exchange Commission under the Exchange Act, as such rule may be amended from
time to time.
(w) "Share" shall mean a share of the Common Stock, as adjusted in
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accordance with Section 10 of the Plan.
(x) "Subsidiary" shall mean a "subsidiary corporation", whether now or
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hereafter existing, as defined in Section 424(f) of the Code.
(y) "Terminating Transaction" shall mean any of the following events:
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(a) the dissolution or liquidation of the Company; (b) a reorganization, merger
or consolidation of the Company with one or more other corporations (except with
respect to a transaction, the purpose of which is to change the domicile or name
of the Company), as a result of which the Company goes out of existence or
becomes a subsidiary of another corporation (which shall be deemed to have
occurred if another corporation shall own, directly or indirectly, fifty percent
(50%) or more of the aggregate voting power of all outstanding equity securities
of the Company); or (c) a sale of all or substantially all of the Company's
assets.
3. Administration.
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(a) The Plan shall be administered by the Board, which shall have sole
authority in its absolute discretion, subject to the terms of Section 3(b)
herein, (i) to determine which Employees, Directors and Consultants shall
receive Options, (ii) subject to the express provisions of the Plan, to
determine the time when Options shall be granted, the number of Shares subject
to the Options, the exercise prices, and the terms and conditions of Options
other than those terms and conditions fixed under the Plan, and (iii) to
interpret the provisions of the Plan and any Option granted under the Plan. The
Board shall adopt by resolution such rules and regulations as may be required to
carry out the purposes of the Plan and shall have authority to do everything
necessary or appropriate to administer the Plan. All decisions, determinations
and interpretations of the Board shall be final and binding on all Optionees.
(b) The Board may delegate administration of the Plan to a Committee
of no less than two Directors, each of which shall be Disinterested Persons
unless the Board expressly declares that it does not require the Plan to comply
with the requirements of Rule 16b-3. The Board may from time to time remove
members from, or add members to, the Committee, and vacancies on the Committee
shall be filled by the Board. Furthermore, the Board at any time by resolution
may abolish the Committee and revest in the Board the administration of the
Plan. (For purposes of this Plan document, the term "Board" shall mean the
Committee to the extent that the Board's powers have been delegated to the
Committee.)
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4. Eligibility.
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(a) Incentive Stock Options may be granted only to Employees who
render services which contribute to the Company. Nonstatutory Stock Options may
be granted only to Employees, Directors or Consultants who render services which
contribute to the Company.
(b) The Plan shall not confer upon any Optionee any right to continue
as an Employee, Director or Consultant of the Company, nor shall it interfere in
any way with an Optionee's right or the Company's right to terminate Optionee's
employment or relationship as a Director or Consultant at any time, with or
without cause.
(c) The determination as to whether an Employee, Director or
Consultant is eligible to receive Options hereunder shall be made by the Board
in its sole discretion, and the decision of the Board shall be binding and
final.
5. Number of Shares. The maximum aggregate number of Shares which may be
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optioned and sold under this Plan is 2,500,000 Shares of authorized but unissued
Common Stock of the Company. No Employee, Director or Consultant shall receive
Options for more than 250,000 shares over any one-year period. In the event
that Options granted under the Plan shall terminate or expire without being
exercised, in whole or in part, the Shares subject to such unexercised Options
may again be optioned and sold under this Plan.
6. Term of the Plan. The Plan shall be effective as of March 26, 1996,
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and shall continue in effect until March 25, 2006, unless terminated earlier.
7. Exercise Price and Consideration.
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(a) The per Share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the Board in
its sole discretion, but shall be subject to the following:
(i) for an Option granted to a Restricted Shareholder, the per
Share exercise price shall be no less than 110% of the Fair Market Value
per Share on the date of grant;
(ii) for a Nonstatutory Stock Option granted to any Employee,
Director or Consultant (other than a Restricted Shareholder), the per Share
exercise price shall be no less than 85% of the Fair Market Value per Share
on the date of grant; and
(iii) for an Incentive Stock Option granted to any Employee
(other than a Restricted Shareholder), the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of
grant.
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(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option shall consist of full payment in cash or cash equivalents
or, with the consent of the Board, one of the alternative forms specified below:
(i) full payment in shares of Common Stock (duly endorsed for
transfer to the Company) held by the Optionee for the requisite period
necessary to avoid a charge to the Company's earnings for financial
reporting purposes and valued at Fair Market Value on the date of delivery;
or
(ii) full payment through a combination of cash or cash
equivalents and shares of Common Stock (duly endorsed for transfer to the
Company) held by the Optionee for the requisite period necessary to avoid a
charge to the Company's earnings for financial reporting purposes and
valued at Fair Market Value on the date of delivery; or
(iii) full payment effected through a broker-dealer sale and
remittance procedure pursuant to which the Optionee (A) shall provide
irrevocable written instructions to a designated brokerage firm to effect
the immediate sale of the purchased shares and remit to the Company, out of
the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate option price payable for the purchased Shares plus all
applicable Federal and State income and employment taxes required to be
withheld by the Company by reason of such purchase and (B) shall provide
written directives to the Company to deliver the certificates for the
purchased Shares directly to such brokerage firm in order to complete the
sale transaction; or
(iv) any other legal consideration that may be acceptable to
the Board.
8. Exercise of Options.
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(a) Vesting of Options. Any Option granted hereunder shall be
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exercisable at such times and under such conditions as determined by the Board,
including performance criteria with respect to the Company and/or the Optionee,
and as shall be permissible under the terms of the Plan, except that any Option
granted hereunder to an employee who is not an officer or director shall be
exercisable at a rate of at least 20% per year over five (5) years from the date
of grant.
(b) Procedure for Exercise. An Option may be exercised at any time as
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to all or any portions of the Shares as to which it is then exercisable, except
that an Option may not be exercised for a fraction of a Share and shall be
subject to any provision in the written option agreement governing the minimum
number of Shares as to which the Option may be exercised. An Option shall be
deemed to be exercised when written notice of such exercise has been given to
the Company in accordance with the terms of the Option by the person entitled to
exercise the Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company. Full payment may, as
authorized by the Board, consist of any consideration and method of payment
allowable under Section 7(b) of the Plan.
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(c) Termination of Options. All installments of an Option shall
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expire and terminate on such date(s) as the Board shall determine, but in no
event later than ten (10) years from the date such Option was granted (except
that an Incentive Stock Option granted to a Restricted Shareholder shall by its
terms not be exercisable after the expiration of five (5) years from the date
such Option was granted).
(d) Death or Termination of Service of Optionee. The following
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provisions shall govern the exercise period applicable to any Options held by an
Optionee at the time of his or her death or termination of service with the
Company or any Parent or Subsidiary of the Company:
(i) Termination of Continuous Status as an Employee, Director or
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Consultant. In the event of termination of an Optionee's Continuous Status
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as an Employee, Director or Consultant (as the case may be) for any reason
other than Optionee's death or Disability, such Optionee may only exercise
the Option within three (3) months (or such shorter period as specified in
the written option agreement, but in no event less than thirty (30) days)
after the date of such termination.
(ii) Disability of Optionee. In the event of termination of an
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Optionee's Continuous Status as an Employee, Director or Consultant as a
result of the Optionee's Disability, the Optionee may only exercise the
Option within twelve (12) months (or such shorter period as is specified in
the written option agreement, but in no event less than six (6) months)
from the date of such termination.
(iii) Death of Optionee. In the event of termination of an
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Optionee's Continuous Status as an Employee, Director or Consultant as a
result of the Optionee's death, the Option may only be exercised any time
within twelve (12) months (or such shorter period as is specified in the
written option agreement, but in no event less than six (6) months)
following the date of death by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance.
(iv) Limitations. Each Option shall, during the limited exercise
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period under this Section 8(d), be exercisable only as to the Shares for
which the Option is exercisable on the date of the Optionee's death or
termination of service with the Company. Under no circumstances shall any
Option become exercisable under this Section 8(d) after the Option
Termination Date. Upon the earlier of the expiration of such limited
exercise period or the Option Termination Date, the Option shall terminate
and cease to be exercisable.
(v) Immediate Termination. Should (A) the Optionee's Continuous
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Status as an Employee, Director or Consultant be terminated for misconduct
(including, but not limited to, any act of dishonesty, willful misconduct,
fraud or embezzlement) or (B) the Optionee make any unauthorized use or
disclosure of confidential information or trade secrets of the Company or
any Parent or Subsidiary, then in any such event all
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outstanding Options granted to the Optionee under this Plan shall terminate
immediately and cease to be exercisable.
(e) Extensions. Notwithstanding the provisions covering the
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exercisability of Options following death or termination of service, as
described in Section 8(d), the Board may, in its sole discretion, with the
consent of the Optionee or the Optionee's estate (in the case of the death of
Optionee), extend the period of time during which the Option shall remain
exercisable, provided that in no event shall such extension go beyond the Option
Termination Date. In the case of Incentive Stock Options, extensions under this
Section 8(e) may result in loss of the favorable treatment accorded to incentive
stock options under the Code.
9. Restrictions on Grants of Options and Issuance of Shares.
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(a) Regulatory Approvals. No Shares shall be issued or delivered upon
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exercise of an Option unless and until there shall have been compliance with all
applicable requirements of the Securities Act of 1933, as amended, (the "1933
Act"), and any other requirement of law or of any regulatory body having
jurisdiction over such issuance and delivery. The inability of the Company to
obtain any required permits, authorizations or approvals necessary for the
lawful issuance and sale of any Shares hereunder on terms deemed reasonable by
the Board shall relieve the Company, the Board, and any Committee of any
liability in respect of the non-issuance or sale of such Shares as to which such
requisite permits, authorizations, or approvals shall not have been obtained.
(b) Representations and Warranties. As a condition to the granting or
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exercise of any Option, the Board may require the person receiving or exercising
such Option to make any representation and/or warranty to the Company as may be
required (or deemed appropriate by the Board, in its discretion) under any
applicable law or regulation, including but not limited to a representation that
the Option and/or Shares are being acquired only for investment and without any
present intention to sell or distribute such Option and/or Shares, if such a
representation is required under the 1933 Act or any other applicable law, rule,
or regulation.
(c) Shareholder Approval. The exercise of Options under the Plan also
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is conditioned on approval of the Plan by the Company's Shareholders within
twelve (12) months of adoption of the Plan by the Board, and no Option shall be
exercisable hereunder unless and until the Plan has been so approved.
10. Option Adjustments.
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(a) Change in Capitalization. If the outstanding shares of Common
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Stock of the Company are increased, decreased, changed into or exchanged for a
different number or kind of shares of the Company through reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse stock
split, upon authorization by the Board an appropriate and proportionate
adjustment shall be made in the number or kind of shares, and the per-share
option price thereof, which may be issued in the aggregate and to any individual
Optionees under the Plan upon exercise of Options granted under the Plan;
provided, however, that no such
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adjustment need be made if, upon the advice of counsel, the Board determines
that such adjustment may result in the receipt of federal taxable income to
holders of Options granted under the Plan or the holders of Common Stock or
other classes of the Company's securities.
(b) Corporate Reorganizations. Upon the occurrence of a Terminating
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Transaction, as of the effective date of such Terminating Transaction, the Plan
and any then outstanding Options (whether or not vested) shall terminate unless
(i) provision is made in writing in connection with such transaction for the
continuance of the Plan and for the assumption of such Options, or for the
substitution for such Options of new options covering the securities of a
successor corporation or an affiliate thereof, with appropriate adjustments as
to the number and kind of securities and exercise prices, in which event the
Plan and such outstanding Options shall continue or be replaced, as the case may
be, in the manner and under the terms so provided; or (ii) the Board otherwise
shall provide in writing for such adjustments as it deems appropriate in the
terms and conditions of the then-outstanding Options (whether or not vested),
including without limitation providing for the cancellation of Options and their
automatic conversion into the right to receive the securities or other
properties which a holder of the Shares underlying such Options would have been
entitled to receive upon such Terminating Transaction had such Shares been
issued and outstanding (net of the appropriate option exercise prices). If,
pursuant to the foregoing provisions of this paragraph (b), the Plan and the
Options shall terminate by reason of the occurrence of a Terminating Transaction
without provision for any of the action(s) described in clause (i) or (ii)
hereof, then any Optionee holding outstanding Options shall have the right, at
such time immediately prior to the consummation of the Terminating Transaction
as the Board shall designate, to exercise his or her Options to the full extent
not theretofore exercised, including any portion which has not yet become
exercisable.
11. Option Agreement. The terms and conditions of Options granted under
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the Plan shall be evidenced by a written option agreement executed by the
Company and the person to whom the Option is granted. Each option agreement
shall incorporate the Plan by reference and shall include such provisions as are
determined to be necessary or appropriate by the Board.
12. Limitations on Incentive Stock Options. In the event that the
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aggregate Fair Market Value of Shares (determined as of the date of grant of the
Option covering such Shares) with respect to which Incentive Stock Options are
exercisable for the first time by an Employee during any calendar year under
this Plan and any other plan of the Company exceeds $100,000, Options with
respect to and to the extent of such excess shall be treated as Nonstatutory
Stock Options. This Section 12 shall be applied by taking Options which are
intended to be Incentive Stock Options into account in the order in which they
were granted.
13. Amendment or Termination of the Plans.
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(a) Board Authority. The Board may amend, suspend, alter, or
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terminate the Plan at any time. To the extent necessary or desirable to comply
with Rule 16b-3 of the Exchange Act, the Code or any other applicable law or
regulation, the Company may obtain
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shareholder approval of any amendment to the Plan only in such a manner and to
such a degree as required under applicable law.
(b) Limitation on Board Authority. Furthermore, the Plan may not,
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without the approval of the shareholders, be amended in any manner that would
cause Incentive Stock Options issued hereunder to fail to qualify as Incentive
Stock Options as defined in Section 422(b) of the Code. Notwithstanding the
foregoing, no amendment, suspension or termination of the Plan shall adversely
affect Options granted on or prior to the date thereof, as evidenced by the
execution of an option agreement by both the Company and the Optionee, without
the consent of such Optionee.
(c) Contingent Grants Based on Amendments. Options may be granted in
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reliance on and consistent with any amendment adopted by the Board and which is
necessary to enable such Options to be granted under the Plan, even though such
amendment requires future shareholder approval; provided, however, that any such
contingent Option by its terms may not be exercised prior to shareholder
approval of such amendment, and provided further, that in the event shareholder
approval is not obtained within twelve (12) months of the date of grant of such
contingent Option, then such contingent Option shall be deemed cancelled and no
longer outstanding.
14. Options Not Transferable. Options granted under this Plan may not be
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sold, pledged, hypothecated, assigned, encumbered, gifted or otherwise
transferred or alienated in any manner, either voluntarily or involuntarily by
operation of law, other than by will or the laws of descent or distribution, and
may be exercised during the lifetime of an Optionee only by such Optionee.
15. No Rights in Shares Before Issuance and Delivery. Neither the
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Optionee, his or her estate nor his or her transferees by will or the laws of
descent and distribution shall be, or have any rights or privileges of, a
shareholder of the Company with respect to any Shares issuable upon exercise of
the Option unless and until certificates representing such Shares shall have
been issued and delivered notwithstanding exercise of the Option. No adjustment
will be made for a dividend or other rights where the record date is prior to
the date such stock certificates are issued, except as provided in Section 10.
16. Taxes. The Board shall make such provisions and take such steps as it
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deems necessary or appropriate for the withholding of any federal, state, local
and other tax required by law to be withheld with respect to the grant or
exercise of an Option under the Plan, including, without limitation, the
deduction of the amount of any such withholding tax from any compensation or
other amounts payable to an Optionee by the Company, or requiring an Optionee
(or the Optionee's beneficiary or legal representative) as a condition of
granting or exercising an Option to pay to the Company any amount required to be
withheld, or to execute such other documents as the Board deems necessary or
desirable in connection with the satisfaction of any applicable withholding
obligation. In the discretion of the Board, upon exercise of a Nonstatutory
Stock Option, the Optionee may request the Company to withhold from the Shares
to be issued upon such exercise that number of Shares (based on the Fair
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Market Value of the Shares as of the day notice of exercise is received by the
Company) that would satisfy any tax withholding requirement.
17. Legends on Options and Stock Certificates. Each option agreement and
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each certificate representing Shares acquired upon exercise of an Option shall
be endorsed with all legends, if any, required by applicable federal and state
securities laws to be placed on the option agreement and/or the certificate.
The determination of which legends, if any, shall be placed upon option
agreements and/or the certificates representing Shares shall be made by the
Board in its sole discretion and such decision shall be final and binding.
18. Availability of Plan and Financial Statements. A copy of this Plan
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shall be delivered to the Secretary of the Company and shall be shown by the
Secretary to any eligible person making reasonable inquiry concerning the Plan.
The Company shall also provide Optionees with financial statements of the
Company at least annually.
19. Applicable Law. This Plan shall be governed by and construed in
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accordance with the laws of the State of California.
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