EXHIBIT 4.4
ELDORADO ARTESIAN SPRINGS, INC.
1997 STOCK OPTION PLAN
(Amended to reflect 12-1 reverse stock split effected 4/1/98)
I. PURPOSE
The ELDORADO ARTESIAN SPRINGS, INC. STOCK OPTION PLAN ("PLAN") provides
for the grant of Stock Options to employees, directors and consultants of
Eldorado Artesian Springs, Inc. (the "COMPANY"), and such of its subsidiaries
(as defined in Section 424(f) of the Internal Revenue Code of 1986, as amended
(the "CODE")), as the Board of Directors of the Company (the "BOARD") shall
from time to time designate ("PARTICIPATING SUB-SIDIARIES") in order to
advance the interests of the Company and its Par-ticipating Subsidiaries
through the motivation, attraction and retention of key personnel.
II. INCENTIVE STOCK OPTIONS AND NON-INCENTIVE STOCK OPTIONS
The Stock Options granted under the Plan may be either:
a) Incentive Stock Options ("ISOS") which are intended to be
"Incentive Stock Options" as that term is defined in Section 422 of
the Code; or
b) Nonstatutory Stock Options ("NSOS") which are intended to be
options that do not qualify as "Incentive Stock Options" under
Section 422 of the Code.
All Stock Options shall be ISOs only to the extent specified in the Option
Agreement. Subject to the other provisions of the Plan, a Participant may
receive ISOs and NSOs at the same time, provided that the ISOs and NSOs are
clearly designated as such, and the exercise of one does not affect the
exercise of the other.
Except as otherwise expressly provided herein, all of the provisions and
requirements of the Plan relating to Stock Options shall apply to ISOs and
NSOs.
III. ADMINISTRATION
The Plan shall be administered by the Board, or by a committee composed
solely of two or more directors ("COMMITTEE") each of whom is a Non-Employee
Director. The Committee or the Board, as the case may be, shall have full
authority to administer the Plan, including authority to interpret and
construe any provision of the Plan and any Stock Options granted thereunder,
and to adopt such rules and regulations for administering the Plan as it may
deem necessary in order to comply with the requirements of the Code or in
order that Stock Options that are intended to be ISOs will be classified as
incentive stock options under the Code, or in order to conform to any
regulation or to any change in any law or regulation applicable thereto. The
Board shall have the power to reprice and accelerate the vesting of Stock
Options. The Board may reserve to itself any of the authority granted to the
Committee as set forth herein, and it may perform and discharge all of the
functions and responsibilities of the Committee at any time that a duly
constituted Committee is not appointed and serving. All references in this
Plan to the "Committee" shall be deemed to refer to the Board whenever the
Board is discharging the powers and responsibilities of the Committee, and to
any special committee appointed by the Board to administer particular aspects
of this Plan.
All actions taken and all interpretations and determinations made by the
Committee in good faith (including determinations of Fair Market Value) shall
be final and binding upon all Participants, the Company and all other
interested persons. No member of the Committee shall be personally liable for
any action, determination or interpretation made in good faith with respect to
this Plan, and all members of the Committee shall, in addition to their rights
as directors, be fully protected by the Company with respect to any such
action, determination or interpretation. Rule 16b-3 under the Securities
Exchange Act of 1934 (the "EXCHANGE ACT") provides that the grant of a stock
option to a director or officer of a company will be exempt from the
provisions of Section 16(b) of the Exchange Act if the conditions set forth in
that Rule are satisfied. Unless otherwise specified by the Committee, grants
of Stock Options hereunder to individuals who are officers or directors of the
Company shall be made in a manner that satisfies the conditions of that Rule.
IV. DEFINITIONS
4.1. "STOCK OPTION." A Stock Option is the right granted under the
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Plan to an Employee, director, or consultant to purchase, at
such time or times and at such price or prices ("OPTION PRICE")
as are determined by the Committee, the number of shares of
Common Stock determined by the Committee.
4.2. "COMMON STOCK." A share of Common Stock means a share of
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authorized common stock of the Company.
4.3. "FAIR MARKET VALUE." If the Common Stock is traded publicly,
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the Fair Market Value of a share of Common Stock on any date
shall be the average of the representative closing bid and asked
prices, as quoted by the National Association of Securities
Dealers, Inc. through NASDAQ (its automated
system for reporting quotes), for the date in question, or, if
the Common Stock is listed on the NASDAQ National System or is
listed on a national stock exchange, the officially quoted
closing price on NASDAQ or such exchange, as the case may be,
on the date in question. If there is no market for the
Common Stock, the Fair Market Value of a share of Common Stock
on any date shall be determined in good faith by the Committee
after such consultations with outside legal, accounting and
other experts as the Committee may deem advisable, and the
Committee may maintain a written record of its method of
determining such value.
4.4. "EMPLOYEE." An Employee is an employee of the Company or any
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Participating Subsidiary.
4.5. "PARTICIPANT." A Participant is an Employee, director or
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consultant to whom a Stock Option is granted.
4.6. "NON-EMPLOYEE DIRECTOR." A Non-Employee Director is a person
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who satisfies the definition of a "non-employee director" set
forth in Rule 16b-3 under the Exchange Act or any successor rule or
regulation, as it may be amended from time to time.
4.7 "CORPORATE TRANSACTION." A Corporate Transaction shall mean one
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or more of the following transactions unless persons who were
holders of outstanding voting capital stock of the Company
which was outstanding immediately prior to such transaction are
immediately after such transaction holders of 51% or more of
the outstanding voting capital stock of the surviving or
acquiring entity (or equivalent equity interest if the entity is
not a corporation): (i) a merger, consolidation or acquisition
(ii) a share exchange (with or without a stockholder vote) in
which 95% or more of the outstanding capital stock of the
Company is exchanged for capital stock of another corporation;
or (iii) the sale, transfer or other disposition of all
or substantially all of the Company's assets.
4.8 "SECURITIES ACT." Securities Act shall mean the Securities
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Act of 1933, as amended.
4.9 "CHANGE IN CONTROL." Change in Control shall mean any of the
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following events occurring after October 27, 1997.
A. If any one Person (as defined below), in a single transaction or
in a series of transactions shall purchase or otherwise acquire or
become the beneficial owner of securities of the Company
representing sixty percent (60%) or more of the combined voting
power of the Company's then outstanding voting securities
(including any voting securities issuable upon conversion of
convertible securities of the Company held by such Person).
B. If at any annual or special meeting of Company stockholders
following a contested election the Board of Directors of the
Company shall cease to be an Authorized Board. For purposes of
this paragraph, a "CONTESTED ELECTION" shall mean (i) an election
contest subject to Rule 14a-11 under the Exchange Act or (ii) an
election which would have been subject to Rule 14a-11
if at the time of such election the Company had securities
registered pursuant to Section 12 of the Exchange Act.
C. If a change of control of the Company (i) required to be reported
in accordance with Item 6 of Schedule 14A under the Exchange
Act, or (ii) which would be required to be reported in accordance
with Item 6 of Schedule 14A if at the time of such election
the Company had securities registered pursuant to Section 12 of
the Exchange Act, has otherwise occurred, unless a
Constitutional Majority of an Authorized Board approves the change
of control and specifically waives the application of this section.
D. A dissolution or liquidation of the Company.
E. A sale of all or substantially all the Company's assets.
F. A determination by the Board or the Committee (as applicable), in
its sole discretion, that there has been a change in control of
the Company.
For purposes of this Section 4.9 "PERSON" shall have the meaning set
forth in Sections 13(d) and 14(d)(2) of the Exchange Act, as in effect on the
date thereof, and shall include, without limitation, any "AFFILIATE" or
"ASSOCIATE" of such Person (as those terms are used in Rule 12b-2 under the
Exchange Act); provided, however, that the term "Person" shall not include the
Company or any trustee or other fiduciary holding securities under any
employee benefit plan of the Company. For purposes of this Section 4.9, (i)
beneficial ownership shall be computed in accordance with Rule 13d-3 under the
Exchange Act; and (ii) "AUTHORIZED BOARD" shall mean a Board of Directors of
the Company of which a number of directors equal to a majority of the
authorized number of directors constituting the entire Board, including
vacancies (a "CONSTITUTIONAL MAJORITY"), were either members of the Board of
Directors on October 27, 1997 or were nominated or elected a director by a
Constitutional Majority at the date of nomination or election of an Authorized
Board.
4.10 "INITIAL PUBLIC OFFERING". "Initial Public Offering" shall
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mean the Company's first offering of securities to the
public which is registered pursuant to the Securities Act.
V. ELIGIBILITY AND PARTICIPATION
Grants of ISOs may be made to Employees of the Company or any
Participating Subsidiary. Grants of NSOs may be made to Employees or
directors of, or consultants to, the Company or any Participating Subsidiary.
Any director of the Company or of a Participating Sub-sidiary who is also an
Employee shall also be eligible to receive ISOs. The Committee shall from
time to time determine the Participants to whom Stock Options shall be
granted, the number of shares of Common Stock subject to each Stock Option to
be granted to each such Participant, and the Option Price of such Stock
Options, all as provided in this Plan. The Option Price of any ISO shall be
not less than the Fair Market Value of a share of Common Stock on the date on
which the Stock Option is granted, and the Option Price of an NSO shall be not
less than eighty percent (80%) of the Fair Market Value on the date the NSO is
granted. If an ISO is granted to an Employee who then owns stock possessing
more than 10% of the total combined voting power of all classes of stock of
the Company or any parent or subsidiary corporation of the Company, the Option
Price of such ISO shall be at least 110% of the Fair Market Value of the
Common Stock subject to the ISO at the time such ISOs are granted, and such
ISO shall not be exer-cisable after five years after the date on which it was
granted. Each Stock Option shall be evidenced by a written agreement ("OPTION
AGREEMENT") containing such terms and provisions as the Committee may
determine, subject to the pro-visions of this Plan.
VI. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
6.1. Maximum Number. The maximum aggregate number of shares of
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Common Stock that may be made subject to Stock Options shall be 875,000
authorized shares. To the extent the aggregate Fair Market Value (determined
as of the time the ISO is granted) of the stock with respect to which ISOs are
exercisable for the first time by an individual in a particular calendar year
exceeds $100,000, such excess Stock Options shall be treated as NSOs. If any
shares of Common Stock subject to Stock Options are not purchased or otherwise
paid for before such Stock Options expire, such shares may again be made
subject to Stock Options.
6.2. Capital Changes. In the event any changes are made to the
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shares of Common Stock (whether by reason of reorganization, recapitalization,
stock dividend, stock split, combination of shares, exchange of shares, change
in corporate structure or otherwise), appropriate adjust-ments shall be made
in: (i) the number of shares of Common Stock theretofore made subject to
Stock Options, and in the Option Price of said shares; and (ii) the aggregate
number of shares which may be made subject to Stock Options in the future. If
any of the foregoing adjustments shall result in a fractional share, the
fraction shall be dis-regarded, and the Company shall have no obligation to
make any cash or other payment with respect to such a fractional share.
VII. EXERCISE OF STOCK OPTIONS
7.1 Time of Exercise. Subject to the provisions of the Plan, the
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Committee, in its discretion, shall determine the time when a Stock Option, or
a portion of a Stock Option, shall become exercisable, and the time when a
Stock Option, or a portion of a Stock Option, shall expire. Such time or
times shall be set forth in the Option Agreement evidencing such Stock Option.
Unless otherwise specified in an Option Agreement, a Stock Option shall become
exercisable (i) with respect to 20% of the shares subject thereto on the
anniversary of the date of grant, and (ii) with respect to 1/48th of the
shares subject thereto at the end of each month after the first anniversary of
the date of grant, (so that all Stock Options are fully vested five (5) years
after the date of grant) subject to continued employment with the Company or a
Participating Subsidiary and Section 7.4 hereof. A Stock Option shall expire,
to the extent not exercised, no later than the tenth anniversary of the date
on which it was granted. The Committee may accelerate the vesting of any
Participant's Stock Option by giving written notice to the Participant. Upon
receipt of such notice, the Participant and the Company shall amend the Option
Agreement to reflect the new vesting schedule. The acceleration of the
exercise period of a Stock Option shall not affect the expiration date of that
Stock Option.
7.2 Exchange of Outstanding Stock. The Committee, in its sole
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discretion, may permit a Participant to (i) surrender to the Company whole
shares of Common Stock previously acquired by the Participant and/or (ii)
request that the Company withhold whole shares of Common Stock issuable upon
exercise of the Stock Option, as part or full payment for the exercise of a
Stock Option. Such surrendered or withheld shares shall be valued at their
Fair Market Value on the date of exercise. Shares credited to a Participant
shall again be available for grant under the Plan.
7.3. Use of Promissory Note; Exercise Loans. The Committee may, in its
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sole discretion, impose terms and conditions, including conditions relating to
the manner and timing of payments, on the exercise of Stock Options. Such
terms and conditions may include, but are not limited to, permitting a
Participant to deliver to the Company his promissory note as full or partial
payment for the exercise of a Stock Option. The Committee, in its sole
discretion, may authorize the Company to make a loan to a Participant in
connection with the exercise of Stock Options, or authorize the Company to
arrange or guarantee loans to a Participant by a third party. Any loan by the
Company or acceptance of a promissory note shall be made in accordance with
the corporate law of the Company's state of incorporation.
7.4. Termination of Employment before Exercise. If the employment of
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a Participant who was an employee of the Company or a Participating Subsidiary
when the Stock Option was granted shall terminate for any reason other than
the Par-ticipant's death or disability, any Stock Option granted to the
Participant, to the extent then exercisable under the applicable Option
Agreement(s), shall remain exercisable after the termination of the
Participant's employment for a period of three (3) months (but not later than
the specified expiration date). If the Participant's employment is terminated
because the Participant is disabled within the meaning of Section 22(e)(3) of
the Code, any Stock Option granted to the Participant, to the extent then
exercisable under the applicable Option Agreement(s), shall remain exercisable
after the termination of his employment for a period of twelve (12) months
(but not later than the specified expiration date). If the Participant dies
while employed by the Company or a Participating Subsidiary, or during the
three-month or twelve-month periods referred to above, his Stock Options may
be exercised by the Participant's estate, duly appointed representative or
beneficiary who acquires the Stock Options by will or by the laws of descent
and distribution, to the extent that they were exercisable on the date of
cessation of his employment, but no further installments of the Participant's
Stock Options will become exercisable and each of the Participant's Stock
Options shall terminate on the first anniver-sary of the date of the
Participant's death (but not later than the specified expiration dates). If a
Stock Option is not exercised during the applicable period, it shall be deemed
to have been forfeited and of no further force or effect.
Notwithstanding the foregoing provisions of this Section 7.4, but subject
to the other provisions of this Plan, the Option Agreement may specify longer
periods for exercise of a NSO or ISO (unless to do so in the case of an ISO
would cause the ISO not to qualify as an incentive stock option pursuant to
Section 422 of the Code) after any such an event.
Upon action of the Committee in its sole discretion, except as provided
in a written employment or consulting agreement of the Company or a
Participating Subsidiary with the Participant, which is referenced in the
Option Agreement, any Stock Option shall terminate immediately, and may not be
exercised, (i) if prior to the date of exercise Participant is terminated for
cause as an Employee of the Company or its Participating Subsidiary, or if not
an Employee, for cause as a director or consultant for the Company or its
Participating Subsidiary; or (ii) if subsequent to a Participant's termination
and prior to the expiration of the term of the Stock Option conditions arise
or are discovered with respect to a Participant that would have constituted
cause for termination. "CAUSE" shall have the meaning given to it in the
Participant's written employment, consultant or director agreement with the
Company or Participating Subsidiary. If no such written agreement exists,
"cause" shall mean (i) dishonesty which is not the result of an inadvertent or
innocent mistake with respect to the Company or any of its subsidiaries; (ii)
willful misfeasance or nonfeasance of duty intended to injure or having the
effect of injuring in some material fashion the reputation, business or
business relationships of the Company or any of its subsidiaries or any of
their respective officers, directors or employees; (iii) conviction upon a
charge of any crime involving moral turpitude or a crime other than a vehicle
offense which could reflect in some material fashion unfavorably upon the
Company or any of its subsidiaries; or (iv) willful or prolonged absence from
work by the Participant (other than by reason of disability due to physical or
mental illness) or failure, neglect or refusal by the Participant to perform
his duties and responsibilities without the same being corrected upon twenty
(20) days prior written notice. In addition, unless specifically provided
otherwise in reference to this Plan in a written employment, consultant or
director agreement with the Company or Participating Subsidiary, "cause" for
purposes of this Section 7.4 shall exist (and termination of the Stock Option
may occur even if not so provided in the written employment, consultant or
director agreement with the Company or Participating Subsidiary) if the
Participant materially breaches any provision of an agreement with the Company
or any of its subsidiaries with respect to obligations regarding
non-competition, confidentiality, non-solicitation of customers, and non-hire
of customers and employees of the Company or a Subsidiary.
7.5. Disposition of Forfeited Stock Options. Any shares of Common
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Stock subject to Stock Options forfeited by a Participant shall not thereafter
be eligible for purchase by the Participant, but may be made subject to Stock
Options granted to other Par-ticipants.
7.6. Conditions of Exercise. Notice of exercise shall be in the form
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attached to the Option Agreement and shall, in the discretion of the Company,
contain a representation, in the form provided by the Company, that the shares
are being purchased for investment only and not for resale or distribution,
and such other representations and agreements as the Company may reasonably
require, and may in addition require as a condition of exercise that the
Participant execute any stockholders agreement which is to be applicable to
either: (i) holders of 70% or more of the capital stock of the Company or
(ii) holders of 70% or more of the Stock Options granted under this Plan. The
Company may also require as a condition of exercise that the Participant will
agree, if requested by the Company in connection with a public offering of the
Company's securities, to adhere to lock-up arrangements between the Company
and an underwriter involved in such public offering.
VIII. NO CONTRACT OF EMPLOYMENT
Nothing in this Plan shall confer upon the Participant the right to
continue as an employee, consultant or director of the Company or any
Par-ticipating Subsidiary, nor shall it interfere in any way with the right of
the Company, or any Participating Subsidiary, to discharge the Participant at
any time for any reason what-soever, with or without cause. Nothing in this
Article VIII shall affect any rights or obligations of the Company or any
Par-ticipant under any written contract of employment.
IX. NO RIGHTS AS A STOCKHOLDER
A Participant shall have no rights as a stockholder with respect to any
shares of Common Stock subject to a Stock Option. Except as provided in
Section 6.2, no adjustment shall be made in the number of shares of Common
Stock issued to a Participant, or in any other rights of the Participant upon
exercise of a Stock Option by reason of any dividend, distribution or other
right granted to stockholders for which the record date is prior to the date
of exercise of the Participant's Stock Option. The Committee, the Board and
the Company have no continuing duty to provide a Participant with information
concerning the Company.
X. ASSIGNABILITY
No Stock Option granted under this Plan, nor any other rights acquired by
Participant under this Plan, shall be assignable or transferable by a
Participant, other than by will or the laws of descent and distribution.
Notwithstanding the preceding sentence, the Committee, in its sole discretion,
may permit the assignment or transfer of an NSO and the exercise thereof by a
person other than a Participant, on such terms and conditions as the Committee
in its sole discretion may determine. Any such terms shall be set forth in
the Option Agreement. In the event of a Participant's death, the Stock Option
may be exercised by the personal representative of the Participant's estate or
by the successor or successors in interest determined under the Participant's
will or under the applicable laws of descent and distribution. The terms of
any rights under this Plan in the hands of a transferee or assignee shall be
determined as if held by the Participant and shall be of no greater extent or
term than if the transfer or assignment had not taken place.
XI. CORPORATE TRANSACTIONS AND CHANGES IN CONTROL
11.1. At least ten (10) days prior to the consummation of a Corporate
Transaction, the Company shall give Participants written notice of the
proposed Corporate Transaction. The vesting schedules of all Stock Options
shall automatically be accelerated so that the Stock Options shall become
exercisable as to those shares which could be purchased under those vesting
schedules 12 months after the date of consummation of the Corporation
Transaction. In addition, at the sole discretion of the Committee, the
vesting schedule of some or all other Stock Options may be accelerated so that
all or any portion of Stock Options outstanding under the Plan immediately
prior to the consummation of the Corporate Transaction shall, for all purposes
under this Plan, become exercisable as of such time. If a Corporate
Transaction is to occur, in lieu of allowing a Participant to exercise the
Participant's Stock Options, the Board may, in its sole discretion, require
some or all Participants to accept a cash payment in consideration for the
termination of the Participant's Stock Options. The termination shall occur
immediately prior to the consummation of the Corporate Transaction and the
cash payment shall be equal to the difference between the price per share of
Common Stock in the Corporate Transaction as determined by the Board and the
exercise price of a Participant's Stock Options. All Stock Options, to the
extent not previously exercised, shall terminate upon the consummation of such
Corporate Transaction and cease to be exercisable unless expressly assumed by
the successor corporation or parent thereof. Provided, however, that if the
Corporate Transaction is to be accounted for as a "pooling-of-interest," then
unexercised stock options shall be exchanged for similar options of the
acquiror or surviving entity or voting common stock of the acquiror or
surviving entity based on the value of the options, as and to the extent
required by APB No. 16, accounting pronouncements of the Securities and
Exchange Commission, and other authoritative principles and pronouncements
concerning pooling-of-interest accounting. Notwithstanding the foregoing, the
vesting of a Participant's Stock Options shall not be accelerated (if and to
the extent requested in writing by the Participant) upon a Corporate
Transaction if the participant is a "disqualified individual" as that term is
defined in Section 280G of the Internal Revenue Code.
11.2. The vesting schedules of all Stock Options shall be
automatically accelerated so that the Stock Options shall become exercisable
as to all shares subject to the Stock Options if the Participant's employment
is terminated without cause by the Company within one (1) year following a
Change in Control. "Without cause" means that "cause" did not exist as
defined in Section 7.4.
11.3 The employment, consulting or directorship agreement, or the
Option Agreement of a Participant may contain terms which vary from Sections
11.1 and 11.2 upon approval of the Board and the Committee.
XII. AMENDMENT
The Board of Directors may from time to time alter, amend, suspend or
discontinue the Plan, including, where ap-plicable, any modifications or
amendments as it shall deem advisable in order that ISOs will be classified as
incentive stock options under the Code, or in order to conform to any
regulation or to any change in any law or regulation applicable thereto;
provided, however, that no such action shall adversely affect the rights and
obligations with respect to Stock Options at any time outstanding under the
Plan; and provided further that no such action shall, without the approval of
the stockholders of the Company, (i) increase the maximum number of shares of
Common Stock that may be made subject to Stock Options (unless necessary to
effect the adjustments required by Section 6.2), (ii) materially modify the
requirements as to eligibility for participation in the Plan, or (iii)
materially increase the benefits accruing to Participants under the Plan.
XIII. REGISTRATION OF OPTIONED SHARES
The Stock Options shall not be exercisable unless the purchase of such
optioned shares is pursuant to an applicable effective registration statement
under the Securities Act and applicable state securities laws or unless, in
the opinion of counsel to the Company, the proposed purchase of such optioned
shares would be exempt from the registration requirements of the Securities
Act and from the registration or qualification requirements of applicable
state securities laws. Any certificates for such shares shall bear such
legends as deemed appropriate by the Committee.
XIV. WITHHOLDING TAXES
14.1 Satisfaction of Withholding Obligations. The Company or
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Participating Subsidiary may take such steps as it may deem necessary or
appropriate for the withholding of any taxes or funds which the Company or the
Participating Subsidiary is required by any law or regulation of any
governmental author-ity, whether federal, state or local, domestic or foreign,
to withhold in connection with any Stock Options (collectively, "WITHHOLDING
OBLIGATIONS"). Such steps may include, by way of example only and not
limitation, (i) requiring a Participant to remit to the Company in cash an
amount sufficient to satisfy such Withholding Obligations; (ii) allowing the
Participant to tender to the Company shares of Common Stock, the Fair Market
Value of which at the tender date the Committee determines to be sufficient to
satisfy such Withholding Obligations; (iii) withholding shares of Common Stock
otherwise issuable upon the exercise of a Stock Option and which have a Fair
Market Value at the exercise date sufficient to satisfy such Withholding
Obligations; or (iv) any combination of the foregoing.
14.2 Securities Law Restrictions on Satisfaction of Withholding
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Obligations. Notwithstanding any other provisions of the Plan, a Participant
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who is subject to Section 16(b) of the Exchange Act shall not be permitted to
satisfy Withholding Obligations in the manner set forth in clauses (ii) or
(iii) of Section 14.1 hereof prior to the expiration of six months after the
date on which the applicable Stock Option was granted, except in the event of
the death or Disability of the Participant, unless the Company is advised by
its counsel that such elections may be permitted pursuant to Section 16 of the
Exchange Act or any rule or interpretation of the U.S. Securities and Exchange
Commission thereunder. Except with the consent of the Committee, a
Participant who is subject to Section 16(b) of the Exchange Act may not
satisfy Withholding Obligations in the manner set forth in clauses (ii) or
(iii) of Section 14.1 other than (i) during the 10-day window period beginning
on the third business day following the date of release for publication of the
Company's quarterly and annual summary statements of sales and earnings and
ending on the twelfth business day following such date or (ii) at least six
months prior to the date as of which the income attributable to the exercise
of such Stock Option is recognized under the Code.
14.3 Notification of Inquiries and Agreements. Each Participant
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shall notify the Company in writing within 10 days after the date such
Participant (i) first obtains knowledge of any Internal Revenue Service
inquiry, audit, assertion, determination, investigation, or question relating
in any manner to the value of any shares of Common Stock or Stock Options
granted or received hereunder; (ii) includes or agrees (including, without
limitation, in any settlement, closing or other similar agreement) to include
in gross income with respect to any shares of Common Stock or Stock Options
received or granted hereunder (A) any amount in excess of the amount reported
on Form 1099 or Form W-2 to such Participant by the Company, or (B) if no such
Form was received, any amount; (iii) exercises, sells, disposes of, or
otherwise transfers (other than to such Person's successors, heirs, executors
or administrators, as the case may be) a Stock Option acquired pursuant to
this Plan; or (iv) sells, disposes of, or otherwise transfers (other than to
such Person's successors, heirs, executors or administrators, as the case may
be) shares of Common Stock acquired pursuant to the exercise of an Incentive
Stock Option within the Disqualified Period. Upon request, a Participant
shall provide to the Company any information or document relating to any event
described in the preceding sentence which the Company (in its sole discretion)
requires in order to calculate and substantiate any change in the Company's
tax liability as a result of such event. "DISQUALIFIED PERIOD" means, in the
case of any Incentive Stock Option, the period beginning on the date such
Stock Option is granted and ending on the later of the date (i) two years
after the date such Stock Option is granted, or (ii) one year after the
transfer of any Common Stock to a Participant pursuant to the exercise of such
Stock Option.
XV. BROKERAGE ARRANGEMENTS
The Committee, in its discretion, may enter into arrangements with one or
more banks, brokers or other financial institutions to facilitate the
disposition of shares acquired upon the exercise of Stock Options including,
without limitation, arrangements for the simultaneous exercise of Stock
Options and the sale of shares acquired upon exercise.
XVI. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor the submission of the
Plan to stockholders of the Company for approval shall be construed as
creating any limita-tions on the power or authority of the Board to adopt such
other or additional incentive or other compensation arrange-ments of whatever
nature as the Board of Directors may deem necessary or desirable or preclude
or limit the continuation of any other plan, practice or arrangement for the
payment of compensation or fringe benefits to employees generally, or to any
class or group of employees, which the Company or any Participating Subsidiary
now has lawfully put into effect, including, without limitation, any
retirement, pension, savings and stock purchase plan, insurance, death and
disability benefits and executive short-term or long-term incentive plans.
XVII. EFFECTIVE DATE
This Plan was adopted by the Board of Directors on September 10, 1997 and
became effective on that date subject to the approval of the Company's
stockholders within twelve (12) months thereafter. However, if such approval
is not obtained all provisions of this Plan, and all grants hereunder, shall
nevertheless be effective except that all ISOs shall be NSOs. No Stock
Options shall be granted subsequent to ten years after the effective date of
the Plan. Stock Options outstanding subsequent to ten years after the
effective date of the Plan shall continue to be governed by the provisions of
the Plan.