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EXHIBIT 10.2
1991 STOCK OPTION PLAN OF
ARI NETWORK SERVICES, INC.
(Amended and Restated as of December 10, 1998)
1. Purpose. The purpose of this Plan is to provide additional
incentive compensation to certain key employees of ARI Network Services, Inc.
(the "Company") and to provide them with an opportunity to acquire an equity
interest in the Company. Stock options granted under this Plan may be "incentive
stock options" as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), and any successor thereto, or stock options which are
not qualified as incentive stock options under the Code ("nonqualified stock
options"). Each stock option granted under this Plan shall be clearly identified
as either an incentive stock option or a nonqualified stock option at the time
of grant.
2. Eligible Employees. Options to purchase $.001 par value Common
Stock of the Company (the "Common Stock") under this Plan may be granted to
employees of the Company, or of any present or future subsidiary or parent of
the Company. For this purpose, and for all purposes under this Plan, a parent or
subsidiary of the Company shall be a "parent corporation" or a "subsidiary
corporation" of the Company as defined in Sections 424(e) and 424(f) of the
Code. An employee who is a member of the class of employees eligible to receive
an option under this Plan shall hereinafter sometimes be referred to as an
"eligible employee" and an eligible employee who has been granted an option
shall hereinafter be referred to as a "Participant."
3. Shares Available for Options. There shall be available for
purchase under options granted pursuant to this Plan a total of eight hundred
and fifty thousand (850,000) shares of Common Stock, subject to adjustment as
provided in Paragraph 8.1 hereof. In the event that options which have been
granted under this Plan lapse, expire or terminate for any reason (whether by
voluntary surrender, lapse of time, termination of employment or otherwise), to
the extent that such options were unexercised, options for an equivalent number
of shares may be granted hereunder; provided, however, in no event shall the
number of shares purchased through the exercise of options granted under this
Plan and the number of shares subject to options outstanding at any time exceed
in the aggregate more than eight hundred fifty thousand (850,000) shares of
Common Stock. No Participant shall be eligible to receive options for more than
eighty seven thousand five hundred (87,500) shares of Common Stock during any
one-year period, subject to adjustment as provided in Paragraph 8.1 hereof.
4. Maximum Calendar Year Grant to Any Employee. The aggregate fair
market value (determined at the time the option is granted) of the stock with
respect to which incentive stock options are exercisable for the first time by
an individual employee during any calendar year under this Plan (and under all
other plans of the Company or any parent or subsidiary of the Company) shall not
exceed $100,000, and/or any other limit as may be prescribed by the Code from
time to time.
5. Administration.
5.1. The Committee. The Plan shall be administered by the Stock
Option Committee (the "Committee") which shall be constituted so as to permit
the Plan to comply with Section 162(m) of the Code and any regulations
promulgated thereunder, or any other statutory rule or regulatory require-
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ments. The members of the Committee shall be appointed from time to time by the
Board of Directors of the Company. A majority of the members of the Committee
shall constitute a quorum at any meeting thereof and the acts of a majority of
members present at any meeting of the Committee at which a quorum is present, or
acts unanimously approved in writing by a majority of the entire Committee,
shall be the acts of the Committee.
5.2. Power of the Committee. The Committee is authorized and shall
have plenary authority in its discretion, subject only to the provisions of the
Plan and the applicable provisions of the Code, to determine the exercise prices
applicable to options, the eligible employees to whom and the time or times at
which options shall be granted, the number of shares of Common Stock subject to
each option and the extent to which options may be exercisable in installments;
to interpret the Plan; to prescribe, amend and rescind rules and regulations
pertaining to the Plan; to determine the terms and provisions of the respective
Incentive Stock Option Agreements and Nonqualified Stock Option Agreements; and
to make determinations and interpretations which it deems consistent with the
Plan's provisions. The Committee's determinations and interpretations shall be
final, conclusive and binding.
5.3. Designation of Assistants to Committee. The Committee may
designate one or more employees of the Company to assist the Committee in the
administration of the Plan and may grant authority to such or other persons to
execute, deliver and receive documents on behalf of the Committee.
6. Terms and Conditions of Options.
6.1. Option Price. The purchase price of each share of Common
Stock under each incentive stock option granted pursuant to this Plan shall be
the fair market value thereof at the date of grant of such option, unless the
Participant owns (applying the attribution rules of Section 424(d) of the Code)
more than ten Percent (10%) of the total combined voting power of all classes of
stock of the Company or of a subsidiary or parent of the Company (hereinafter
referred to as a "10% Shareholder"), in which case the per share price shall be
at least one hundred ten percent (110%) of the fair market value per share of
Common Stock of the Company at the date of grant of such option. The fair market
value of Common Stock on the date each option is granted shall be the closing
price of a share of the Company's stock as reported in the Wall Street Journal
on the day of the grant or, if no closing price is listed on the date of grant,
on the last day prior to the date of grant that a closing price was listed or
the fair market value determined by the Committee in conformity with pertinent
law and applicable regulations and rulings of the Treasury Department. The
purchase price of each share of Common Stock under each nonqualified stock
option granted pursuant to this Plan shall be determined by the Committee in its
sole discretion.
6.2. Exercise Period. No option granted pursuant to this Plan
shall be exercisable after the expiration of ten (10) years (five (5) years in
the case of an incentive stock option granted to a 10% Shareholder) from its
date of grant and it shall lapse upon the expiration of said ten (or five) year
period unless it shall lapse at an earlier date by reason of termination of
employment as provided in Paragraph 6.3, below, or as otherwise determined by
the Committee. The Committee may, in its sole discretion, require that a
Participant be employed by the Company or a subsidiary or parent of the Company
for a designated number of years prior to the exercise by him of any option or
portions of options granted pursuant to this Plan, and may, in its sole
discretion, determine the exercise dates on which options or portions of options
may be exercised by a Participant. In addition, the Committee may, in its sole
discretion, require that a Participant meet certain performance criteria, or
that the Company meet certain targets or goals prior to the exercise by such
Participant of an option or a portion of an option granted pursuant to this
Plan. Any such requirements or limitations may subsequently be reduced or waived
by
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the Committee in its sole discretion, unless such reduction or waiver is
prohibited by the Code or other applicable law.
6.3. Termination of Employment. If the employment of any
Participant with the Company, and any subsidiary or parent corporation of the
Company, is terminated, the following shall apply unless otherwise determined by
the Committee; provided, that no incentive stock option can be exercisable
subsequent to ten (10) years after the date of grant (five (5) years if the
Participant is a 10% shareholder):
(a) If such termination is due to retirement on or after such
Participant's normal retirement date, the Participant shall have three
(3) months from the date of such termination of employment to exercise
any option granted hereunder as to all or part of the shares under such
option, subject to the condition that no option shall be exercisable at
such time as the exercise thereof would result in a violation of
federal or state securities laws or subsequent to ten (10) years [five
(5) years if the Participant holds an incentive stock option and is a
10% Shareholder] after the date of grant, and provided that at the time
of termination the Participant had a present right to exercise such
option. To the extent an option is not exercised within such period, it
shall lapse. For this purpose, "normal retirement date" shall mean the
date of a Participant's 65th birthday. Notwithstanding the foregoing,
in the event that a Participant retires prior to his 65th birthday, the
date of such early retirement shall be deemed to be such Participant's
"normal retirement date" for purposes of this Plan if, and only if, at
the time of such early retirement, such Participant has attained at
least the age of 60 years and has been employed by the Company for at
least 15 years. An employee who continues his employment with the
Company beyond his normal retirement date shall continue to be an
eligible employee so long as he otherwise continues to qualify to
participate hereunder.
(b) If such termination is due to permanent and total
disability, as defined in Section 22(e)(3) of the Code, the Participant
shall have one (1) year from the date of such termination to exercise
any option granted hereunder as to all or part of the shares under such
option, subject to the condition that no option shall be exercisable at
such time as the exercise thereof would result in a violation of
federal or state securities laws or subsequent to ten (10) years [five
(5) years if the Participant holds an incentive stock option and is a
10% Shareholder] after the date of grant and provided that at the time
of termination the Participant had a present right to exercise such
option. To the extent an option is not exercised within such period, it
shall lapse.
(c) If such termination is due to death, the personal
representative, administrator or other representative of the estate of
the deceased Participant or the person or persons to whom the deceased
Participant's rights under the option shall pass by will or the laws of
descent and distribution, as the case may be, shall have the right to
exercise any option granted pursuant to this Plan as to all or part of
the shares subject to such option to the extent exercisable at the date
of the Participant's death. Such option must be exercised within one
(1) year after the date of the Participant's death, subject to the
condition that no option shall be exercisable at such time as the
exercise thereof would result in a violation of federal or state
securities laws or subsequent to ten (10) years [five (5) years if the
Participant holds an incentive stock option and is a 10% Shareholder]
after the date of grant. To the extent an option is not exercised
within such period, it shall lapse.
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(d) If such termination is for any reason other than those
specified above, to the extent an option is not effectively exercised
prior to such termination, it shall lapse immediately upon termination,
unless the Committee shall, in its sole discretion, make other
provisions for exercise not inconsistent with the terms of this Plan or
applicable law. The transfer of employment from a subsidiary or parent
of the Company to the Company or to a subsidiary or parent of the
Company or vice versa shall not be considered to constitute termination
of employment by a Participant.
6.4. Transferability of Options. Unless otherwise provided by the
Committee in the case of a nonqualified stock option, during his lifetime a
Participant may not transfer any option granted to him pursuant to this Plan and
such options shall be exercisable only by the Participant. Upon his death a
Participant shall have the right to transfer the option or options granted to
him either by the terms of his will or under the applicable laws of descent and
distribution, subject to the limitations set forth in Paragraph 6.3(c), above,
and all such distributees shall be subject to the same terms and conditions of
this Plan as would the Participant, except as otherwise expressly provided
herein or as determined by the Committee.
6.5. Exercise of Option. Subject to the limitations stated
elsewhere in this Plan, options granted pursuant to this Plan will be
exercisable on such dates and during such periods and for such number of shares
as shall be determined by the Committee. An option granted pursuant to this Plan
shall be exercisable by delivering to the chief financial officer of the Company
at its principal business office a written notice designating the number of
shares for which it is being exercised. Payment in full for the number of shares
for which the options have been exercised must accompany said written notice (or
arrangements must be made satisfactory to the Company for payment in full);
provided, however, that the Committee may, subject to the approval of the Board
of Directors of the Company, permit a Participant to partially finance the
exercise of his option with capital borrowed from the Company on a recourse
basis at the interest rate mandated by the applicable provisions of the Code.
The Company shall have the right to delay the issue or delivery of any shares of
Common Stock under the Plan until (a) the completion of such registration or
qualification of such shares under any federal or state law, ruling or
regulation as the Company shall determine to be necessary or advisable, and (b)
receipt from the Participant of any such documents and information as the
Committee may deem necessary or appropriate in connection with such registration
or qualification.
7. Securities Laws. Each Incentive Stock Option Agreement and
Nonqualified Stock Option Agreement shall contain such representations,
warranties, and other terms and conditions as shall be necessary in the opinion
of counsel to the Company to comply with all applicable federal and state
securities laws.
8. Miscellaneous.
8.1. Adjustments. In the event there is any increase or decrease
in the number of issued and outstanding shares of any class of common stock of
the Company, or in the number of issued and outstanding shares of any class of
stock of the Company convertible into shares of any class of common stock of the
Company, by reason of a stock dividend, stock split, reverse stock split, or
similar adjustment or in the event of any change in the Company or in the issued
and outstanding shares of the common stock of the Company by reason of a
recapitalization, merger, consolidation, acquisition of stock or property,
reorganization, liquidation or other significant event affecting the Company or
the issued and outstanding shares of its Common Stock, the number of shares of
Common Stock available for options provided in Paragraph 3 hereof, the number of
shares subject to each outstanding option, the
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purchase price per share under each outstanding option, the consideration to be
received upon the exercise of each option and/or the per Participant limitation
on the number of shares of Common Stock subject to options contained in
Paragraph 3 shall be correspondingly adjusted as deemed equitable by the
Committee or each outstanding option may be converted, at the sole discretion of
the Committee, into a new option to purchase such number or kind of shares of
stock or other securities with appropriate adjustment of the purchase price per
share as the Committee deems appropriate to reflect such change. In addition,
the Committee shall, in its sole discretion, have authority to provide, in
appropriate cases, for (i) waiver in whole or in part of any remaining
restrictions or vesting requirements in connection with any option and/or (ii)
the conversion of any outstanding options into cash or other property to be
received in certain of the transactions specified above. Any adjustment, waiver,
conversion or the like carried out by the Committee under this Paragraph shall
be conclusive and binding for all purposes of the Plan. In no event shall the
aggregate fair market value (determined at the time the option is granted) of
the stock with respect to which incentive stock options are exercisable for the
first time during any calendar year under this Plan (and under all plans of the
Company or any parent or subsidiary of the Company) exceed $100,000 per employee
as a result of adjustments made under this Paragraph 8.1.
8.2. Fractional Shares. No fractional shares of stock shall be
issued upon the exercise of any option and the Company shall not be under any
obligation to compensate any Participant in any way for any such fractional
share.
8.3. Reservation of Shares. The Company shall at all times reserve
and keep available such number of shares of its Common Stock as shall be
necessary for the exercise of all options which may be granted pursuant to
Paragraph 3, above. Said shares may be in the form of treasury shares or
authorized but previously unissued shares, or both. If in the opinion of its
counsel the issue or sale of any shares of its stock hereunder shall not be
lawful for any reason, including the inability of the Company to obtain from any
regulatory body having jurisdiction authority deemed by such counsel to be
necessary to such issuance or sale, the Company shall not be obligated to issue
or sell any such shares.
8.4. No Obligation for Employment. The Plan shall not impose any
obligation on the Company to continue the employment of any Participant or
eligible employee.
8.5. Indemnification of Committee. Each person who is a member of
the Committee shall be indemnified and held harmless by the Company against and
for any and all loss, cost, liability, or expense, including attorneys' fees,
that may be imposed upon or be reasonably incurred by him in connection with or
resulting from any claim, action, suit or proceeding to which he may be a party
or in which he may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him in
settlement thereof, with the Company's approval, or paid by him in satisfaction
of judgment in any such action, suit or proceeding against him, except in
relation to matters as to which it shall be adjudged in such claim, action, suit
or proceeding, that such Committee member is liable for gross negligence or
willful misconduct in the performance of his duties. Each such person shall give
the Company an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such person may be entitled under the Company's
Articles of Incorporation or By-Laws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them and hold them harmless.
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8.6. Rights as a Shareholder. No holder of an option granted
pursuant to this Plan shall have any rights as a shareholder of the Company with
respect to any shares covered by his option until the date such shares are
issued pursuant to the exercise of such option.
8.7. Taxes. The Company shall be entitled to pay or withhold the
amount of any tax which it believes is required as a result of the grant or
exercise of any option under the Plan, and the Company may defer making delivery
with respect to shares of Common Stock obtained pursuant to the exercise of any
option until arrangements satisfactory to it have been made with respect to any
such withholding obligations. In accordance with any applicable administrative
guidelines it establishes, the Committee may allow a Participant to satisfy any
withholding obligations upon exercise of an option by withholding Common Stock
otherwise issuable upon exercise of the option, or by permitting the Participant
to deliver to the Company shares of Common Stock having a fair market value, as
determined by the Committee, equal to the amount of such withholding taxes.
9. Termination and Amendment. No incentive stock options shall be
granted under the Plan after September 30, 2001. The Plan may at any time and
from time to time be terminated, modified, or amended by the Board of Directors
of the Company in its sole discretion; provided, however, that the Board of
Directors may not, unless otherwise permitted under federal law, without the
approval of the Company's shareholders, adopt any amendment to the Plan for
which shareholder approval is required under tax, securities or any other
applicable law, including, but not limited to any amendment of the Plan which
would cause the Plan not to comply with or Code Section 162(m), or any successor
rule or regulatory requirements. No termination, modification or amendment of
the Plan may, without the consent of the Participant, materially adversely
affect the rights of such Participant under an outstanding option.
The Committee may amend, modify or terminate an outstanding
option, including, but not limited to, substituting another award of the same or
of a different type, changing the date of exercise, or converting an incentive
stock option into a nonqualified stock option; provided, however, that the
Participant's consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would not
materially adversely affect the Participant.
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