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EXHIBIT 10.27
AMENDED APRIL 18, 1988
THE CREDIT LIFE COMPANIES, INCORPORATED
1987 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. THE CREDIT LIFE COMPANIES, INCORPORATED
1987 STOCK OPTION PLAN (hereinafter referred to as the "Plan") is intended to
provide a means whereby key policy-making employees of THE CREDIT LIFE
COMPANIES, INCORPORATED (hereinafter referred to as the "Company") and its
related corporations may sustain a sense of proprietorship and personal
involvement in the continued development and financial success of the Company,
and to encourage them to remain with and devote their best efforts to the
business of the Company, thereby advancing the interests of the Company and its
shareholders. Accordingly, the Company may permit certain employees to acquire
shares of the Company (hereinafter referred to as "Shares"), on the terms and
conditions established herein. For purposes of the Plan, except as provided in
Paragraph 4(d)(iv) below, a corporation shall be deemed a related corporation
to THE CREDIT LIFE COMPANIES, INCORPORATED if such corporation would be a
parent or subsidiary corporation with respect to THE CREDIT LIFE COMPANIES,
INCORPORATED, as defined in Section 425(e) or (f), respectively, of the
Internal Revenue Code of 1986 (hereinafter referred to as the "Code") if "35
percent" was substituted for "50 percent" where it appears in Sections 425(e)
and (f).
2. ADMINISTRATION OF THE PLAN. The Plan shall be administered by
the Board of Directors of the Company (hereinafter referred to as the "Board").
The Board shall have sole authority from time to time to select the employees
from among those eligible to whom Shares shall be sold under the Plan, to
establish the number of such Shares which may be sold to each such employee and
the time when certificates for such Shares shall be issued, and to prescribe
the legend to be affixed to the certificate representing such Shares. The
Board is authorized to interpret the Plan and may from time to time adopt such
rules, regulations, forms and agreements, not inconsistent with the provisions
of the Plan, as it may deem advisable to carry out the Plan. All decisions
made by the Board in administering the Plan shall be final.
3. SHARES SUBJECT TO THE PLAN. The aggregate number of Shares
which may be acquired by employees under the Plan shall not exceed 200,000
shares. Such Shares may consist of authorized but unissued shares or
previously issued shares reacquired by the Company. Any Shares which remain
unissued at the termination of the Plan shall cease to be subject to the Plan,
but until termination of the Plan, the Company shall at all times make
available sufficient Shares to meet the requirements of the Plan. The
aggregate number of Shares which may be sold under the Plan may be adjusted to
reflect a change in capitalization of the Company, such as a stock dividend or
stock split.
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4. STOCK OPTIONS.
(a) TYPE OF OPTIONS. The Company may issue options which
constitute Incentive Stock Options ("Incentive Options") under Section
422A of the Code and options which do not constitute Incentive Options
("Nonqualified Options") under the Plan. The grant of each option
shall be confirmed by a stock option agreement which shall be executed
by the Company and the optionee as soon as practicable after such
grant. The stock option agreement shall expressly state or
incorporate by reference the provisions of this Plan and state whether
the option is an Incentive Option or Nonqualified Option.
(b) TERMS OF OPTIONS. Except as provided in
Subparagraphs (c) and (d) below, each option granted under the Plan
shall be subject to the terms and conditions set forth by the Board in
the stock option agreement including, but not limited to, option
price, option term and transferability.
(c) ADDITIONAL TERMS APPLICABLE TO ALL OPTIONS. Each
option shall be subject to the following terms and conditions:
(i) VESTING. An option may be exercised with
respect to 25% of the Shares subject to the option for each
complete twelve calendar month period the optionee has been
employed by the Company or related corporation following the
date such option is granted to him. An optionee who
terminates employment with the Company or related corporation
shall forfeit the right to acquire any Shares which may not
yet be acquired under this Subparagraph.
(ii) WRITTEN NOTICE. An option may be exercised
only by giving written notice to the Company specifying the
number of Shares to be purchased.
(iii) METHOD OF EXERCISE. The aggregate option
price shall be paid in any one or a combination of cash,
personal cheek or by delivery to the Company of Shares held by
the optionee.
(iv) DEATH OF OPTIONEE. If an optionee dies prior
to exercise in full of any options, such options may only be
exercised, if at all, by a member of the optionee's family who
is designated as the recipient of such options under the
optionee's will. If the optionee has no surviving family
member or if the optionee fails to make testamentary
disposition of such options or dies intestate, the optionee's
legal representative shall surrender such options to the
Company and the Company shall make a cash payment to the
optionee's estate equal to the product of (i) the difference
between the fair market value (determined on the optionee's
date of death) of the Shares subject to the option being
surrendered and the option price, and (ii) the number of
Shares which could have been acquired by the
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optionee under the option on the date of his death. The death
of an optionee shall not accelerate the time under
Subparagraph (c)(i) above that an option may be exercised.
For purposes of this Subparagraph, a member of an optionee's
family shall be limited to his parents, brothers and sisters,
spouse, children (whether or not adopted) and grandchildren.
(v) TRANSFERABILITY. No option may be
transferred by an optionee except by will or by the laws of
descent and distribution.
(d) ADDITIONAL TERMS APPLICABLE TO INCENTIVE OPTIONS.
Each Incentive Option shall be subject to the following terms and
conditions:
(i) OPTION PRICE. The option price per Share
shall be 100% of the fair market value of such Share on the
date the option is granted. Notwithstanding the preceding
sentence, the option price per Share granted to an individual
(hereinafter referred to as a "10% Shareholder") who, at the
time such option is granted, owns stock possessing more than
10% of the total combined voting power of all classes of stock
of the Company or related corporation shall not be less than
110% of the fair market value of such Share on the date the
option is granted.
(ii) TERM OF OPTION. No option may be exercised
more than ten years after the date of grant and no option
granted to a 10% Shareholder may be exercised more than five
years after the date of grant. Notwithstanding the preceding
sentence, no option may be exercised more than three months
after the optionee terminates employment with the Company or
related corporation; except that, if the optionee terminates
employment due to his disability (within the meaning of
Section 22(e)(3) of the Code), the Board may extend such three
month period for up to an additional nine months.
(iii) ANNUAL EXERCISE LIMIT. The aggregate value
of Shares which may be acquired during any calendar year by
reason of the exercise of an option shall not exceed $100,000
multiplied by the number of calendar years (including the then
current calendar year) that the optionee has been entitled to
exercise options. For purposes of the preceding sentence, the
fair market value of each Share shall be determined on the
date the option with respect to such Share is granted.
(iv) RELATED CORPORATION. For purposes of this
Subparagraph (d), a corporation shall be deemed a related
corporation to THE CREDIT LIFE COMPANIES, INCORPORATED if such
corporation is a parent or subsidiary corporation with respect
to THE CREDIT LIFE COMPANIES, INCORPORATED as defined in
Section 425(e) or (f), respectively, of the Code.
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5. STOCK APPRECIATION RIGHTS. The Company may grant Stock
Appreciation Rights ("SARs") in conjunction with any option granted under the
Plan, either at the time the option is granted or by subsequent amendment
thereto. Each SAR shall relate to a specific option granted under the Plan and
one SAR shall be granted with respect to one Share subject to the option up to
the number of SARs granted. An SAR shall be exercisable only to the extent
that the associated option is exercisable and the exercise of SARs shall reduce
an equal number of Shares which the optionee may acquire under the option.
An optionee may exercise an SAR and receive from the Company a cash
payment equal to the product of (i) the difference between the fair market
value of the Share subject to the option being surrendered and the option
price, and (ii) the number of SARs exercised. The Company, in its discretion,
may permit an optionee to exercise an SAR and receive from the Company in
exchange, without the payment of cash (except for any applicable income taxes),
Shares having an aggregate fair market value equal to the cash payment the
optionee would receive under the preceding sentence; except that, the optionee
shall not receive a greater number of Shares under this sentence than the
optionee would receive if he or she exercised the option to acquire Shares. An
optionee may exercise an SAR in tandem with another option and apply the
proceeds due under the SAR to the exercise price under the option. An optionee
exercising an SAR in tandem with an option shall be deemed to receive cash
followed by the optionee's payment of the option price.
6. RESTRICTED STOCK. The Company may sell Shares to any employee
eligible to receive options under the Plan at any price determined by the
Board. Shares sold hereunder shall be subject to a restriction that such
Shares may not be sold, exchanged, transferred, pledged, hypothecated or
otherwise disposed of by the employee until such Shares become nonforfeitable.
Shares shall become nonforfeitable at a rate of 25% of the Shares purchased for
each complete twelve calendar month period the employee has been employed by
the Company or related corporation (disregarding any employment with a related
corporation before such corporation first became a related corporation to THE
CREDIT LIFE COMPANIES, INCORPORATED). In the event the employee terminates
employment with the Company or related corporation for any reason at a time
when any Shares purchased hereunder are forfeitable, the Company shall have the
option exercisable within sixty days following the employee's termination to
purchase such forfeitable Shares. The option price per Share hereunder to the
Company shall be the employee's original purchase price per Share.
The Company may distribute Shares to any employee eligible to receive
options under the Plan as additional compensation to such employee. For all
purposes of the Plan, such employee shall be deemed to have purchased such
Shares at a purchase price of zero.
The restrictions against disposition and the option to the Company are
herein referred to as "Forfeiture Restrictions" and the Shares which are then
subject to the Forfeiture Restrictions are herein referred to as "Restricted
Shares." Certificates representing Restricted Shares shall be
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appropriately legended to reflect the Forfeiture Restrictions. Upon expiration
of the Forfeiture Restrictions, the employee or his representative shall have
the right to surrender such certificates to the Company and receive in exchange
certificates of Shares not constituting Restricted Shares.
Notwithstanding the foregoing, the Company may sell Shares which are
not subject to any Forfeiture Restrictions but are otherwise subject to all
other provisions of the Plan.
7. RIGHT OF FIRST REFUSAL. If any Shares issued under the Plan
are not readily tradable on an established market on the date an employee or
his successor intends to sell such Shares, the employee or his successor shall
first offer such Shares to the Company for purchase and the Company shall have
thirty days to exercise its right to purchase such Shares. The employee or his
successor shall be entitled to receive the fair market value of such Shares
determined on the date the Company exercises its right to purchase such Shares.
Payment may be in a lump sum or in substantially equal annual or more frequent
installments over a period not exceeding five years in the discretion of the
Board. If the Board selects a method of deferred payments, the unpaid balance
shall earn interest at a rate which is substantially equal to the rate at which
the Company could borrow the amount due and shall be secured by a pledge of the
Shares purchased or such other adequate security as agreed to by the Company
and the employee or his successor. For purposes of this Paragraph, Shares
shall be considered not readily tradable on an established market if such
Shares are not publicly tradable or because such Shares are subject to a
trading limitation under any Federal or state securities law or regulation
which would make such Shares less freely tradable than stock not so restricted.
8. AMENDMENT OR TERMINATION OF THE PLAN. The Board may in its
discretion terminate the Plan at any time with respect to any Shares which are
not subject to issued but unexercised options, and may alter or amend the Plan
or any part thereof from time to time.
9. TERM OF PLAN. The Plan shall be effective upon the date of
its adoption by the Board; provided that, Incentive Options may be granted only
if the Plan is approved by the shareholders within twelve months before or
after the date of adoption. Unless sooner terminated under the provisions of
Paragraph 8, Shares shall not be awarded under the Plan after the expiration of
ten years from the effective date of the Plan.
10. DELEGATION OF AUTHORITY. The Board may in its discretion
appoint a committee (hereinafter referred to as the "Committee") of not less
than three directors who shall serve at the pleasure of the Board to administer
the Plan. The Board may delegate any authority conferred to the Board by this
Plan to the Committee and any determination by the Committee shall be
considered determined by the Board.
11. RIGHTS AS SHAREHOLDER. Upon delivery of any Share to an
employee, such employee shall have all of the rights of a shareholder of the
Company with respect to such Share,
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including the right to vote such Share and to receive all dividends or other
distributions paid with respect to such Share.
12. MERGER OR CONSOLIDATION. In the event the Company is merged
or consolidated with another corporation and the Company is not the surviving
corporation, the surviving corporation shall exchange options issued under this
Plan for options (with the same option price and, if applicable, SARs) to
acquire that number of shares in the surviving corporation which have a fair
market value equal to the fair market value (determined on the date of such
merger or consolidation) of Shares which the optionee is entitled to acquire
under this Plan on the date of such merger or consolidation.
13. EMPLOYMENT RELATIONSHIP. An employee shall be considered to
be in the employment of the Company or related corporation as long as he
remains an employee of the Company or related corporation. Nothing herein
shall confer on any employee the right to continued employment with the Company
or related corporation or affect the right of the Company or related
corporation to terminate such employment.
14. WITHHOLDING OF TAX. To the extent the award or issuance of
Shares, or the exercise of SARs, results in the receipt of compensation by an
employee, the Company is authorized to withhold from any other cash
compensation then or thereafter payable to such employee any tax required to be
withheld by reason of the receipt of compensation resulting from the issuance
of Shares or the exercise of SARs. Alternatively, the employee may tender a
personal check in the amount of tax required to be withheld.
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