INTERNET FINANCIAL SERVICES, INC.
1997 STOCK OPTION PLAN
1. Purpose
This plan (the "Plan") enables employees, non-employee directors and
officers (including officers and directors who are also employees) as well as
independent contractors who contribute to the success of Internet Financial
Services, Inc., a Delaware Corporation (the "Company") to participate in its
future prosperity and growth and further to identify their interests with those
of the shareholders of the Company. The purpose of this Plan is to provide
long-term incentive for gain through outstanding service to the Company and its
shareholders and to assist in recruiting and retaining people of ability and
initiative.
2. Administration
This Plan shall be administered by a stock option committee (the
"Committee") selected by the Board of Directors (the "Board") of the Company
which shall consist of not less than one (1) nor more than three (3) persons.
The Board may also select one or more persons as alternate members of the
Committee, who may take the place of any absent member or members at any meeting
of the Committee. Any vacancy occurring in the membership of the Committee shall
be filled by appointment of the Board. The Committee shall have complete
authority to interpret all provisions of this Plan consistent with law, to
determine and designate those directors or employees of the Company (including,
but not limited to, members of the Committee) to whom options may be granted and
the type and number of option to be granted, to prescribe the form of
instruments evidencing any option granted under this Plan, to adopt, amend and
rescind general and special rules and regulations for its administration, and to
make all other determinations necessary or advisable for the administration of
this Plan.
3. Eligibility
Any member of the Board of the Company, officer and/or any salaried
employee or independent contractor of or to the Company or any of its
subsidiaries (including any subsidiary acquired after adoption of this Plan) who
in the judgment of the Committee contributes significantly to the overall
success of the Company or a subsidiary may be granted an option hereunder.
The Committee will designate non-employee directors and officers and
employees and independent contractors to whom options are to be granted and will
specify whether the option is an Incentive Stock Option (as hereinafter defined)
or non-statutory stock option (except that non-employee directors and officers,
and independent contractors may only be granted non-statutory stock options) and
the number of shares subject to each option.
The Committee will also designate non-employee directors and officers,
and employees to whom options are to be granted and will specify the number of
shares subject to each option.
4. Shares Subject to Option
Options may be granted under this Plan on or after January 27, 1997.
Each option so granted will give the optionee the right to purchase a designated
number of the shares of common stock of the Company, $.001 par value (the
"Shares"), (subject to adjustment under Section 9 hereof). Upon exercise of any
option the Company may deliver to the optionee authorized but unissued Shares,
treasury Shares, or any combination thereof.
The Committee will maintain records showing the cumulative total of all
Shares subject to options outstanding under this Plan. The number of Shares
delivered under this Plan shall not exceed in the aggregate 400,000 Shares. The
number may be adjusted to reflect any change in the capitalization of the
Company resulting from a stock dividend or a stock split or other adjustment
contemplated by Section 9 hereof and occurring after the adoption of this Plan.
Subject to Section 6(D) hereof, if an option is terminated, in whole or in part,
for any reason other than the exercise thereof, the Shares allocated to the
option or portion thereof so terminated may be reallocated to another option or
options to be granted under this Plan.
5. Stock Options
(A) Allotment of Shares
(1) Subject to the limitations specified in Section
4(A)(2) hereof, the Committee may grant to optionees
(i) options which are intended to qualify as
incentive stock options ("Incentive Stock Options")
under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"); (ii) options which are
not intended to qualify as Incentive Stock Options;
or (iii) both of the foregoing if not granted to an
optionee in tandem where the exercise of one type of
option would reduce the Shares available under the
other type of option. The Committee may, in its sole
discretion, offer an optionee the opportunity to
surrender his or her options granted pursuant to this
Plan in exchange for different options to be granted
pursuant to this Plan.
(2) The aggregate fair market value (determined at the
time the option is granted) of the Shares for which
Incentive Stock Options may be granted to an optionee
with respect to which an option is exercisable for
the first time by such optionee during any calendar
year (under all incentive stock option plans of the
Company and its subsidiaries) may not exceed the
amount set forth in Section 422 of the Code with
respect to vesting limits. No Incentive Stock Option
may be granted more than ten years after the
effective date of this Plan.
(3) Options which are not Incentive Stock Options may be
granted to any optionee without regard to the
limitation stated in Section 5(A)(2) hereof.
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(B) Option Price
The price per share for Shares purchased by the exercise of
any Incentive Stock Option granted pursuant to this Plan will be the fair market
value per Share of such Shares at the time the option is granted except that the
price per share for Shares purchased by the exercise of any Incentive Stock
Option granted to any employee who at the time of such grant owns 10% or more of
the total combined voting power of all classes of stock of the Company or any
parent corporation (as defined by Section 425(e) of the Code) or any subsidiary
shall be at least 110% of the fair market value of the Shares at the time of
grant, and such option shall not be exercisable after the expiration of five (5)
years from the date of its grant; the price per share for Shares purchased by
exercise of any non-statutory stock option granted pursuant to this Plan shall
be at the sole discretion of the Committee.
(C) Option Period
Except as set forth in Section 5(B) above, each option shall
expire on such date as the Committee shall determine at the time of the grant
and except further that Incentive Stock Options shall not be exercisable after
the expiration of ten (10) years from the date such option is granted.
(D) Exercise of Options
(1) By an Optionee during Continuous Service or
Employment
Subject to the provisions of this Plan, each option
granted hereunder shall be exercisable on such date
or dates and during such period and for such number
of Shares as the Committee may determine.
Subject to the provisions of subparagraphs (2) and
(3) of paragraph (D) of this Section 5, no director
or employee may exercise any part of an option
granted under this Plan unless, at the time of such
exercise, he had served continuously on the Board of
the Company or he has been in he continuous
employment of the /Company of a subsidiary of the
Company, as the case may be, since the date the
option was granted. The Committee may decide in each
case to what extent leaves of absence for government
or military service, illness, temporary disability,
or other reasons shall not, for this purpose, be
deemed interruptions of continuous employment.
During the lifetime of an optionee, the option may be
exercised only by the optionee, his attorney-in-fact,
his guardian, or his assignee as hereinafter
provided.
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(2) By a Former Director, Former Employee
or Former Independent Contractor
After an optionee ceases to be a director or employee
or independent contractor of the Company or such
subsidiary, as the case may be, whether as a result
of termination by the Company or such subsidiary or
by the optionee, normal retirement, early retirement,
or disability retirement because of physical or
mental disability, the option may be exercised by
him, his attorney-in-fact, or his guardian, as
appropriate, at any time after the date on which he
ceases to be such (but no later than the earlier of
(a) 90 days after he ceases to be a member of the
Company's Board or ceases to be employed by, or an
independent contractor to, the Company or a
subsidiary thereof (for whichever of the above
reasons) or, (b) the end of the fixed term of the
option) for the number of Shares for which the option
could have been exercised at the time he ceased to be
a director or an employee, as the case may be, or for
such greater number of Shares subject to the option
as to which the Committee may authorize an
acceleration of the schedule of the time or times of
exercise under the option.
(3) In Case of Death or Disability
If an optionee shall die or become permanently and
totally disabled (within the meaning of Section
22(e)(3) of the Code, hereinafter referred to as
"Disabled" or "Disability") while an employee or a
director or independent contractor of the Company or
of a subsidiary or if an employee or a director or
independent contractor dies within 90 days after
termination pursuant to 5(D)(2), and at the time of
death or Disability was entitled to exercise any
option granted under this Plan, then the option may
be exercised by such Disabled optionee or his legal
representative, as the case may be, or by his estate,
or by a person who acquires the right to exercise the
option by bequest or inheritance, at any time after
the date of death or Disability (but no later than
the earlier of (a) twelve (12) months after the date
of death or termination by reason of Disability of
the optionee or, (b) the end of the fixed term of the
option); provided, however, in the case of options
which are not Incentive Stock Options, that the
Committee may prescribe a period during which the
option may be exercised which is shorter than twelve
months after the death or Disability. The option may
be exercised only for the number of Shares (subject
to adjustment under Section 9 hereof) for which it
could have been exercised at the time the director or
former director or employee or former employee died
or became Disabled, or for such greater number of
Shares subject to the option for which the Committee
may authorize an acceleration of the schedule of the
time or times of exercise under the option.
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(4) Acceleration or Conversion
On a case-by-case basis, the Committee may, in its
sole discretion, accelerate the schedule of the time
or times when an option granted under this Plan may
be exercised. The Committee may also, in its sole
discretion, from time to time, on a case by case
basis, convert Incentive Stock Options granted to an
optionee hereunder into non-statutory stock option on
such basis as the Committee deems advisable.
6. Special Provisions Respecting Exercise
(A) Simultaneously with the exercise of any options granted hereunder,
the Company may require any such optionee to simultaneously make
payment of any federal, state or employment taxes required to be
withheld with respect to the exercise of such options or payable in
connection with such exercise.
(B) An optionee exercising an option hereunder may pay a portion or all
of the exercise price by delivering Shares of the Company already
issued to, and held by such optionee provided that the Company then has
Shares publicly traded (regardless of whether the Shares being utilized
by such optionee are themselves registered for trading). The value of
the Shares being tendered by an optionee shall be calculated at the
last trade price on the day prior to the date of exercise of such stock
option, when Shares are then listed on NASDAQ or a national stock
exchange or, alternatively, the mean between the "bid" "asked" price
for Shares if there are no trades or if Shares are not listed thereon.
7. Method of Exercise
Each option granted under this Plan shall be deemed exercised when the
optionee shall indicate the decision to do so in a writing delivered to the
Company, and shall at the same time tender to the Company payment in full for
the Shares for which the option is exercised, and shall comply with such other
reasonable requirements as the Committee may establish pursuant to Sections 10
and 11 hereof. Payment for the Shares shall be made in cash or, in the
discretion of the Committee, through delivery of Shares or a combination of cash
and Shares. No person, estate or other entity shall have any of the rights of a
shareholder with reference to Shares subject to an option until a certificate or
certificates for the Shares shall have been delivered to such person, estate or
other entity.
An option granted under this Plan may be exercised for any lesser
number of Shares than the full amount for which it could be exercised. Such
partial exercise of an option or Stock Appreciation Right shall not affect the
right to exercise the option from time to time in accordance with this Plan for
the remaining Shares subject to the option.
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8. Assign ability
No Incentive Stock Option granted to an employee under this Plan shall
be transferable by him except by will or by the laws of descent and
distribution. No non-statutory stock option granted to an optionee hereunder may
be assigned except by will or by the laws of descent and distribution.
9. Adjustment Upon Change of Shares
In the event of a reorganization, merger, consolidation,
reclassification, recapitalization, combination or exchange of Shares, stock
split, stock dividend, spin-off, rights offering or other events affecting
Shares of the Company, the number and class of Shares then subject to options
previously granted under this Plan, and the price per Share payable upon
exercise of such options, shall be equitably adjusted by the Committee to
reflect the change.
10. Compliance With Law and Approval of Regulatory Bodies
No option shall be exercisable and no Shares will be delivered under
this Plan except in compliance with all applicable federal and state laws and
regulations, including without limitation, compliance with withholding tax
requirements and with the rules of all stock exchanges on which the Company's
Shares may be listed. Any Share certificate issued to evidence Shares for which
an option is exercised may bear legends and statements which the Committee shall
deem advisable to assure compliance with federal and state laws and regulations.
No option shall be exercisable, and no Shares will be delivered under this Plan,
until the Company has obtained consent or approval from regulatory bodies,
federal or state, having jurisdiction over such matters as the Committee may
deem advisable.
In the case of the exercise of an option by a person or estate
acquiring the right to exercise the option by bequest or inheritance, the
Committee may require reasonable evidence as to the ownership of the option and
may require such consents and releases of taxing authorities that it may deem
advisable.
11. Investment Representation
The Committee may require the optionee to furnish to the Company,
before the issuance of any Shares upon the exercise of all or any part of an
option granted pursuant to this Plan, a representation (in such form as the
Committee may specify) in which the optionee acknowledges that the Shares
acquired by him upon exercise of his option right have not been registered under
the Securities Act of 1933, as amended, and may not be sold or disposed of,
except in accordance with said Act.
12. General Provisions
Neither the adoption of this Plan nor its operation, nor any document
describing or referring to this Plan, or any part thereof, shall confer upon any
employee any right to continue in the employ of the Company or any subsidiary,
or shall in any way affect the right and power
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of the Company or any subsidiary to terminate the employment of any employee at
any time with or without assigning a reason therefor to the same extent as the
Company might have done if this Plan had not been adopted.
Headings are given to the sections of this Plan solely as a convenience
to facilitate reference; such headings, numbering and paragraphing shall not in
any case be deemed in any way material or relevant to the construction of this
Plan or any provisions thereof. The use of the masculine gender shall also
include within its meanings the feminine. The use of the singular shall also
include within its meaning the plural, and vice versa.
13. Amendment
The Board of Directors of the Company may alter, amend or terminate
this Plan from time to time, except no amendment to this Plan may become
effective for which approval of the shareholders of the Company is necessary for
continued compliance of this Plan with Section 422 of the code without such
approval having been obtained.
14. Duration of the Plan
No option shall be granted under this Plan after January 26, 2007.
Options granted before that date shall remain valid thereafter in accordance
with their terms.
15. Effective Date of Plan
This Plan was adopted by the Board of Directors of the Company on
January 27, 1997.
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