DATA NATIONAL CORPORATION
1997 STOCK OPTION PLAN
1. PURPOSES. The purposes of this 1997 Stock Option Plan are to
further the interests of DATA NATIONAL CORPORATION by (i) providing incentives
for employees and consultants of the Company who may be designated for
participation in the Plan, (ii) to provide additional means of attracting and
retaining competent personnel, and (iii) to secure and increase the
proprietary interest of such persons in the continued success of the business
of the Company.
2. DEFINITIONS. As used herein, the following definitions shall apply:
2.1 Board. "Board" shall mean the Board of Directors of the
Company.
2.2 Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.3 Committee. "Committee" shall mean the Executive Compensation
Committee, if any, established by the Board in accordance with Section 3 to
administer this Plan. In the event that the Board has not established a
Committee, the members of the Committee have not been appointed, or the
Committee is not functional for any other reason, then all references herein
to the Committee during any such period shall be deemed to refer to the Board.
2.4 Common Shares. "Common Shares" shall mean the Voting Common
Shares of the Company, par value $.001.
2.5 Company. "Company" shall mean Data National Corporation, a
Colorado corporation. In the event of the existence of one or more Parent or
Subsidiary corporations of the Company, then all references herein to the
Company shall include a reference to such Parent and Subsidiary corporations,
as the context so requires to permit the granting of Options to any Employee
or Consultant of any such Parent or Subsidiary pursuant to this Plan.
2.6 Consultant. "Consultant" shall mean (i) any person who is
engaged by the Company as a consultant or adviser to render bona fide
consulting or advisory services to the Company and is compensated for such
consulting services, and (ii) any director of the Company whether compensated
for such services or not. The words "consultant" and "adviser" in part (i) of
the previous sentence shall be given the meanings which are generally given
such words within the scope of Rule 701 promulgated under the Securities Act
of 1933. No Options shall be awarded pursuant to this Plan to Consultants for
services rendered in connection with the offer and sale of securities in a
capital-raising transaction.
2.7 Employee. "Employee" shall mean any common law employee of the
Company, including officers.
2.8 Incentive Stock Option. "Incentive Stock Option" shall mean a
stock option which (i) is granted pursuant to the Plan, and (ii) is intended
to qualify as an incentive stock option within the meaning of Section 422 of
the Code. Incentive Stock Options shall be granted only to Employees.
Section 422 of the Code provides specific tax treatment for Incentive Stock
Options, which may be viewed by Employees as favorable.
2.9 Non-Qualified Stock Option. "Non-Qualified Stock Option" shall
mean a stock option which (i) is granted pursuant to the Plan, and (ii) is not
intended to qualify as an incentive stock option within the meaning of Section
422 of the Code.
2.10 Option. "Option" shall mean any stock option granted pursuant
to the Plan, including both Incentive Stock Options and Non-Qualified Stock
Options.
2.11 Optionee and Optionees. "Optionee" shall mean any Employee or
Consultant who has been granted an Option pursuant to this Plan. "Optionees"
shall collectively mean the Employees and Consultants who have been granted
Options pursuant to this Plan.
2.12 Parent. "Parent" shall mean a "parent corporation," whether
now or hereafter existing, as defined in Section 424(e) of the Code.
2.13 Plan. "Plan" shall mean this 1997 Stock Option Plan of the
Company.
2.14 Subsidiary. "Subsidiary" shall mean a "subsidiary
corporation," whether now or hereafter existing, as defined in Section 424(f)
of the Code.
3. ADMINISTRATION.
3.1 Executive Compensation Committee. The Plan shall be
administered by an Executive Compensation Committee appointed by the Board.
The Committee shall consist of not less than three (3) members, all of whom
shall also be a director of the Company, an officer of the Company, or a
member of the Advisory Board of Directors of the Company, if any. Once
appointed, the Committee shall continue to serve until otherwise directed by
the Board. From time to time, the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause), appoint new members in substitution therefor, or remove all
members of the Committee and thereafter directly administer the Plan.
3.2 Procedure. Subject to the provisions of the Plan and
applicable law, the Committee is authorized to interpret the Plan and to
prescribe, amend, and rescind rules and regulations relating to the Plan and
to any Options granted thereunder, and to make all other determinations
necessary or advisable for the administration of the Plan. Any controversy or
claim arising out of or relating to the Plan shall be determined unilaterally
by and at the sole discretion of the Committee. Members of the Committee who
are either eligible for Options or have been granted Options may vote on any
matters affecting the administration of the Plan or the grant of any Options
pursuant to the Plan, except that no such member shall act upon the granting
of an Option to himself or herself, but any such member may be counted in
determining the existence of a quorum at any meeting of the Committee during
which action is taken with respect to the granting of Options to him or her.
3.3 Effect of Committee's Decision. Except as otherwise provided
in the following sentence, all decisions, determinations, and interpretations
of the Committee shall be final and binding on all holders of any Options
granted pursuant to the Plan. At any time in its own discretion, or at the
request of one or more officers of the Company or members of the Committee,
the Board may review, investigate, or oversee any decisions, determinations,
or interpretations of the Committee, and may approve or reverse any such
action of the Committee, provided that the Board shall only reverse a
decision, determination, or interpretation of the Committee within a
reasonable time after the date such action is finally adopted by the
Committee.
4. TYPES OF OPTIONS, PARTICIPANTS, AND ALLOTMENTS.
4.1 Types of Options. Options granted hereunder may be either
Incentive Stock Options or Non-Qualified Stock Options. The type of Option
granted in each instance shall be at the discretion of the Committee, taking
into account such factors and considerations as the Committee shall determine
are appropriate in each instance, and as reflected in the terms of the written
option agreement; provided that Incentive Stock Options may only be granted to
Employees. Among the factors considered by the Committee may be the
requirement in Section 422(a)(1) of the Code that favorable tax treatment
under Section 421 of the Code is available for Incentive Stock Options only if
there is no disposition of any Common Share within two (2) years from the date
of the granting of the Option nor within one (1) year after the transfer of
the Common Share to the Optionee. The Committee shall use a written option
agreement in substantially the form attached hereto as Exhibit 1 in the case
of the grant of an Incentive Stock Option, and a written option agreement in
substantially the form attached hereto as Exhibit 2 in the case of the grant
of a Non-Qualified Stock Option.
4.2 Participants. Options may be granted only to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. The
Committee shall determine and designate from time to time those Employees and
Consultants of the Company to whom Non-Qualified Options are to be granted,
and those Employees to whom Incentive Stock Options are to be granted, and who
thereby become participants in the Plan. An Employee or Consultant who has
been granted an Option may, if he or she is otherwise eligible, be granted an
additional Option or Options. All participants in the Plan shall be provided
with a copy of the Plan.
4.3 Allotment. The Committee shall allot Options to such Employees
and Consultants in such amounts as the Committee shall from time to time
determine; provided, however, that no Incentive Stock Option may be granted to
an Employee if, as the result of such grant, the aggregate fair market value
(determined as of the time the Option is granted) of the Commons Shares for
which such Optionee has been granted Incentive Stock Options exercisable for
the first time by such Employee during any calendar year under all incentive
stock option plans of the Company and any Parent and Subsidiary would exceed
$100,000. The Plan shall not confer upon any Optionee any right with respect
to continuation of an employment, consulting, or advisory relationship with
the Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate his or her employment, consulting, or advisory
relationship at any time.
4.4 Option Grant Period. NO OPTION SHALL BE GRANTED AFTER THE DATE
WHICH IS TEN (10) YEARS FROM THE DATE THE PLAN IS ADOPTED BY THE BOARD, OR THE
DATE THE PLAN IS APPROVED BY THE COMPANY'S SHAREHOLDERS, WHICHEVER IS EARLIER.
5. SHARES SUBJECT TO THE PLAN. Subject to the provisions of subsection
8.1, the Committee may from time to time grant Options to Employees and
Consultants entitling the holders thereof to purchase up to an aggregate of
250,000 Common Shares. If any Option granted under the Plan shall terminate
or expire unexercised, in whole or in part, the Common Shares so released may
be made the subject of additional Options granted under the Plan. The Company
shall reserve and keep available such number of Common Shares as will satisfy
the requirements of all outstanding Options granted under the Plan.
6. TERMS AND CONDITIONS.
6.1 Exercise Price. The per Common Share exercise price for the
Common Shares to be issued pursuant to exercise of an Option shall be such
price as determined by the Committee, except that:
6.1.1 In the case of an Incentive Stock Option, the exercise price
shall not be less than one hundred percent (100%) of the fair market value of
a Common Share on the date the Incentive Stock Option is granted, provided
that if an Incentive Stock Option is granted to an Employee who, at the time
of the grant of such Incentive Stock Option, owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock
of the Company or its Parent or Subsidiary corporations, the exercise price
shall be at least one hundred ten percent (110%) of the fair market value of a
Common Share on the date the Incentive Stock Option is granted; and
6.1.2 In the case of a Non-Qualified Stock Option, the exercise
price shall be determined by the Committee.
6.2 Fair Market Value. The fair market value of a Common Share
shall be determined in good faith by the Committee in its discretion;
provided, however, that if there is a public market for the Common Shares, the
fair market value per Common Share shall be the mean of the bid and ask prices
of the Common Shares for the date of grant, as reported by any one of the Wall
Street Journal, the National Association of Securities Dealers Automated
Quotation (NASDAQ) System, or any other recognized reporting medium, or, in
the event the Common Shares are listed on a stock exchange, the fair market
value per Common Share shall be the closing price on such exchange on the date
of grant of the Option, as reported in the Wall Street Journal. For purposes
of determining whether the fair market value of stock equals the option price
(as required by Section 422(b)(4) of the Code), the Common Shares must be
valued without regard to any restriction other than a restriction which, by
its terms, will never lapse.
6.3 Consideration. The consideration to be paid for the Common
Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Committee and may consist entirely of
cash, check, other Common Shares having a fair market value on the date of
surrender equal to the aggregate exercise price of the Common Shares as to
which the Option shall be exercised, or any combination of such methods of
payment, or such other consideration and method of payment for the issuance of
the Common Shares to the extent permitted under Section 7-106-202 of the
Colorado Business Corporation Act. In making its determination as to the type
of consideration to accept, the Committee shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.
6.4 Additional Option Terms. The Committee shall, in its sole
discretion, but within the limitations provided in the Plan and by the Code in
the case of Incentive Stock Options, determine whether any particular Option
shall become exercisable in one or more installments, specify the installment
dates, and determine the total period during which the Option is exercisable.
Further, the Committee may make such other provisions as may appear generally
acceptable or desirable to the Committee or necessary to qualify the Incentive
Stock Options as "incentive stock options" under the provisions of Section 422
of the Code. The Committee may also, in its sole discretion, authorize
acceleration of the exercise of an Option or installment.
6.5 Exercise Period. No Option shall be exercisable after the
expiration of such Option, which expiration shall occur upon the earliest of:
6.5.1 In the case of any Option granted to an Employee, ten
(10) years from the date the Option is granted, or such shorter term as may be
provided in the Option granted; or
6.5.2 In the case of an Incentive Stock Option granted to an
Employee who, at the time the Incentive Stock Option is granted, owns stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, five (5)
years from the date the Incentive Stock Option is granted, or such shorter
term as may be provided in the Option granted; or
6.5.3 In the case of any Option granted to an Employee, the
earliest of:
6.5.3.1 The date on which he or she is notified in
writing by the Company that his or her employment with the Company is being
terminated; or
6.5.3.2 The date on which he or she notifies the
Company that his or her employment with the Company will cease; or
6.5.3.3 If neither party provides notice of the
termination or cessation of employment, on the date on which his or her
employment with the Company ceases; or
6.5.4 In the case of any Option granted to a Consultant, one
(1) year from the date the Option is granted, or such other term as may be
provided in the Option granted, provided that such term may not exceed ten
(10) years from the date the Option is granted; or
6.5.5 The date upon which the Option terminates pursuant to
subsection 8.2 of the Plan; or
6.5.6 The date upon which the Option terminates pursuant to
subsection 8.3 of the Plan.
6.6 Exercise Restrictions and Requirements.
6.6.1 Incentive Stock Option Vesting Period. In the case
of any Incentive Stock Option granted to an Employee, subject to the
provisions of paragraph 6.6.2, such Option shall be exercisable prior to such
Option's expiration as follows:
6.6.1.1 During the period beginning one (1) year from
the date of the grant of the Option and ending two (2) years from the date of
such grant, the Optionee shall have the right to exercise the Option for at
most 20% of the initial number of Common Shares subject to the Option;
6.6.1.1 During the period beginning two (2) years
from the date of the grant of the Option and ending three (3) years from the
date of such grant, the Optionee shall have the right to exercise the Option
for at most an additional 20% of the initial number of Common Shares subject
to the Option;
6.6.1.3 During the period beginning three (3) years
from the date of the grant of the Option and ending four (4) years from the
date of such grant, the Optionee shall have the right to exercise the Option
for at most a second additional 20% of the initial number of Common Shares
subject to the Option; and
6.6.1.4 During the period beginning four (4) years
from the date of the grant of the Option and ending ten (10) years from the
date of such grant, the Optionee shall have the right to exercise the Option
for all the remaining Common Shares subject to the Option.
6.6.2 Additional Incentive Stock Option Vesting Period
Requirements. The Optionee's right to purchase Common Shares in accordance
with paragraph 6.6.1 shall be cumulative. The Committee may in its discretion
grant the Optionee the right to exercise his or her Option for a smaller or
larger percentage of the Common Shares subject to the Option during the period
beginning one (1) year from the date of the grant of the Option and ending
nine (9) years from the date of such grant.
6.6.3 Additional Incentive Stock Option Exercise
Requirements. An Incentive Stock Option may be exercised by an Optionee only
if such Optionee (i) is currently an Employee of the Company, and (ii) has
maintained continuous status as an Employee at all times during the period
beginning on the date of the granting of the Option and ending at the time of
the exercise of the Option. The phrase "continuous status as an Employee"
shall mean the absence of any interruption or termination of service as an
Employee. Continuous status as an Employee shall not be considered
interrupted in the case of sick leave, military leave, or any other bona fide
leave or absence approved by the Committee; provided that either (i) such
leave is for a period of not more than ninety (90) days, or (ii) reemployment
upon the expiration of such leave is guaranteed by either contract or statute.
7. EXERCISE OF OPTION.
7.1 Procedure for Exercise. Subject to the terms hereof, any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Committee, including performance criteria with
respect to the Company and/or the Optionee, and as shall be permissible under
the terms of this Plan. An Option may not be exercised for a fraction of a
share. An Option may be exercised in whole or in part only by the delivery by
the Optionee (or legal representative thereof) of written notice to the
Company in accordance with the terms of the applicable stock option agreement
by the person entitled to exercise the Option and full payment for the Common
Shares with respect to which notice of exercise has been received by the
Company. Full payment may, as authorized by the Committee, consist of any
consideration and method of payment allowable under subsection 6.3 of the
Plan.
7.1.1 In the event of failure of the Optionee to take and
pay for the number of Common Shares specified in the notice of exercise by the
date stated therein, the Option shall become inoperative as to such number of
Common Shares, but shall continue with respect to any remaining Common Shares
subject to the Option as to which notice of exercise has not been given.
7.1.2 Exercise of an Option in any manner shall result in a
decrease in the number of Common Shares which thereafter may be available both
for purposes of the Plan and for sale under the Option.
7.2 Registration and Compliance with Rules. The Option may not
be exercised until the Company has taken all action to comply with all federal
and state laws, rules, and regulations and the rules and regulations of any
securities exchange on which the Common Shares may then be listed applicable
to the issuance of the Common Shares to be acquired, as the Company shall, in
its absolute discretion upon the advice of counsel, determine to be necessary
or advisable. If the Company shall be advised by its counsel that shares of
stock deliverable upon any exercise of an Option are required to be registered
under the Securities Act of 1933, or that the consent of any other authority
is required for the issuance of same, the Company may effect registration or
obtain consent, and delivery of shares by the Company may be deferred until
registration is effected or consent obtained. Inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Common Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Common Shares as to
which such requisite authority shall not have been obtained.
7.3 Rights as a Shareholder. The Optionee shall have no rights
as a shareholder with respect to the Common Shares covered by the Option until
payment for such Common Shares shall have been made in full and until the date
of the issuance of a share certificate for such Common Shares. No adjustment
will be made for a dividend or other right for which the record date is prior
to the date the share certificate is issued, except as provided in subsection
8.1 of the Plan.
7.4 Investment Intent and Restrictions on Transfer of Common
Shares.
7.4.1 Investment Representation Letter. Unless the Common
Shares to be acquired pursuant to the exercise of the Option shall have been
registered under the Securities Act of 1933, as amended (the "Act"), prior to
such exercise, each notice of the exercise of the Option shall be accompanied
by an Investment Representation Letter in the Form attached as Exhibit B to
each of the form stock option agreements, such Investment Representation
Letter to include a representation that any of the Common Shares purchased
pursuant to the Option shall be acquired for investment only, and not with a
view to, or for sale in connection with, any public distribution, or that any
subsequent resale of any of such Common Shares either shall be made pursuant
to a registration statement under the Act which has become effective and is
current with regard to the Common Shares being sold, or shall be made pursuant
to an exemption from registration under the Act.
7.4.2 Restrictions on Transfer and Stock Certificate
Legend. The Common Shares issued upon exercise of an Option will be
"restricted securities" within the meaning of Rule 144 promulgated under the
Act and resales of the Common Shares must be in compliance with Rule 144, the
registration requirements of the Act, or an exemption therefrom. The
certificates representing the Common Shares shall bear (i) any legend required
by applicable Blue Sky or other state securities or corporate laws, and (ii) a
legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER STATE SECURITIES LAWS.
THEY HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, ASSIGNED, OR OTHERWISE MARKETED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THESE SECURITIES UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH OFFER, SALE, TRANSFER, ASSIGNMENT, OR OTHER MARKETING IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH STATE
SECURITIES LAWS AND THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH
STATE SECURITIES LAWS.
7.4.3 Restriction on Disposition. Except as otherwise
provided in subsections 8.2 and 8.3, Common Shares acquired pursuant to an
Incentive Stock Option shall not be disposed of by the holder thereof within
twenty-four (24) months from the date of grant of the Option nor within twelve
(12) months from the date of transfer of such Common Shares by the Company to
the Optionee, other than pursuant to the laws of descent or distribution.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
8.1 Capital Restructuring. Subject to any required action by the
shareholders of the Company, the number of Common Shares covered by each
outstanding Option, and the number of Common Shares which have been authorized
for issuance under the Plan, but as to which no Options have yet been granted
or which have been returned to the Plan upon cancellation or expiration of the
Option, as well as the price per Common Share covered by each such outstanding
Option, shall be proportionately adjusted for any increase or decrease in the
number of issued Common Shares resulting from a stock split, reverse stock
split, stock dividend, combination, or reclassification of the Common Shares,
or any other increase or decrease in the number of issued Common Shares
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be
deemed to have been "effected without receipt of consideration." Such
adjustments shall be made by the Committee, whose determination in that
respect shall be final, binding, and conclusive. Except as otherwise
expressly provided herein, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of Common Shares subject to an Option.
8.2 Dissolution. In the event of the proposed dissolution or
liquidation of the Company, the Option will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the
Committee. The Committee may, in the exercise of its sole discretion in such
instance, declare that any Option shall terminate as of the date fixed by the
Committee, give each Optionee the right to exercise his or her Option as to
all or any part of the Common Shares subject to the Option, including Common
Shares as to which the Option would not otherwise be exercisable.
8.3 Sale or Merger. In the event of a proposed sale of all or
substantially all of the assets of the Company, the merger of the Company with
or into another corporation (other than with a wholly-owned subsidiary) or
business entity, the consolidation of the Company with another corporation
(other than with a wholly-owned subsidiary) or business entity, or the
occurrence of some other acquisitive or divisive reorganization, and provided
that any new employer corporation (or its Parent or Subsidiary) does not
elect, in compliance with Section 424(a) of the Code, to either issue a new
incentive stock option in exchange for a current Incentive Stock Option or
assume the current Incentive Stock Option, then the Optionee shall have the
right to exercise the Option, including with respect to the Common Shares as
to which the Option would not otherwise be exercisable. If an Option becomes
fully exercisable in the case of an event described above, the Committee shall
notify the Optionee that the Option shall be fully exercisable for a period of
thirty (30) days from the date of such notice, and the Option will terminate
upon the expiration of such period.
9. NON-TRANSFERABILITY OF OPTIONS. The Options may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.
10. AMENDMENT AND TERMINATION OF THE PLAN.
10.1 Amendment and Termination. The Board may amend or terminate
the Plan from time to time in such respects as it may deem advisable;
provided, however, that the following revisions or amendments shall require
approval of the holders of a majority of the outstanding Voting Common Stock
of the Company:
10.1.1 Any increase in the aggregate number of Shares
subject to the Plan, other than in connection with an adjustment under
subsection 8.1 of the Plan; or
10.1.2 Any change in the designation of the class of
Employees or Consultants eligible to be granted Options.
10.2 Effect of Amendment and Termination. Any such amendment or
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee
and the Committee, which agreement must be in writing and signed by the
Optionee and the President of the Company.
11. RESERVATION OF COMMON SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Common
Shares as shall be sufficient to satisfy the requirements of the Plan.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall,
for all purposes, be the date on which the Committee makes the determination
to grant such Option. Notice of the determination shall be given to each
Employee or Consultant to whom an Option is so granted within a reasonable
time after the date of such grant.
13. OPTION AGREEMENT. The granting of an option shall take place only
when a written option agreement substantially in the form of the Incentive
Stock Option Agreement which is attached hereto as Exhibit 1 or in the form of
the Non-Qualified Stock Option Agreement which is attached hereto as Exhibit
2, as the case may be, is executed by or on behalf of the Company and the
Employee or Consultant to whom the Option is granted and such executed
agreement is delivered to the Company.
14. EFFECTIVE DATE AND DURATION OF THE PLAN.
14.1 Effective Date. The Plan shall become effective upon its
adoption by the Board. However, unless on, or within twelve (12) months
after, the date the Plan is adopted by the Board, the Plan is approved by the
holders of a majority of the Voting Common Stock of the Company, the Plan and
any Options already granted shall be canceled. If such shareholder approval
is obtained by written consent, it must be obtained by the unanimous consent
of all voting shareholders of the Company.
14.2 Termination. No Options shall be granted on or after the
tenth anniversary of the date of adoption of the Plan by the Board, or the
date the Plan is approved by the Company's shareholders, whichever is earlier.
The Plan shall expire on the later of said tenth anniversary date or the date
on which all Options granted under the Plan have expired or been exercised in
full.
EXHIBIT 1
DATA NATIONAL CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement"), is made this ----
day of -----------------, ----, by and between DATA NATIONAL CORPORATION, a
Colorado corporation (the "Company"), and -------------------------------, an
employee of the Company (the "Optionee").
RECITALS
WHEREAS, the Board of Directors of the Company has adopted the 1997 Stock
Option Plan (the "Plan"); and
WHEREAS, the Executive Compensation Committee of the Company (the
"Committee") considers it desirable and in the Company's best interests that
the Optionee be given an opportunity to purchase shares of the Company's
Voting Common Stock in furtherance of the Plan to provide additional
compensation to the Optionee, provide incentive for the Optionee to remain in
the employ of the Company, and to promote the success of the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the Recitals, the mutual covenants,
promises, agreements, representations, and warranties of the parties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:
1. GRANT OF OPTION. The Company hereby grants to the Optionee the
right, privilege, and option to purchase --------------------- (------) shares
of the Voting Common Stock, par value $.001 ("Common Shares"), of the Company,
at a purchase price of ----------------------------- Dollars ($--------) per
share, in the manner and subject to the conditions hereinafter provided. Said
purchase price is not less than the fair market value of one share of the
Voting Common Stock of the Company at the time this Option is granted, or if
the Optionee is an Employee who, at the time the Option is granted, owns stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or its Parent or Subsidiary corporations,
said purchase price is not less than 110% of the fair market value of one
share of the Common Shares of the Company at the time this Option is granted.
2. APPLICABILITY OF STOCK OPTION PLAN. The Option granted hereunder
shall be in all respects governed by and subject to the terms, definitions,
and provisions of the Data National Corporation 1997 Stock Option Plan (the
"Plan") adopted by the Company, which is incorporated herein by reference and
attached hereto as Exhibit A. The terms defined in the Plan shall have the
same defined meanings herein.
3. NATURE OF THE OPTION. The Option granted pursuant to this
Agreement is intended to be an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code. The Optionee, however, is required
to comply with numerous requirements imposed by the Internal Revenue Code and
this Agreement to obtain the income tax benefits associated with an incentive
stock option and the Optionee is solely responsible for compliance therewith.
4. PERIOD OF EXERCISE OF OPTION.
4.1 Period of Exercise. This Option shall be exercisable prior
to such Option's expiration pursuant to Section 6 of this Agreement, only as
follows:
4.1.1 During the period beginning one (1) year from the
date of the grant of the Option and ending two (2) years from the date of such
grant, the Optionee shall have the right to exercise the Option for at most
20% of the initial number of Common Shares subject to the Option;
4.1.2 During the period beginning two (2) years from the
date of the grant of the Option and ending three (3) years from the date of
such grant, the Optionee shall have the right to exercise the Option for at
most an additional 20% of the initial number of Common Shares subject to the
Option;
4.1.3 During the period beginning three (3) years from the
date of the grant of the Option and ending four (4) years from the date of
such grant, the Optionee shall have the right to exercise the Option for at
most a second additional 20% of the initial number of Common Shares subject to
the Option; and
4.1.4 During the period beginning four (4) years from the
date of the grant of the Option and ending ten (10) years from the date of
such grant, the Optionee shall have the right to exercise the Option for all
the remaining Common Shares subject to the Option.
4.2 Cumulative Right to Exercise Options During Vesting Period.
The Optionee's right to purchase Common Shares in accordance with subsection
4.1 shall be cumulative.
4.3 Additional Exercise Requirements. Notwithstanding anything
to the contrary herein, this Option may be exercised by the Optionee only if
the Optionee (i) is currently an Employee of the Company, and (ii) has
maintained continuous status as an Employee at all times during the period
beginning on the date of the granting of the Option and ending at the time of
the exercise of the Option. The phrase "continuous status as an Employee"
shall mean the absence of any interruption or termination of service as an
Employee. Continuous status as an Employee shall not be considered
interrupted in the case of sick leave, military leave, or any other bona fide
leave or absence approved by the Committee; provided that either (i) such
leave is for a period of not more than ninety (90) days, or (ii) reemployment
upon the expiration of such leave is guaranteed by either contract or statute.
5. EXERCISE OF OPTION. This Option shall be exercisable during its
term in accordance with the provisions of Section 7 of the Plan and subject to
the following:
5.1 Procedure for Exercise. The Option may be exercised in whole
or in part only by the delivery by the Optionee (or legal representative
thereof) of written notice to the Company in accordance with the terms of this
Agreement and full payment for the Common Shares with respect to which notice
of exercise is given to the Company. Full payment may, as authorized by the
Committee, consist of any consideration and method of payment allowable under
subsection 6.3 of the Plan, except that payment in any method other than by
cash or certified check must be pre-authorized by the Committee.
5.1.1 In the event of failure of the Optionee to take and
pay for the number of Common Shares specified in the notice of exercise by the
date stated therein, the Option shall become inoperative as to such number of
Common Shares, but shall continue with respect to any remaining Common Shares
subject to the Option as to which notice of exercise has not been given.
5.1.2 Exercise of an Option in any manner shall result in a
decrease in the number of Common Shares which thereafter may be available both
for purposes of the Plan and for sale under the Option.
5.2 Registration and Compliance with Rules. The Option may not
be exercised until the Company has taken all action to comply with all federal
and state laws, rules, and regulations and the rules and regulations of any
securities exchange on which the Common Shares may then be listed applicable
to the issuance of the Common Shares to be acquired, as the Company shall, in
its absolute discretion upon the advice of counsel, determine to be necessary
or advisable. If the Company shall be advised by its counsel that shares of
stock deliverable upon any exercise of an option are required to be registered
under the Securities Act of 1933, or that the consent of any other authority
is required for the issuance of same, the Company may effect registration or
obtain consent, and delivery of shares by the Company may be deferred until
registration is effected or consent obtained. Inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Common Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Common Shares as to
which such requisite authority shall not have been obtained.
6. EXPIRATION OF OPTION. This Option shall not be exercisable in whole
or in part after the expiration of such Option, which expiration shall occur
upon the earliest of:
6.1 Ten (10) years from the date the Option is granted; or
6.2 If the Option is granted to an Employee who, at the time the
Option is granted, owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or its
Parent or Subsidiary corporations, five (5) years from the date the Option is
granted; or
6.3 The earliest of:
6.3.1 The date on which the Optionee is notified in writing
by the Company that his or her employment with the Company is being
terminated; or
6.3.2 The date on which the Optionee notifies the Company
that his or her employment with the Company will cease; or
6.3.3 If neither party provides notice of the termination
or cessation of employment, on the date on which the Optionee's employment
with the Company ceases; or
6.4 The date upon which the Option terminates pursuant to
subsection 8.2 of the Plan; or
6.5 The date upon which the Option terminates pursuant to
subsection 8.3 of the Plan.
7. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a
shareholder with respect to the Common Shares covered by this Agreement until
payment for such Common Shares shall have been made in full and until the date
of the issuance of a share certificate for such Common Shares. No adjustment
will be made for a dividend or other right for which the record date is prior
to the date the share certificate is issued, except as provided in subsection
8.1 of the Plan.
8. RESTRICTION ON TRANSFER AND LIMITATION UPON EXERCISE. This Option
may not be sold, pledged, assigned, hypothecated, transferred, or disposed of
in any manner other than by will or the laws of descent and distribution and
is exercisable, during the lifetime of the Optionee, only by the Optionee.
9. RESTRICTIONS ON TRANSFER OF COMMON SHARES.
9.1 Investment Representation Letter. Unless the Common Shares
to be acquired pursuant to the exercise of the Option shall have been
registered under the Securities Act of 1933, as amended (the "Act"), prior to
such exercise, each notice of the exercise of the Option shall be accompanied
by an Investment Representation Letter in the Form attached hereto as Exhibit
B, such Investment Representation Letter to include a representation that any
of the Common Shares purchased pursuant to the Option shall be acquired for
investment only, and not with a view to, or for sale in connection with, any
public distribution, and that any subsequent resale of any of such Common
Shares either shall be made pursuant to a registration statement under the Act
which has become effective and is current with regard to the Common Shares
being sold, or shall be made pursuant to an exemption from registration under
the Act.
9.2 Stock Certificate Legend. Unless the Common Shares to be
acquired pursuant to the exercise of the Option shall have been registered
under the Act prior to such exercise, the Common Shares issued upon exercise
of this Option will be "restricted securities" within the meaning of Rule 144
promulgated under the Act and resales of Common Shares must be in compliance
with Rule 144, the registration requirements of the Act, or an exemption
therefrom. The certificates representing the Common Shares acquired by the
exercise of this Option shall bear (i) any legend required by applicable Blue
Sky or other state securities or corporate laws, and (ii) a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER STATE SECURITIES LAWS.
THEY HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, ASSIGNED, OR OTHERWISE MARKETED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THESE SECURITIES UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH OFFER, SALE, TRANSFER, ASSIGNMENT, OR OTHER MARKETING IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH STATE
SECURITIES LAWS AND THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH
STATE SECURITIES LAWS.
9.3 Restriction on Disposition. Except as otherwise provided in
subsections 8.2 and 8.3 of the Plan, Common Shares acquired pursuant to the
exercise of this Option shall not be disposed of by the Optionee within
twenty-four (24) months from the date of grant of the Option nor within twelve
(12) months from the date of transfer of such Common Shares by the Company to
the Optionee, other than pursuant to the laws of descent or distribution.
Earlier disposition, whether pursuant to subsections 8.2 or 8.3 of the Plan or
otherwise, could negatively impact the Optionee's tax consequences relating to
the Option.
10. STOCK RESERVED. The Company shall at all times during the term of
this Agreement reserve and keep available such number of shares of its Voting
Common Stock as will be sufficient to satisfy the terms of this Agreement and
shall pay any original issue taxes on the exercise of this Option.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. The number
of Common Shares subject to this Option and the exercise price per Common
Share shall be adjusted in accordance with the provisions of subsection 8.1 of
the Plan upon the occurrence of any event described therein. This Option may
be terminated in the event of the proposed dissolution or liquidation of the
Company pursuant to subsection 8.2 of the Plan. Subsection 8.3 of the Plan
provides that this Option may be terminated, assumed by a new employer
corporation, or the exercise of the Option may be accelerated upon the
occurrence of specified transactions. This Section 11 is qualified in all
respects by the terms of Section 8 of the Plan, which is specifically
incorporated herein.
12. MISCELLANEOUS PROVISIONS.
12.1 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of any successor or successors of the Company and any
permitted heirs, devisees, assigns, successor or successors of the Optionee.
12.2 Waiver. The failure to demand strict performance of one or
more of the terms, covenants, or conditions set forth herein shall not be
construed as a continuing waiver or relinquishment thereof and any party may
at any time demand strict and complete performance of said terms, covenants,
and conditions.
12.3 Titles. The section and subsection headings used in this
Agreement are for convenience of reference only and shall not affect the
meaning of the terms and provisions of this Agreement.
12.4 Construction. The language of all parts of this Agreement
shall in all cases be construed as a whole, according to its fair meaning, and
not strictly for or against any party. No presumptions or rules of
interpretation based upon the identity of the party preparing or drafting the
Agreement, or any part thereof, shall be applicable or invoked.
12.5 Modification. No modification of this Agreement shall be
valid or binding upon the parties or entitled to any enforcement whatsoever
unless such modification is reduced to writing and signed and dated by both
parties.
12.6 Applicable Law. This Agreement shall be construed,
interpreted, and governed in accordance with the laws of the State of
Colorado, excluding any choice of law rules (whether of the State of Colorado
or any other jurisdiction) which may direct the application of the laws of
another jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Incentive Stock
Option Agreement to be executed the day and year first above written.
DATA NATIONAL CORPORATION,
a Colorado corporation:
By:------------------------------------
Printed Name:----------------------
Title:-----------------------------
The Optionee acknowledges receipt of a copy of the Plan and represents
that he or she is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof in
addition to the terms and provisions of this Agreement. The Optionee hereby
agrees to accept as binding, conclusive, and final all decisions or
interpretations of the Committee upon any questions arising under the Plan.
OPTIONEE:
--------------------------------------
Printed Name:-------------------------
EXHIBIT B TO INCENTIVE STOCK OPTION AGREEMENT
INVESTMENT REPRESENTATION LETTER
Pursuant to the terms and conditions of that certain Incentive Stock
Option Agreement, dated as of ------------, ---- (the "Stock Option
Agreement"), whereby the undersigned (the "Optionee") was granted an option to
purchase shares of the Voting Common Stock, $.001 par value, of Data National
Corporation (the "Shares"), the Optionee hereby represents and warrants to
Data National Corporation (the "Company") as follows:
1. To the extent that the Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, the Optionee
has read and is familiar with the Company's latest annual report to the
Securities and Exchange Commission on Form 10-K, the Company's latest
quarterly report to the Securities and Exchange Commission on Form 10-Q, and
any current reports of the Company since the date of the latter to the
Securities and Exchange Commission on Form 8-K, and has read and is familiar
with the audited financial statements and unaudited monthly or quarterly, as
the case may be, financial statements of the Company (such reports and
financial statements, collectively, the "Evaluation Material"), access to
which was afforded by the Company to the Optionee prior to the execution of
this Investment Representation Letter (the "Letter") and the purchase by the
Optionee of the Shares.
2. To the extent that the Company is not subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, the Optionee
has been provided and has read and is familiar with the Company's recent
audited financial statements and unaudited monthly or quarterly, as the case
may be, financial statements of the Company, any recent business plans of the
Company, and such other reports, plans, and memoranda of the Company which
explain and provide information concerning the business and affairs of the
Company (such reports, plans, memoranda, and financial statements are also
collectively referred to as the "Evaluation Material"), access to which was
afforded by the Company to the Optionee prior to the execution of this Letter
and the purchase by the Optionee of the Shares.
3. Prior to purchasing the Shares, the Company has made available to
the Optionee, during the course of this transaction and prior to the purchase
of the Shares, the opportunity to ask questions of, and receive answers from,
the Company and those persons acting on its behalf, concerning the terms and
conditions of this Letter and the information contained in the Evaluation
Material, and to obtain any additional information necessary to verify the
information provided by the Company to the extent that the Company possesses
such information or can acquire it without unreasonable effort or expense.
4. The Optionee has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks of
investments generally, and of the Optionee's investment in the Shares in
particular. The Optionee is able to bear the economic risk of this investment
with the full understanding that he or she can lose his or her entire
investment; and the Optionee can lose his or her entire investment in the
Shares without producing a material adverse change in his or her standard of
living as of the date hereof.
5. The Optionee acknowledges that neither the Shares nor the sale
thereof to the Optionee has been registered under the Securities Act of 1933,
as amended (the "Securities Act"), or under any state securities laws. The
Optionee understands that no registration statement with respect to the Shares
has been filed with the Securities and Exchange Commission, nor with any other
regulatory authority, and that, as a result, any benefit which might normally
accrue to a holder such as the Optionee by an impartial review of such a
registration statement by the Securities and Exchange Commission or other
regulatory authority will not be forthcoming. The Optionee understands that
the Shares are "restricted securities" under the Securities Act and,
therefore, cannot be resold unless they are subsequently registered under the
Securities Act, or unless an exemption from such registration is available;
that the Optionee may not resell or otherwise dispose of all or any part of
the Shares, except as permitted by law, including, without limitation, any and
all applicable provisions of the Stock Option Agreement and any regulations
under the Securities Act; and that the Company will restrict the transfer of
the Shares in accordance with the representations contained in this paragraph.
6. The Optionee is the only party in interest with respect to the Stock
Option Agreement, and is acquiring the Shares for investment for his or her
own account for long-term investment only, and not with an intent to resell,
fractionalize, divide, or redistribute all or any part of the Shares to any
other person.
7. The Optionee will not transfer, sell, or offer for sale any of the
Shares in the absence of (i) an effective registration statement relating
thereto under the Securities Act and under all applicable state securities
laws, or (ii) an opinion of counsel satisfactory to the Company that such
registration or other qualification under the Securities Act or applicable
state securities laws is not required in connection with such transfer, offer,
or sale. The Optionee acknowledges that the Company is under no obligation to
register the Shares or to assist the Optionee in complying with any exemption
from registration under the Securities Act or applicable state securities
laws.
8. The Optionee is at least 18 years old.
9. The Optionee has adequate means of providing for his or her current
needs and personal contingencies, and has no need for liquidity in connection
with this investment.
10. The Optionee's overall commitment to investments which are not
readily marketable is not disproportionate to his or her net worth, and the
Optionee's investment in the Shares will not cause such overall commitment to
become excessive.
11. The Optionee has evaluated the risks of investing in the Shares,
and has determined that the Shares are a suitable investment for him or her.
-----------------------------------------
Print Name:------------------------------
NUMBER OF SHARES SUBJECT
TO OPTION:-------------------------------
NUMBER OF SHARES EXERCISED
BY OPTIONEE:-----------------------------
EXHIBIT 2
DATA NATIONAL CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement"), is made this
- ---- day of ----------------, ----, by and between Data National Corporation,
a Colorado corporation (the "Company"), and --------------------------------,
an employee or consultant of the Company (the "Optionee").
RECITALS
WHEREAS, the Board of Directors of the Company has adopted the 1997 Stock
Option Plan (the "Plan"); and
WHEREAS, the Executive Compensation Committee of the Company (the
"Committee") considers it desirable and in the Company's best interests that
the Optionee be given an opportunity to purchase shares of the Company's
Voting Common Stock in furtherance of the Plan to provide additional
compensation to the Optionee and to promote the success of the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the Recitals, the mutual covenants,
promises, agreements, representations, and warranties of the parties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:
1. GRANT OF OPTION. The Company hereby grants to the Optionee the
right, privilege, and option to purchase --------------- (------) shares of
the Voting Common Stock, par value $.001 ("Common Shares"), of the Company, at
a purchase price of -------------------- Dollars ($-----) per share, in the
manner and subject to the conditions hereinafter provided.
2. APPLICABILITY OF STOCK OPTION PLAN. The Option granted hereunder
shall be in all respects governed by and subject to the terms, definitions,
and provisions of the Data National Corporation 1997 Stock Option Plan (the
"Plan") adopted by the Company, which is incorporated herein by reference and
attached hereto as Exhibit A. The terms defined in the Plan shall have the
same defined meanings herein.
3. NATURE OF THE OPTION. The Option granted pursuant to this Agreement
is not intended to be an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code. The Optionee is responsible for
ascertaining the extent of any tax liability and withholdings arising from the
grant or exercise of this Option.
4. PERIOD OF EXERCISE OF OPTION.
4.1 Period of Exercise. This Option shall be exercisable prior
to such Option's expiration pursuant to subsection 4.2 only during the period
beginning on the date of the grant of the Option and ending one (1) year from
the date of such grant.
4.2 Expiration of Option. This Option shall not be exercisable
in whole or in part after the expiration of such Option, which expiration
shall occur upon the earliest of:
4.2.1 One (1) year from the date the Option is granted; or
4.2.2 The date upon which the Option terminates pursuant to
subsection 8.2 of the Plan; or
4.2.3 The date upon which the Option terminates pursuant to
subsection 8.3 of the Plan.
5. EXERCISE OF OPTION. This Option shall be exercisable during its
term in accordance with the provisions of Section 7 of the Plan and subject to
the following:
5.1 Procedure for Exercise. The Option may be exercised in whole
or in part only by the delivery by the Optionee (or legal representative
thereof) of written notice to the Company in accordance with the terms of this
Agreement and full payment for the Common Shares with respect to which notice
of exercise is given to the Company. Full payment may, as authorized by the
Committee, consist of any consideration and method of payment allowable under
subsection 6.3 of the Plan, except that payment in any method other than by
cash or certified check must be pre-authorized by the Committee.
5.1.1 In the event of failure of the Optionee to take and
pay for the number of Common Shares specified in the notice of exercise on the
date stated therein, the Option shall become inoperative as to such number of
Common Shares, but shall continue with respect to any remaining Common Shares
subject to the Option as to which notice of exercise has not been given.
5.1.2 Exercise of an Option in any manner shall result in a
decrease in the number of Common Shares which thereafter may be available both
for purposes of the Plan and for sale under the Option.
5. Registration and Compliance with Rules. The Option may not be
exercised until the Company has taken all action to comply with all federal
and state laws, rules, and regulations and the rules and regulations of any
securities exchange on which the Common Shares may then be listed applicable
to the issuance of the Common Shares to be acquired, as the Company shall, in
its absolute discretion upon the advice of counsel, determine to be necessary
or advisable. If the Company shall be advised by its counsel that shares of
stock deliverable upon any exercise of an option are required to be registered
under the Securities Act of 1933, or that the consent of any other authority
is required for the issuance of same, the Company may effect registration or
obtain consent, and delivery of shares by the Company may be deferred until
registration is effected or consent obtained. Inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Common Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Common Shares as to
which such requisite authority shall not have been obtained.
6. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a
shareholder with respect to the Common Shares covered by this Agreement until
payment for such Common Shares shall have been made in full and until the date
of the issuance of a share certificate for such Common Shares. No adjustment
will be made for a dividend or other right for which the record date is prior
to the date the share certificate is issued, except as provided in subsection
8.1 of the Plan.
7. RESTRICTION ON TRANSFER AND LIMITATION UPON EXERCISE. This Option
may not be sold, pledged, assigned, hypothecated, transferred, or disposed of
in any manner other than by will or the laws of descent and distribution and
is exercisable, during the lifetime of the Optionee, only by the Optionee.
8. RESTRICTIONS ON TRANSFER OF COMMON SHARES.
8.1 Investment Representation Letter. Unless the Common Shares
to be acquired pursuant to the exercise of the Option shall have been
registered under the Securities Act of 1933, as amended (the "Act"), prior to
such exercise, each notice of the exercise of the Option shall be accompanied
by an Investment Representation Letter in the Form attached hereto as Exhibit
B, such Investment Representation Letter to include a representation that any
of the Common Shares purchased pursuant to the Option shall be acquired for
investment only, and not with a view to, or for sale in connection with, any
public distribution, and that any subsequent resale of any of such Common
Shares either shall be made pursuant to a registration statement under the Act
which has become effective and is current with regard to the Common Shares
being sold, or shall be made pursuant to an exemption from registration under
the Act.
8.2 Stock Certificate Legend. Unless the Common Shares to be
acquired pursuant to the exercise of the Option shall have been registered
under the Act prior to such exercise, the Common Shares issued upon exercise
of this Option will be "restricted securities" within the meaning of Rule 144
promulgated under the Act and resales of Common Shares must be in compliance
with Rule 144, the registration requirements of the Act, or an exemption
therefrom. The certificates representing the Common Shares acquired by the
exercise of this Option shall bear (i) any legend required by applicable Blue
Sky or other state securities laws, and (ii) a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER STATE SECURITIES LAWS.
THEY HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, ASSIGNED, OR OTHERWISE MARKETED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THESE SECURITIES UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH OFFER, SALE, TRANSFER, ASSIGNMENT, OR OTHER MARKETING IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH STATE
SECURITIES LAWS AND THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH
STATE SECURITIES LAWS.
9. STOCK RESERVED. The Company shall at all times during the term of
this Agreement reserve and keep available such number of shares of its Voting
Common Stock as will be sufficient to satisfy the terms of this Agreement and
shall pay any original issue taxes on the exercise of this Option.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. The number
of Common Shares subject to this Option and the exercise price per Common
Share shall be adjusted in accordance with the provisions of subsection 8.1 of
the Plan upon the occurrence of any event described therein. This Option may
be terminated in the event of the proposed dissolution or liquidation of the
Company pursuant to subsection 8.2 of the Plan. Subsection 8.3 of the Plan
provides that this Option may be terminated, assumed by a new employer
corporation, or the exercise of the Option may be accelerated upon the
occurrence of specified transactions. This Section 10 is qualified in all
respects by the terms of Section 8 of the Plan, which is specifically
incorporated herein.
11. MISCELLANEOUS PROVISIONS.
11.1 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of any successor or successors of the Company and any
permitted heirs, devisees, assigns, successor or successors of the Optionee.
11.2 Waiver. The failure to demand strict performance of one or
more of the terms, covenants, or conditions set forth herein shall not be
construed as a continuing waiver or relinquishment thereof and any party may
at any time demand strict and complete performance of said terms, covenants,
and conditions.
11.3 Titles. The section and subsection headings used in this
Agreement are for convenience of reference only and shall not affect the
meaning of the terms and provisions of this Agreement.
11.4 Construction. The language of all parts of this Agreement
shall in all cases be construed as a whole, according to its fair meaning, and
not strictly for or against any party. No presumptions or rules of
interpretation based upon the identity of the party preparing or drafting the
Agreement, or any part thereof, shall be applicable or invoked.
11.5 Modification. No modification of this Agreement shall be
valid or binding upon the parties or entitled to any enforcement whatsoever
unless such modification is reduced to writing and signed and dated by both
parties.
11.6 Applicable Law. This Agreement shall be construed,
interpreted, and governed in accordance with the laws of the State of
Colorado, excluding any choice of law rules (whether of the State of Colorado
or any other jurisdiction) which may direct the application of the laws of
another jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Non-Qualified
Stock Option Agreement to be executed the day and year first above written.
DATA NATIONAL CORPORATION,
a Colorado corporation
By:--------------------------------------
Printed Name:------------------------
Title:-------------------------------
The Optionee acknowledges receipt of a copy of the Plan and represents
that he or she is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof in
addition to the terms and provisions of this Agreement. The Optionee hereby
agrees to accept as binding, conclusive, and final all decisions or
interpretations of the Committee upon any questions arising under the Plan.
OPTIONEE:
----------------------------------------
Printed Name:---------------------------
EXHIBIT B TO NON-QUALIFIED STOCK OPTION AGREEMENT
INVESTMENT REPRESENTATION LETTER
Pursuant to the terms and conditions of that certain Non-Qualified Stock
Option Agreement, dated as of -------------------, ----- (the "Stock Option
Agreement"), whereby the undersigned (the "Optionee") was granted an option to
purchase shares of the Voting Common Stock, $.001 par value, of Data National
Corporation (the "Shares"), the Optionee hereby represents and warrants to
Data National Corporation (the "Company") as follows:
1. To the extent that the Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, the Optionee
has read and is familiar with the Company's latest annual report to the
Securities and Exchange Commission on Form 10-K, the Company's latest
quarterly report to the Securities and Exchange Commission on Form 10-Q, and
any current reports of the Company since the date of the latter to the
Securities and Exchange Commission on Form 8-K, and has read and is familiar
with the audited financial statements and unaudited monthly or quarterly, as
the case may be, financial statements of the Company (such reports and
financial statements, collectively, the "Evaluation Material"), access to
which was afforded by the Company to the Optionee prior to the execution of
this Investment Representation Letter (the "Letter") and the purchase by the
Optionee of the Shares.
2. To the extent that the Company is not subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, the Optionee
has been provided and has read and is familiar with the Company's recent
audited financial statements and unaudited monthly or quarterly, as the case
may be, financial statements of the Company, any recent business plans of the
Company, and such other reports, plans, and memoranda of the Company which
explain and provide information concerning the business and affairs of the
Company (such reports, plans, memoranda, and financial statements are also
collectively referred to as the "Evaluation Material"), access to which was
afforded by the Company to the Optionee prior to the execution of this Letter
and the purchase by the Optionee of the Shares.
3. Prior to purchasing the Shares, the Company has made available to
the Optionee, during the course of this transaction and prior to the purchase
of the Shares, the opportunity to ask questions of, and receive answers from,
the Company and those persons acting on its behalf, concerning the terms and
conditions of this Letter and the information contained in the Evaluation
Material, and to obtain any additional information necessary to verify the
information provided by the Company to the extent that the Company possesses
such information or can acquire it without unreasonable effort or expense.
4. The Optionee has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks of
investments generally, and of the Optionee's investment in the Shares in
particular. The Optionee is able to bear the economic risk of this investment
with the full understanding that he or she can lose his or her entire
investment; and the Optionee can lose his or her entire investment in the
Shares without producing a material adverse change in his or her standard of
living as of the date hereof.
5. The Optionee acknowledges that neither the Shares nor the sale
thereof to the Optionee has been registered under the Securities Act of 1933,
as amended (the "Securities Act"), or under any state securities laws. The
Optionee understands that no registration statement with respect to the
Shares has been filed with the Securities and Exchange Commission, nor with
any other regulatory authority, and that, as a result, any benefit which
might normally accrue to a holder such as the Optionee by an impartial review of
such a registration statement by the Securities and Exchange Commission or other
regulatory authority will not be forthcoming. The Optionee understands that
the Shares are "restricted securities" under the Securities Act and,
therefore, cannot be resold unless they are subsequently registered under the
Securities Act, or unless an exemption from such registration is available;
that the Optionee may not resell or otherwise dispose of all or any part of
the Shares, except as permitted by law, including, without limitation, any and
all applicable provisions of the Stock Option Agreement and any regulations
under the Securities Act; and that the Company will restrict the transfer of
the Shares in accordance with the representations contained in this paragraph.
6. The Optionee is the only party in interest with respect to the Stock
Option Agreement, and is acquiring the Shares for investment for his or her
own account for long-term investment only, and not with an intent to resell,
fractionalize, divide, or redistribute all or any part of the Shares to any
other person.
7. The Optionee will not transfer, sell, or offer for sale any of the
Shares in the absence of (i) an effective registration statement relating
thereto under the Securities Act and under all applicable state securities
laws, or (ii) an opinion of counsel satisfactory to the Company that such
registration or other qualification under the Securities Act or applicable
state securities laws is not required in connection with such transfer, offer,
or sale. The Optionee acknowledges that the Company is under no obligation to
register the Shares or to assist the Optionee in complying with any exemption
from registration under the Securities Act or applicable state securities
laws.
8. The Optionee is at least 18 years old.
9. The Optionee has adequate means of providing for his or her current
needs and personal contingencies, and has no need for liquidity in connection
with this investment.
10. The Optionee's overall commitment to investments which are not
readily marketable is not disproportionate to his or her net worth, and the
Optionee's investment in the Shares will not cause such overall commitment to
become excessive.
11. The Optionee has evaluated the risks of investing in the Shares,
and has determined that the Shares are a suitable investment for him or her.
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Print Name:------------------------------
NUMBER OF SHARES SUBJECT
TO OPTION:-------------------------------
NUMBER OF SHARES EXERCISED
BY OPTIONEE:-----------------------------