1997 STOCK OPTION PLAN
OF
Easy Street Online, Inc.
1. Purpose
Easy Street Online, Inc. (the "Company") desires to attract
and retain the best available talent and encourage the highest level of
performance in order to continue to serve the best interests of the Company, and
its stockholders. By affording key personnel the opportunity to acquire
proprietary interests in the Company and by providing them incentives to put
forth maximum efforts for the success of the business, the 1997 Stock Option
Plan of Easy Street Online, Inc. (the "1997 Plan") is expected to contribute to
the attainment of those objectives.
The word "Subsidiary" or "Subsidiaries" as used herein, shall
mean any corporation, fifty percent or more of the voting stock of which is
owned by the Company.
2. Scope and Duration
Options under the 1997 Plan may be granted in the form of
incentive stock options ("Incentive Options") as provided in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or in the form of
nonqualified stock options ("Non-Qualified Options"). (Unless otherwise
indicated, references in the 1997 Plan to "options" include Incentive Options
and Non-Qualified Options.) The maximum aggregate number of shares as to which
options may be granted from time to time under the 1997 Plan is 500,000 shares
of the Common Stock of the Company ("Common Stock"), which shares may be, in
whole or in part, authorized but unissued shares or shares reacquired by the
Company. If an option shall expire, terminate or be surrendered for cancellation
for any reason without having been exercised in full, the shares represented by
the option or portion thereof not so exercised shall (unless the 1997 Plan shall
have been terminated) become available for subsequent option grants under the
1997 Plan. As provided in paragraph 13, the 1997 Plan shall become effective on
March 1, 1997, and unless terminated sooner pursuant to paragraph 14, the 1997
Plan shall terminate on March 1, 2007, and no option shall be granted hereunder
after that date.
3. Administration
The 1997 Plan shall be administered by the Board of Directors
of the Company, or, at their discretion, by a committee which is appointed by
the Board of Directors to perform such function (the "Committee"). The Committee
shall consist of not less than two members of the Board of Directors, each of
whom shall serve at the pleasure of the Board of Directors and shall be a
"disinterested person" as defined in Rule l6b-3 pursuant to the Securities
Exchange Act of 1934 (the "Act"). Members of the Committee shall not be eligible
to participate in the Plan while a member of the Committee. Vacancies occurring
in the membership of the Committee shall be filled by appointment by the Board
of Directors.
The Board of Directors or the Committee, as the case may be,
shall have plenary authority in its discretion, subject to and not inconsistent
with the express provisions of the 1997 Plan, to grant options, to determine the
purchase price of the Common Stock covered by each option, the term of each
option, the persons to whom, and the time or times at which, options shall be
granted and the number of shares to be covered by each option; to designate
options as Incentive Options or Non-Qualified Options; to interpret the 1997
Plan; to prescribe, amend and rescind rules and regulations relating to the 1997
Plan; to determine the terms and provisions of the option agreements (which need
not be identical) entered into in connection with options under the 1997 Plan;
and to make all other determinations deemed necessary or advisable for the
administration of the 1997 Plan. The Board of Directors or the Committee, as the
case may be, may delegate to one or more of its members or to one or more agents
such administrative duties as it may deem advisable, and the Board of Directors
or the Committee, as the case may be, or any person to whom it has delegated
duties as aforesaid may employ one or more persons to render advice with respect
to any responsibility the Board of Directors or the Committee, as the case may
be, or such person may have under the 1997 Plan.
4. Eligibility; Factors to be Considered in Granting
Options
Incentive Options shall be limited to persons who are
employees of the Company or its present and future Subsidiaries and at the date
of grant of any option are in the employ of the Company or its present and
future Subsidiaries. In determining the employees to whom Incentive Options
shall be granted and the number of shares to be covered by each Incentive
Option, the Board of Directors or the Committee, as the case may be, shall take
into account the nature of employees' duties, their present and potential
contributions to the success of the Company and such other factors as it shall
deem relevant in connection with accomplishing the purposes of the 1997 Plan. An
employee who has been granted an option or options under the 1997 Plan may be
granted an additional option or options, subject, in the case of Incentive
Options, to such limitations as may be imposed by the Code on such options.
Except as provided below, a Non-Qualified Option may be granted to any person,
including, but not limited to, employees, independent agents, consultants and
attorneys, who the Board of Directors or the Committee, as the case may be,
believes has contributed, or will contribute, to the success of the Company.
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5. Option Price
The purchase price of the Common Stock covered by each option
shall be determined by the Board of Directors or the Committee, as the case may
be, but shall not be less than 100% of the Fair Market Value (as defined in
paragraph 15 below) of a share of the Common Stock on the date on which the
option is granted. Such price shall be subject to adjustment as provided in
paragraph 12 below. The Board of Directors or the Committee, as the case may be,
shall determine the date on which an option is granted; in the absence of such a
determination, the date on which the Board of Directors or the Committee, as the
case may be, adopts a resolution granting an option shall be considered the date
on which such option is granted.
6. Term of Options
The term of each option shall be not more then ten years from
the date of grant, as the Board of Directors or the Committee, as the case may
be, shall determine, subject to earlier termination as provided in paragraphs 10
and 11 below.
7. Exercise of Options
(a) Subject to the provisions of the 1997 Plan and unless
otherwise provided in the option agreement, options granted under the 1997 Plan
shall become exercisable as determined by the Board of Directors or Committee.
In its discretion, the Board of Directors or the Committee, as the case may be,
may, in any case or cases, prescribe that options granted under the 1997 Plan
become exercisable in installments or provide that an option may be exercisable
in full immediately upon the date of its grant. The Board of Directors or the
Committee, as the case may be, may, in its sole discretion, also provide that an
option granted pursuant to the 1997 Plan shall immediately become exercisable in
full upon the happening of any of the following events; (i) the first purchase
of shares of Common Stock pursuant to a tender offer or exchange offer (other
than an offer by the Company) for all, or any part of, the Common Stock, (ii)
the approval by the stockholders of the Company of an agreement for a merger in
which the Company will not survive as an independent, publicly owned
corporation, a consolidation, or a sale, exchange or other disposition of all or
substantially all of the Company's assets, (iii) with respect to an employee, on
his 65th birthday, or (iv) with respect to an employee, on the employee's
involuntary termination from employment, except as provided in Section 10
herein. In the event of a question or controversy as to whether or not any of
the events hereinabove described has taken place, a determination by the Board
of Directors or the Committee, as the case may be, that such event has or has
not occurred shall be conclusive and binding upon the Company and participants
in the 1997 Plan.
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(b) Any option at any time granted under the 1997 Plan may
contain a provision to the effect that the optionee (or any persons entitled to
act under Paragraph 11 hereof) may, at any time at which Fair Market Value is in
excess of the exercise price and prior to exercising the option, in whole or in
part, request that the Company purchase all or any portion of the option as
shall then be exercisable at a price equal to the difference between (i) an
amount equal to the option price multiplied by the number of shares subject to
that portion of the option in respect of which such request shall be made and
(ii) an amount equal to such number of shares multiplied by the fair market
value of the Company's Common Stock (within the meaning of Section 422 of the
Code and the treasury regulations promulgated thereunder) on the date of
purchase. The Company shall have no obligation to make any purchase pursuant to
such request, but if it elects to do so, such portion of the option as to which
the request is made shall be surrendered to the Company. The purchase price for
the portion of the option to be so surrendered shall be paid by the Company, at
the election of the Board of Directors or the Committee, as the case may be,
either in cash or in shares of Common Stock (valued as of the date and in the
manner provided in clause (ii) above), or in any combination of cash and Common
Stock, which may consist, in whole or in part, of shares of authorized but
unissued Common Stock or shares of Common Stock held in the Company's treasury.
No fractional share of Common Stock shall be issued or transferred and any
fractional share shall be disregarded. Shares covered by that portion of any
option purchased by the Company pursuant hereto and surrendered to the Company
shall not be available for the granting of further options under the Plan. All
determinations to be made by the Company hereunder shall be made by the Board of
Directors or the Committee, as the case may be.
(c) An option may be exercised, at any time or from time to
time (subject, in the case of Incentive Options, to such restrictions as may be
imposed by the Code), as to any or all full shares as to which the option has
become exercisable until the expiration of the period set forth in Paragraph 6
hereof, by the delivery to the Company, at its principal place of business, of
(i) written notice of exercise in the form specified by the Board of Directors
or the Committee, as the case may be, specifying the number of shares of Common
Stock with respect to which the option is being exercised and signed by the
person exercising the option as provided herein, (ii) payment of the purchase
price; and (iii) in the case of Non-Qualified Options, payment in cash of all
withholding tax obligations imposed on the Company by reason of the exercise of
the option. Upon acceptance of such notice, receipt of payment in full, and
receipt of payment of all withholding tax obligations, the Company shall cause
to be issued a certificate representing the shares of Common Stock purchased. In
the event the person exercising the option delivers the items specified in (i)
and (ii) of this Subsection (c), but not the item specified in (iii) hereof, if
applicable, the option shall still be considered exercised upon acceptance by
the Company for the full number of
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shares of Common Stock specified in the notice of exercise but the actual number
of shares issued shall be reduced by the smallest number of whole shares of
Common Stock which, when multiplied by the Fair Market Value of the Common Stock
as of the date the option is exercised, is sufficient to satisfy the required
amount of withholding tax.
(d) The purchase price of the shares as to which an option is
exercised shall be paid in full at the time of exercise. Payment shall be made
in cash, which may be paid by check or other instrument acceptable to the
Company; in addition, subject to compliance with applicable laws and regulations
and such conditions as the Board of Directors or the Committee, as the case may
be, may impose, the Board of Directors or the Committee, as the case may be, in
its sole discretion, may on a case-by-case basis elect to accept payment in
shares of Common Stock of the Company which are already owned by the option
holder, valued at the Fair Market Value thereof (as defined in paragraph 15
below) on the date of exercise; provided, however, that with respect to
Incentive Options, no such discretion may be exercised unless the option
agreement permits the payment of the purchase price in that manner.
(e) Except as provided in paragraphs 10 and 11 below, no
option granted to an employee may be exercised at any time by such employee
unless such employee is then an employee of the Company or a Subsidiary.
8. Incentive Options
(a) With respect to Incentive Options granted, the aggregate
Fair Market Value (determined in accordance with the provisions of paragraph 15
at the time the Incentive Option is granted) of the Common Stock or any other
stock of the Company or its current or future Subsidiaries with respect to which
incentive stock options, as defined in Section 422 of the Code, are exercisable
for the first time by any employee during any calendar year (under all incentive
stock option plans of the Company and its parent and subsidiary corporation's,
as those terms are defined in Section 424 of the Code) shall not exceed
$100,000.
(b) No Incentive Option may be awarded to any employee who
immediately prior to the date of the granting of such Incentive Option owns more
than 10% of the combined voting power of all classes of stock of the Company or
any of its Subsidiaries unless the exercise price under the Incentive Option is
at least 110% of the Fair Market Value and the option expires within 5 years
from the date of grant.
(c) In the event of amendments to the Code or applicable
regulations relating to Incentive Options subsequent to the date hereof, the
Company may amend the provisions of the 1997 Plan, and the Company and the
employees holding options may agree to amend outstanding option agreements, to
conform to such amendments
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9. Non-Transferability of Options
Options granted under the 1997 Plan shall not be transferable
otherwise than by will or the laws of descent and distribution, and options may
be exercised during the lifetime of the optionee only by the optionee. No
transfer of an option by the optionee by will or by the laws of descent and
distribution shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and a copy of the will and such
other evidence as the Company may deem necessary to establish the validity of
the transfer and the acceptance by the transferor or transferees of the terms
and conditions of such option.
10. Termination of Employment
In the event that the employment of an employee to whom an
option has been granted under the 1997 Plan shall be terminated (except as set
forth in paragraph 11 below), such option may be, subject to the provisions of
the 1997 Plan, exercised (to the extent that the employee was entitled to do so
at the termination of his employment) at any time within ninety (90) days after
such termination, but not later than the date on which the option terminates;
provided, however, that any option which is held by an employee whose employment
is terminated for cause or voluntarily without the consent of the Company shall,
to the extent not theretofore exercised, automatically terminate as of the date
of termination of employment. As used herein, "cause" shall mean conduct
amounting to fraud, dishonesty, negligence, or engaging in competition or
solicitations in competition with the Company and breaches of any applicable
employment agreement between the Company and the optionee. Options granted to
employees under the 1997 Plan shall not be affected by any change of duties or
position so long as the holder continues to be a regular employee of the Company
or any of its current or future Subsidiaries. Any option agreement or any rules
and regulations relating to the 1997 Plan may contain such provisions as the
Board of Directors or the Committee, as the case may be, shall approve with
reference to the determination of the date employment terminates and the effect
of leaves of absence. Nothing in the 1997 Plan or in any option granted pursuant
to the 1997 Plan shall confer upon any employee any right to continue in the
employ of the Company or any of its Subsidiaries or parent or affiliated
companies or interfere in any way with the right of the Company or any such
Subsidiary or parent or affiliated companies to terminate such employment at any
time.
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11. Death or Disability of Employee
If an employee to whom an option has been granted under the
1997 Plan shall die while employed by the Company or a Subsidiary or within
ninety (90) days after the termination of such employment (other than
termination for cause or voluntary termination without the consent of the
Company), such option may be exercised, to the extent exercisable by the
employee on the date of death, by a legatee or legatees of the employee under
the employee's last will, or by the employee's personal representative or
distributees, at any time within one year after the date of the employee's
death, but not later than the date on which the option terminates. In the event
that the employment of an employee to whom an option has been granted under the
1997 Plan shall be terminated as the result of a disability, such option may be
exercised, to the extent exercisable by the employee on the date of such
termination, at any time within one year after the date of such termination, but
not later than the date on which the option terminates.
12. Adjustments Upon Changes in Capitalization, Etc.
Notwithstanding any other provision of the 1997 Plan, the
Board of Directors or the Committee, as the case may be, may, at any time, make
or provide for such adjustments to the 1997 Plan, to the number and class of
shares issuable thereunder or to any outstanding options as it shall deem
appropriate to prevent dilution or enlargement of rights, including adjustments
in the event of changes in the outstanding Common Stock by reason of stock
dividends, split-ups, recapitalizations, mergers, consolidations, combinations
or exchanges of shares, separations, reorganizations, liquidations and the like.
In the event of any offer to holders of Common Stock generally relating to the
acquisition of their shares, the Board of Directors or the Committee, as the
case may be, may make such adjustment as it deems equitable in respect of
outstanding options and rights, including in its discretion revision of
outstanding options and rights so that they may be exercisable for the
consideration payable in the acquisition transaction. Any such determination by
the Board of Directors or the Committee, as the case may be, shall be
conclusive. Any fractional shares resulting from such adjustments shall be
eliminated.
13. Effective Date
The 1997 Plan shall become effective on March 1, 1997.
14. Termination and Amendment
The Board of Directors of the Company may suspend, terminate,
modify or amend the 1997 Plan, provided that any amendment that would increase
the aggregate number of shares which may be
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issued under the 1997 Plan, materially increase the benefits accruing to
participants under the 1997 Plan, or materially modify the requirements as to
eligibility for participation in the 1997 Plan, shall be subject to the approval
of the Company's stockholders, except that any such increase or modification
that may result from adjustments authorized by paragraph 12 does not require
such approval. No suspension, termination, modification or amendment of the 1997
Plan may, without the consent of the employee to whom an option shall
theretofore have been granted, effect the rights of such employee under such
option.
15. Miscellaneous
As said term is used in the 1997 Plan, the "Fair Market Value"
of a share of Common Stock on any day means: (a) if the principal market for the
Common Stock is a national securities exchange or the National Association of
Securities Dealers Automated Quotations System ("NASDAQ), the closing sales
price of the Common Stock on such day as reported by such exchange or market
system, or on a consolidated tape reflecting transactions on such exchange or
market system, or (b) if the principal market for the Common Stock is not a
national securities exchange and the Common Stock is not quoted on NASDAQ, the
mean between the highest bid and lowest asked prices for the Common Stock on
such day as reported by the National Quotation Bureau, Inc.; provided that if
clauses (a) and (b) of this paragraph are both inapplicable, or if no trades
have been made or no quotes are available for such day, the Fair Market Value of
the Common Stock shall be determined by the Board of Directors or the Committee,
as the case may be, shall be conclusive as to the Fair Market Value of the
Common Stock.
The Board of Directors or the Committee, as the case may be,
may require, as a condition to the exercise of any options granted under the
1997 Plan, that to the extent required at the time of exercise, (i) the shares
of Common Stock reserved for purposes of the 1997 Plan shall be duly listed,
upon official notice of issuance, upon stock exchange(s) on which the Common
Stock is listed, (ii) a Registration Statement under the Securities Act of 1933,
as amended, with respect to such shares shall be effective, and/or (iii) the
person exercising such option deliver to the Company such documents, agreements
and investment and other representations as the Board of Directors or the
Committee, as the case may be, shall determine to be in the best interests of
the Company.
During the term of the 1997 Plan, the Board of Directors or
the Committee, as the case may be, in its discretion, may offer one or more
option holders the opportunity to surrender any or all unexpired options for
cancellation or replacement. If any options are so surrendered, the Board of
Directors or the Committee, as the case may be, may then grant new Non-Qualified
or Incentive Options to such holders for the same or different numbers of shares
at higher or lower exercise prices than the surrendered options. Such
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new options may have a different term and shall be subject to the provisions of
the 1997 Plan the same as any other option.
Anything herein to the contrary notwithstanding, the Board of
Directors or the Committee, as the case may be, may, in their sole discretion,
impose more restrictive conditions on the exercise of an option granted pursuant
to the 1997 Plan; however, any and all such conditions shall be specified in the
option agreement limiting and defining such option.
16. Compliance with SEC Regulations.
It is the Company's intent that the 1997 Plan comply in all
respects with Rule 16b-3 of the Act and any regulations promulgated thereunder.
If any provision of the 1997 Plan is later found not to be in compliance with
said Rule, the provisions shall be deemed null and void. All grants and
exercises of Incentive Options under the 1997 Plan shall be executed in
accordance with the requirements of Section 16 of the Act, as amended, and any
regulations promulgated thereunder.
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