EXHIBIT 10.5
2003 STOCK OPTION PLAN
GALAXY INVESTMENTS, INC.
2003 STOCK OPTION PLAN
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TABLE OF CONTENTS
PAGE
1. PURPOSE ..............................................................1
2. DEFINITIONS ..........................................................1
3. NUMBER OF SHARES AVAILABLE FOR OPTIONS................................5
4. VESTING LIMITATIONS FOR ISOS..........................................5
5. CONDITIONS FOR GRANT OF OPTIONS.......................................5
6. EXERCISE PRICE........................................................7
7. EXERCISE OF OPTIONS...................................................7
8. EXERCISABILITY OF OPTIONS.............................................8
9. TERMINATION OF OPTION EXERCISE PERIOD.................................8
10. ADJUSTMENT OF SHARES, MERGER..........................................9
11. TRANSFERABILITY OF OPTIONS...........................................10
12. ISSUANCE OF SHARES...................................................11
13. REDEMPTION OF SHARES BY THE COMPANY..................................11
14. ADMINISTRATION.......................................................12
15. WITHHOLDING OR DEDUCTION FOR TAXES...................................13
16. INTERPRETATION.......................................................13
17. AMENDMENT AND TERMINATION OF THE PLAN................................14
18. RIGHTS AS AN EMPLOYEE OR NON-EMPLOYEE................................14
19. SUCCESSORS AND ASSIGNS...............................................14
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GALAXY INVESTMENTS, INC.
2003 STOCK OPTION PLAN
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1. PURPOSE. The Galaxy Investments, Inc. 2003 Stock Option Plan (the
"Plan") has been established by Galaxy Investments, Inc., a Colorado corporation
(the "Company"), to advance the interests of the Company by providing an
additional incentive to attract and retain qualified and competent persons who
are key to the Company, including key employees of and consultants or advisors
to, the Company and its Subsidiaries, if any, and upon whose efforts and
judgment the success of the Company is largely dependent, through the
encouragement of stock ownership in the Company by such persons.
2. DEFINITIONS. As used herein, the following terms shall have the
meanings indicated.
(a) "Affiliate" shall mean a person, entity or organization
which is controlled by, under common control with, controlling, or is an Officer
or Director of, beneficial owner of five percent or greater of the equity or
voting securities of, or, through contract relationship or otherwise exerts
substantial influence over or is substantially influence by, the Company.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Cause" shall mean any of the following:
(i) a determination by the Company that there has been
a willful, reckless or grossly negligent failure by the Optionee to perform his
or her duties as an Employee or Non- Employee Eligible Individual;
(ii) a willful breach by the Optionee of any of the
material terms or provisions of his employment agreement;
(iii) any conduct by the Optionee that either results
in his or her conviction of a felony under the laws of the United States of
America or any state thereof, or of an equivalent crime under the laws of any
other jurisdiction;
(iv) the commission by the Optionee of an act or acts
involving fraud, embezzlement, misappropriation, theft, breach of fiduciary duty
or material dishonesty against the Company or its Subsidiary, their properties
or personnel;
(v) any act by the Optionee that the Company determines
to be in willful or wanton disregard of the Company's best interests, or which
results, or it intended to result, directly or indirectly, in improper gain or
personal enrichment of the Optionee at the expense of the Company;
(vi) a determination by the Company that there has been
a willful, reckless or grossly negligent failure by the Optionee to comply with
any rules, regulations, policies or
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procedures of the Company or any Subsidiary, or that the Optionee has engaged in
any act, behavior or conduct showing willful or wanton disregard of the best
interests of the Company or any Subsidiary or occasioned by a deliberate and
material violation or disregard of standards of behavior that the Company or any
Subsidiary has a right to expect of its Employees or Non-Employee Eligible
Individuals; or
(vii) if the Optionee, while employed by or in the
service of the Company or any Subsidiary, and for two years thereafter, violates
a confidentiality, non-solicitation and/or noncompete agreement with the Company
or any Subsidiary, or fails to safeguard, divulges, communicates, uses to the
detriment of the Company or any Subsidiary or for the benefit of any person or
persons, or misuses in any way, any Confidential Information; PROVIDED, HOWEVER,
if the Optionee is subject to an employment agreement which defines "Cause,"
then "Cause" shall have the meaning set forth in such employment agreement.
(d) "Change of Control" shall mean any of the following
events: (i) any "person", as such term is used in section 14(d) of the
Securities Exchange Act, other than the Company, any employee benefit plan of
the Company or any Affiliate, any Affiliate of the Company, or any shareholder
of the Company as of the Effective Date, is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Securities Exchange Act (or any successor
rule), directly or indirectly, of fifty percent (50%) or more of the combined
voting power of the Company's common stock; (ii) any consolidation or merger of
the Company, other than a consolidation or merger with the sole purpose of
reorganizing the Company into another form of entity, changing the Company's
state of organization or where the shareholders of the Company immediately
before the merger or consolidation own fifty percent (50%) or more of the issued
and outstanding shares of stock of the resulting entity after the merger or
consolidation; or (iii) any sale, lease, exchange or other transfer (in one or a
series of related transactions) of all, or substantially all, of the assets of
the Company other than any sale, lease, exchange or other transfer to any entity
which the Company or its stockholders own, directly or indirectly, all of the
outstanding voting securities of such entity after such transfer.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
(f) "Committee" shall mean the compensation committee
appointed by the Board pursuant to Section 14 hereof to administer the Plan or,
if not appointed, the Board.
(g) "Common Stock" shall mean the Company's Common Stock, par
value $0.001 per share.
(h) "Company" shall mean Galaxy Investments, Inc., a Colorado
corporation.
(i) "Confidential Information" shall mean any and all
information pertaining to the Company (including, without limitation,
information relating to its products, services, marketing practices, production
practices, management agreements, clients, customers, prospects, sources of
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prospects, suppliers, financial condition, results of operations, costs and
methods of doing business, owners and ownership structure) that is not generally
available to the public.
(j) "Covered Employee" shall mean any individual who as of the
close of the Company's taxable year in which an Option is granted is (i) the
Chief Executive Officer of the Company or is acting in such capacity ("CEO")
whose compensation is required to be reported to Shareholders under the
Securities Exchange Act; or (iii) otherwise considered to be a "Covered
Employee" within the meaning of Section 162(m) of the Code.
(k) "Director" shall mean a member of the Board.
(l) "Disability" shall have the same meaning as a "total and
permanent (mental or physical) disability" as set forth in Section 22(e)(3) of
the Code, as determined by a medical doctor selected by the Committee.
(m) "Employee" shall mean any person, including an officer or
a director, who is employed by the Company, or any Subsidiary.
(n) "Fair Market Value" of a Share on any date of reference
shall be the Closing Price of a share of Common Stock on such date, unless the
Committee in its sole discretion shall determine otherwise in a fair and uniform
manner. For this purpose, the "Closing Price" of the Common Stock on any
business day shall be (i) if the Common Stock is listed or admitted for trading
on any United States national securities exchange, or if actual transactions are
otherwise reported on a consolidated transaction reporting system, the last
reported sale price of the Common Stock on such exchange or reporting system, as
reported in any newspaper of general circulation; (ii) if the Common Stock is
quoted on the National Association of Securities Dealers Automated Quotations
System ("NASDAQ"), or any similar system of automated dissemination of
quotations of securities prices in common use, the mean between the closing high
bid and low asked quotations for such day of the Common Stock on such system; or
(iii) if neither clause (i) nor (ii) is applicable, the mean between the high
bid and low asked quotations for the Common Stock as reported by the National
Quotation Bureau, Incorporated if at least two securities dealers have inserted
both bid and asked quotations for the Common Stock on at least five of the 10
preceding days. If the information set forth in clauses (i) through (iii) above
is unavailable or inapplicable to the Company (E.G., if the Company's Common
Stock is not then publicly traded or quoted), then the "Fair Market Value" of a
Share shall be the fair market value (I.E., the price at which a willing seller
would sell a Share to a willing buyer when neither is acting under compulsion
and when both have reasonable knowledge of all relevant facts) of a share of the
Common Stock on the business day immediately preceding such date as the
Committee in its sole and absolute discretion shall determine in a fair and
uniform manner.
(o) "Incentive Stock Option" shall mean an incentive stock
option as defined in Section 422 of the Code.
(p) "Non-Employee Eligible Individual" shall mean an advisor
or consultant to the
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Company or any Subsidiary who contributes or has an opportunity to contribute to
the success of the Company or any Subsidiary.
(q) "Non-Statutory Stock Option" shall mean an Option which is
not an Incentive Stock Option.
(r) "Officer" shall mean the Company's chairman, president,
principal financial officer, principal accounting officer (or, if there is no
such accounting officer, the controller), any unit, division or Subsidiary
president, any vice-president of the Company in charge of a principal business
unit, division or function (such as sales, administration or finance), any other
officer who performs a policy-making function, or any other person who performs
similar policy-making functions for the Company. Officers of Subsidiaries shall
be deemed Officers of the Company if they perform such policy-making functions
for the Company. As used in this paragraph, the phrase "policy-making function"
does not include policy-making functions that are not significant.
(s) "Option" shall mean a stock option to purchase Shares
granted pursuant to this Plan.
(t) "Option Agreement" shall mean the agreement between the
Company and the Optionee pursuant to which Options are granted.
(u) "Optionee" shall mean a person to whom an Option is
granted under this Plan or any person who succeeds to the rights of such person
under this Plan by reason of the death of such person or otherwise.
(v) "Outside Director" shall mean a member of the Board who:
(i) is not a current employee of the Company or any Affiliate, (ii) is not a
former employee of the Company or any Affiliate who receives compensation for
prior services (other than benefits under a tax-qualified retirement plan)
during the taxable year; (iii) has not been an officer of the Company or any
Affiliate; (iv) does not receive remuneration either directly or indirectly, in
any capacity other than as a director; and (v) satisfies any other conditions
that shall from time to time be required to qualify as an "outside director"
under Section 162(m) of the Code and the regulations thereunder and also as a
"Non- Employee Director" under Rule 16b-3 promulgated under the Securities
Exchange Act. For this purpose, remuneration" shall have the meaning afforded
that term pursuant to Treasury Regulations issued under Section 162(m) of the
Code, and shall exclude any de minimis remuneration excluded under those
Treasury Regulations.
(w) "Plan" shall mean the Galaxy Investments, Inc. 2003 Stock
Option Plan, effective March 13, 2003.
(x) "Retirement" shall mean the occurrence of an Optionee's
termination of employment or service with the Company and its Subsidiaries after
completing at least five years of service and attaining age 65.
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(y) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the
Securities Exchange Act.
(z) "Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(aa) "Share" shall mean one share of Common Stock, as adjusted
in accordance with Section 10 of this Plan.
(bb) "Subsidiary" shall mean any corporation (other than the
Company), partnership, joint venture or other entity (collectively referred to
as "entities") in any unbroken chain of entities beginning with the Company if,
at the time of the granting of the Option, each of the entities other than the
last entity in the unbroken chain owns equity possessing 50 percent or more of
the profits interest or total combined voting power of all classes of equity in
one of the other equities in such chain.
3. NUMBER OF SHARES AVAILABLE FOR OPTIONS. The Company may grant to
Optionees from time to time Options to purchase an aggregate of up to 3,500,000
Shares, as further adjusted by Section 10; PROVIDED, however, that if any Option
granted under this Plan is not exercised in the time allowed for such exercise,
or if any such Option shall terminate, expire or be canceled, forfeited or
surrendered as to any Shares, the Shares relating to such lapsed Option shall be
available for issuance pursuant to new Options subsequently granted under this
Plan. Upon the grant of any Option hereunder, authorized and unissued, or
treasury, Shares shall be reserved for issuance to permit exercise under this
Plan. An Option granted hereunder shall be either an Incentive Stock Option or a
Non-Statutory Stock Option as determined by the Committee at the time of grant
of such Option and the Option Agreement shall clearly state whether it is an
Incentive Stock Option or Non- Statutory Stock Option or, failing a clear
indication, be deemed a Non-Statutory Stock Option. All Incentive Stock Options
shall be granted within 10 years from the effective date of this Plan.
4. VESTING LIMITATION FOR ISOS. Options otherwise qualifying as
Incentive Stock Options hereunder will not be treated as Incentive Stock Options
to the extent that the aggregate Fair Market Value (determined at the time the
Option is granted) of the Shares, with respect to which Options meeting the
requirements of Code Section 422(b) are exercisable for the first time by any
individual during any calendar year (under all stock option or similar plans of
the Company and any Subsidiary), exceeds $100,000.
5. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by a written Option
Agreement in the form of Exhibit A attached hereto that may contain any term
deemed necessary or desirable by the Committee, provided such terms are not
inconsistent with this Plan or any applicable law.
(b) Optionees shall be selected by the Committee from: (i) all
Employees (including Directors and Officers who are Employees); (ii)
Non-Employee Eligible Individuals; and (iii) former
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or prospective Employees and Non-Employee Eligible Individuals.
(c) In granting Options, the Committee shall take into
consideration the contribution the person has made, or is expected to make, with
respect to the success of the Company or its Subsidiaries and such other factors
as the Committee shall determine. The Committee shall also have the authority to
consult with and receive recommendations from Officers and other personnel of
the Company and its Subsidiaries with regard to these matters. The Committee may
from time to time prescribe such terms and conditions concerning such Options as
it deems appropriate, including, without limitation: (i) the exercise price or
prices of the Option or any installments thereof; (ii) the date or dates on
which the Option becomes and/or remains exercisable; (iii) providing that the
Option vests or becomes exercisable in installments over a period of time,
and/or upon the attainment of certain standards, specifications or goals; (iv)
conditioning the exercise of an Option on the continued employment or service of
the Optionee for a specified period of time; or (v) other conditions or
termination events with respect to the exercisability of any Option, provided
that such other conditions or events are not more favorable to an Optionee than
those expressly permitted herein.
(d) The Options granted to Employees or Non-Employee Eligible
Individuals under this Plan shall be in addition to regular salaries, pension,
life insurance or other benefits related to their employment with or service to
the Company or its Subsidiaries.
(e) Notwithstanding any other provisions of this Plan to the
contrary, an Incentive Stock Option shall not be granted to any person owning
directly or indirectly (through attribution under Section 424(d) of the Code) at
the date of grant, stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company (or of its parent or subsidiary, as
those terms are defined in Section 424 of the Code, at the date of grant) unless
the option price of such Option is at least 110% of the Fair Market Value of the
Shares subject to such Option on the date the Option is granted, and such option
by its terms is not exercisable after the expiration of five years from the date
such Option is granted.
(f) Notwithstanding any other provision of this Plan, and in
addition to any other requirements of this Plan, the aggregate number of Shares
with respect to which Options may be granted to any one Optionee may not exceed
sixty percent (60%) of authorized Options, subject to adjustment as provided in
Section 10(a) hereof.
(g) Notwithstanding any other provision of this Plan and in
addition to any other requirements of this Plan, Options may not be granted to a
Covered Employee unless the grant of such Option is authorized by and all of the
terms are determined by a Committee that is appointed in accordance with Section
14 of the Plan and all of whose members are Outside Directors.
(h) Incentive Stock Options may be granted only to Employees.
(i) The Committee may, in its sole discretion, condition the
grant of an Option upon the execution and delivery of confidentiality,
non-competition and other restrictive covenants and
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agreements, all of which may be incorporated into the Option Agreement.
(j) The date of grant of an Option shall, for all purposes, be
the date on which the Board makes the determination to grant such Option. Notice
of the determination shall be given to each Optionee within a reasonable time
after the date of such grant.
6. EXERCISE PRICE.
(a) Except as provided in this Section 6 and Section 10, the
exercise price per Share of any Option shall be the price determined by the
Committee at the time the Option is granted, provided it is in excess of the
Share's par value.
(b) Subject to Section 5(e), the exercise price of any
Incentive Stock Option shall not be less than the Fair Market Value of the Share
underlying the Option (as determined in the sole and absolute discretion of the
Committee in a fair and uniform manner) on the date such Incentive Stock Option
is granted.
7. EXERCISE OF OPTIONS.
(a) An Option shall be deemed exercised when: (i) the Company
has received written notice of such exercise in accordance with the terms of the
Option; (ii) full payment of the exercise price for all of the Shares as to
which the Option is exercised has been made; (iii) the Optionee has agreed to be
bound by the terms, provisions and conditions of any applicable shareholders'
agreement; and (iv) arrangements that are satisfactory to the Committee in its
sole discretion have been made for the Optionee's payment to the Company of the
amount that is necessary for the Company or the Subsidiary employing the
Optionee to withhold in accordance with applicable Federal or state tax
withholding requirements. Unless further limited by the Committee in any Option
Agreement, the exercise price of any Option may be paid in cash, by certified or
official bank check, by personal check (with the approval of the Committee), by
money order, with Shares owned by the Optionee that have been owned by the
Optionee for more than 6 months on the date of surrender or such other period as
may be required to avoid a charge to the Company's earnings for financial
accounting purposes, by authorization for the Company to withhold Shares
issuable upon exercise of the Option, by arrangement with a broker that is
acceptable to the Committee where payment of the exercise price is made pursuant
to an irrevocable direction to the broker to deliver all or a part of the
proceeds from the sale of the Option Shares to the Company in payment of the
exercise price or by a combination of the above, or by promissory note (as
described below). If the exercise price is paid in whole or in part with Shares,
the value of the Shares surrendered shall be their Fair Market Value on the date
the Option is exercised.
(b) Subject to compliance with Federal and State laws
(including corporate governance laws), the Company in its sole discretion may,
on an individual basis or pursuant to a general program established in
connection with this Plan, lend money to an Optionee, guarantee a loan to an
Optionee, or otherwise assist an Optionee to obtain the financing necessary to
exercise all or a portion of an Option granted hereunder or to pay any tax
liability of the Optionee attributable
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to such exercise. If the exercise price is paid in whole or in part with the
Optionee's promissory note, such note shall: (i) provide for full recourse to
the maker; (ii) be collateralized by the pledge of the Shares that the Optionee
purchases upon exercise of such Option; (iii) bear interest at the prime rate of
the Company's principal lender, plus two percent; and (iv) contain such other
terms as the Board or Committee in its sole discretion shall reasonably require.
(c) No Optionee shall be deemed to be a holder of any Shares
subject to an Option unless and until a stock certificate or certificates for
such Shares are issued to such person(s) under the terms of this Plan (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). Until the issuance of the stock
certificate evidencing the Shares as to which an Option has been exercised, no
right to vote or to receive dividends or any other rights as a shareholder shall
exist with respect to such Shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, notwithstanding the exercise of such Option,
except as expressly provided in Section 10 hereof.
8. EXERCISABILITY OF OPTIONS.
(a) Except as otherwise provided in this Section 8 and subject
to Section 12, an Option shall become exercisable in such amounts, at such
vesting intervals, upon such events or occurrences, and upon such other terms
and conditions as shall be provided in the individual's Option Agreement.
(b) Subject to Section 5(e), the expiration date(s) of an
Option shall be determined by the Committee at the time of grant, but in no
event shall an Option be exercisable after the expiration of 7 years from the
date of grant of the Option.
(c) Unless otherwise expressly provided in any Option
Agreement, and notwithstanding the exercise schedule set forth in any Option
Agreement, each outstanding Option, may, in the sole discretion of the
Committee, become fully exercisable upon or immediately prior to the date of the
occurrence of any Change of Control or the Optionee's termination of employment
with the Company by reason of Retirement, death or Disability.
9. TERMINATION OF OPTION EXERCISE PERIOD.
(a) Unless otherwise expressly provided in any Option
Agreement, the unexercised portion of any Option granted to an Optionee shall
automatically and without notice immediately terminate at the earliest to occur
of the following:
(i) one year after the date on which the Optionee's
employment or service is terminated for any reason, other than by reason of: (A)
Cause; (B) voluntary termination of employment or service by the Optionee; or
(C) the Optionee's death;
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(ii) immediately upon the termination by the Company of
the Optionee's employment or service for Cause;
(iii) thirty (30) days after the voluntary termination
of employment or service by the Optionee;
(iv) one year after the date of the Optionee's death
PROVIDED, that with respect to the death of an Optionee who previously
terminated his employment or his service by reason of Disability, the option
exercise period shall expire at the later to occur of one year following the
date on which the Optionee's employment or service with the Company was
terminated due to Disability, or one month following the Optionee's death.
(b) Unless otherwise expressly provided in any Option, the
Committee in its sole discretion may, by giving written notice ("cancellation
notice") to the Optionee, cancel, effective upon the date of the consummation of
any Change of Control, any Option that remains unexercised on such date. Such
cancellation notice shall be given within a reasonable period of time prior to
the proposed date of such cancellation and may be given either before or after
approval of such corpoate transaction.
(c) Upon termination of an Option (or portion thereof)
pursuant to the foregoing provisions of this Section 9, any Option (or portion
thereof) not previously exercised shall be canceled.
10. ADJUSTMENT OF SHARES; MERGER.
(a) If, at any time while this Plan is in effect or
unexercised Options are outstanding, there shall be any increase or decrease in
the number of issued and outstanding Common Stock through the declaration of a
stock dividend, through any recapitalization, reclassification, stock split- up,
merger, combination or exchange of Common Stock (other than any such exchange or
issuance of Common Stock through which Common Stock is issued to effect an
acquisition of another business or entity or the Company's purchase of Common
Stock to exercise a "call" purchase option), then and in such event, at the
discretion of the Committee:
(i) appropriate adjustment shall be made in the maximum
number of Shares available for grant under this Plan, so that the same
percentage of the Company's issued and outstanding Shares shall continue to be
subject to being so optioned; and
(ii) appropriate adjustment shall be made in the number
of Shares and the exercise price per Share thereof then subject to any
outstanding Option, so that the same percentage of the Company's issued and
outstanding Shares shall remain subject to purchase at the same aggregate
exercise price.
(b) Such adjustments shall be made by the Committee, whose
determination shall be final, binding and conclusive.
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(c) Subject to the specific terms of any Option Agreement, the
Committee may change the terms of Options outstanding under this Plan, with
respect to the option price or the number of Shares subject to the Options, or
both, when, in the Committee's sole judgment and discretion, such adjustments
become appropriate by reason of a Change of Control.
(d) Except as otherwise expressly provide herein, the issuance
by the Company of shares of its capital stock of any class, or securities
convertible into or exchangeable for shares of its capital stock of any class,
either in connection with a direct or underwritten sale or upon the exercise of
rights or warrants to subscribe therefor or purchase such shares, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number of or exercise price of Shares then subject
to outstanding Options granted under this Plan.
(e) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under this Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate: (i)
any or all adjustments, recapitalizations, reclassifications, reorganizations or
other changes in the Company's capital structure or its business; (ii) any
merger or consolidation of the Company or to which the Company is a party; (iii)
any issuance by the Company of debt securities, or preferred or preference
stock, that would rank senior to or above the Shares subject to outstanding
Options; (iv) any purchase or issuance by the Company of Shares or other classes
of common stock or common equity securities; (v) the dissolution or liquidation
of the Company; (vi) any sale, transfer, encumbrance, pledge or assignment of
all or any part of the assets or business of the Company; or (vii) any other
corporate act or proceeding, whether of a similar character or otherwise.
(f) In the event of a merger in which the Company's
shareholders immediately before the merger own fifty percent (50%) or more of
the issued and outstanding shares of stock of the resulting entity after the
merger, then existing Options of the Company shall automatically convert into
options to receive stock of the resulting entity. This Plan shall survive such
merger as described in the immediately preceding sentence, and in such case, the
term "Option" herein shall refer to an option for shares of stock of the
surviving entity. In such case, the Committee (or such similar body of the
resulting entity) shall determine whether adjustments are necessary to the
exercise price of existing Options.
(g) The Optionee shall receive written notice within a
reasonable time prior to the consummation of such action advising the Optionee
of any of the foregoing. The Committee may, in the exercise of its sole
discretion, in such instances declare that any Option shall terminate as of a
date fixed by the Board and give each Optionee the right to exercise her or his
Option.
11. TRANSFERABILITY OF OPTIONS.
(a) No Option shall be subject to alienation, assignment,
pledge, charge or other transfer other than by the Optionee by will or the laws
of descent and distribution, and any attempt to make any such prohibited
transfer shall be void; PROVIDED, however, that a Non-Statutory Stock
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Option may be transferred to a family member or trust for the benefit of a
family member if the Committee's prior written consent is obtained (which
consent may be obtained at the time an Option is granted) and provided the
transaction does not violate the requirements of Rule 16b-3. Each Option shall
be exercisable during the Optionee's lifetime only by the Optionee, or in the
case of a Non- Statutory Stock Option that has been assigned or otherwise
transferred with the Committee's prior written consent, only by the assignee
consented to by the Committee.
(b) Unless the Committee's prior written consent is obtained
(which consent may be obtained at the time an Option is granted), and provided
the transaction does not violate the requirements of Rule 16b-3, no Shares
acquired by an Officer, as that term is defined under Rule 16b-3, or Director
pursuant to the exercise of an Option may be sold, assigned, pledged or
otherwise transferred prior to the expiration of the six-month period following
the date on which the Option was granted.
12. ISSUANCE OF SHARES.
(a) Notwithstanding any other provision of this Plan, the
Company shall not be obligated to issue any Shares unless it is advised by
counsel of its selection that it may do so without violation of the applicable
Federal and State laws pertaining to the issuance of securities, and may require
any stock so issued to bear a legend, may give its transfer agent instructions,
and may take such other steps, as in its judgment are reasonably required to
prevent any such violation.
(b) As a condition of any sale or issuance of Shares upon
exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any law, regulation, agreement or other applicable restriction,
including, but not limited to, the following:
(i) a representation and warranty by the Optionee to
the Company, at the time any Option is exercised, that he is acquiring the
Shares to be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(ii) (A) an agreement and undertaking to comply with
all of the terms, restrictions and provisions set forth in any then applicable
shareholders' agreement relating to the Shares, including without limitation any
restrictions on transferability, any rights of first refusal and any option of
the Company to "call" or purchase such Shares under then applicable agreements,
and (B) any restrictive legend or legends, to be embossed or imprinted on Share
certificates, that are, in the discretion of the Committee, necessary or
appropriate to comply with the provisions of any securities law or other
restriction applicable to the issuance of the Shares.
13. REDEMPTION OF SHARES BY THE COMPANY.
(a) RIGHT TO REDEEM. Subject to any restrictions under
applicable corporate or other laws, and notwithstanding any other provisions of
this Plan to the contrary, the Company shall have the right to redeem any Shares
issued to any Optionee upon the exercise by such Optionee of the
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Option granted to him under the Plan immediately upon the termination of
Optionee's employment or service arising from (i) a Disability; (ii) the death
of the Optionee; (iii) the voluntary termination of employment or services of
the Optionee; or (iv) the termination of employment or services of the Optionee
for Cause (each an "Event of Redemption").
(b) REDEMPTION PRICE.
(i) The purchase price (the "Redemption Price"), to be
paid by the Company at the Redemption Closing (as defined herein) for the Shares
of the Optionee upon the occurrence of an Event of Redemption pursuant to
Section 13(a)(i)-(iii), shall be the Fair Market Value of the Shares on the date
of the Event of Redemption, as determined in accordance with Section 2(n)
hereof.
(ii) In the event of an Event of Redemption set forth
in Section 13(a)(iv), the Redemption Price shall be zero, and the Optionee shall
immediately surrender the Shares to the Company without payment of any further
compensation for his Shares.
(c) REDEMPTION CLOSING. The closing (the "Redemption Closing")
shall take place no later than thirty (30) days after the date of the occurrence
of the Redemption Event. At the Redemption Closing: (i) the Optionee shall
deliver to the Company the share certificate or certificates evidencing the
ownership of the Shares together with duly executed stock powers endorsed in
blank and such other documents as the Company shall require; and (ii) the
Company shall pay to the Optionee the Redemption Price (if any) by wire
transfer, certified check or, in the Company's sole discretion, by delivery of a
promissory note to the Optionee in the principal amount of the Redemption Price
and payable on such terms as the Company may deem appropriate.
14. ADMINISTRATION.
(a) This Plan shall be administered by the Committee, which
shall consist of not less than two Directors, each of whom shall be Outside
Directors. The Committee shall have all of the powers of the Board with respect
to this Plan. Any member of the Committee may be removed at any time, with or
without cause, be resolution of the Board, and any vacancy occurring in the
membership of the Committee may be filled by appointment by the Board.
(b) Subject to the provisions of this Plan, the Committee
shall have the authority, in its sole discretion, to: (i) grant Options; (ii)
determine the Fair Market Value per Share; (iii) determine the exercise price
per Share at which Non-Statutory Stock Options may be exercised; (iv) determine
the Optionees to whom, and the time or times at which, Options shall be granted;
(v) determine the number of Shares subject to each Option; (vi) determine the
terms, conditions and provisions of each Option granted (which need not be
identical); (vii) with the consent of the holder thereof, modify or amend each
Option; (viii) defer (with the consent of the Optionee) or accelerate the
exercise date of any Option; and (ix) make all other determinations deemed
necessary or advisable for the administration of this Plan.
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(c) Each determination or other action made or taken pursuant
to the Plan, including interpretation of the Plan and the specific conditions
and provisions of the Options granted hereunder by the Committee, shall be final
and conclusive for al purposes and upon all persons including, but without
limitation, the Company, the Committee, the Board, Officers, and any affected
Employees or consultants to the Company, Optionees and the respective successors
in interest of any of the foregoing.
(d) Any and all decisions or determinations of the Committee
shall be made either: (i) by a majority vote of the members of the Committee at
a meeting of the Committee; or (ii) without a meeting by the unanimous written
approval of the members of the Committee.
(e) The Board may reserve to itself the power to grant Options
to Employees or Directors or directors of any Subsidiary who are not Covered
Employees. If and to the extent that the Board reserves such powers, then all
references herein to the Committee shall refer to the Board with respect to the
Options granted by the Board.
(f) No member of the Committee, or any Officer or Director,
shall be personally liable for any act or omission made in good faith in
connection with this Plan.
(g) The inability of the Company to obtain authority from any
regulatory body having jurisdiction over the grant of options under the Plan,
which authority is deemed by the Company's legal counsel to be necessary to the
lawful issuance and sale of any Shares hereunder, shall relieve the Company of
any liability in respect to the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
15. WITHHOLDING OR DEDUCTION FOR TAXES. If at any time specified herein
for the making of any issuance or delivery of any Option or Common Stock to any
Optionee, any law or regulation of any governmental authority having
jurisdiction in the premises shall require the Company to withhold, or to make
any deduction for, any taxes or take any other action in connection with the
issuance or delivery then to be made, such issuance or delivery shall be
deferred until such withholding or deduction shall have been provided for by the
Optionee or beneficiary, or other appropriate action shall have been taken, as
determined by the Committee in its sole discretion.
16. INTERPRETATION.
(a) This Plan shall be administered and interpreted so that
all Incentive Stock Options granted under this Plan will qualify as Incentive
Stock Options under Section 422 of the Code. If any provision of this Plan
should be held invalid for the granting of Incentive Stock Options or illegal
for any reason, such determination shall not affect the remaining provisions
hereof, and this Plan shall be construed and enforced as if such provision had
never been included in this Plan.
(b) As it is the intent of the Company that the Plan comply in
all respects with Rule 16b-3, any ambiguities or inconsistencies in construction
of the Plan shall be interpreted to give effect to such intention, and if any
provision of the Plan is found not to be in compliance with Rule
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16b-3, such provision shall be deemed null and void to the extent required to
permit the Plan to comply with Rule 16b-3. The Board and the Committee each may
from time to time adopt rules and regulations under, and amend, the Plan in
furtherance of the intent of the foregoing.
(c) This Plan shall be governed by the internal laws of the
State of Colorado.
(d) Headings contained in this Plan are for convenience only
and shall in no manner be construed as part of this Plan or affect the meaning
or interpretation of any part of this Plan.
(e) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
17. AMENDMENT AND TERMINATION OF THE PLAN. Either the Board or the
Committee may from time to time amend or terminate this Plan or any Option
without approval of the shareholders of the Company, unless shareholder approval
is required by Rule 16b-3, applicable stock exchange or quotation systems, or
applicable Code provisions; PROVIDED, however, that, except to the extent
provided in Section 9, no amendment or termination of this Plan or any Option
issued hereunder shall substantially impair any Option previously granted to any
Optionee without the consent of such Optionee.
18. RIGHTS AS AN EMPLOYEE OR NON-EMPLOYEE. Neither the Plan nor any
Option granted pursuant thereto shall be construed to give any person the right
to remain in the employ or service of the Company or any Affiliate, or to affect
the right of the Company or any Affiliate to terminate such individual's
employment or service at any time with or without cause. The grant of an Option
shall not entitle the Optionee to, or disqualify the Optionee from,
participation in the grant of any other Option under the Plan or participation
in any other benefit plan maintained by the Company or any Affiliate.
19. SUCCESSORS AND ASSIGNS. The Plan shall be binding upon the
Company's successors and assigns and shall inure to the benefit of any
representative, executor, administrator, heir, or legatee of the Optionee.
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