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EXHIBIT 10.55
McLEOD, INC.
1996 EMPLOYEE STOCK OPTION PLAN
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TABLE OF CONTENTS
PAGE
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1. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1. Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2. No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6. EFFECTIVE DATE AND TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6.1. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6.2. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. GRANT OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8. LIMITATION ON INCENTIVE STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
9. OPTION AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
10. OPTION PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11. TERM AND EXERCISE OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
11.1. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
11.2. Exercise by Optionee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
11.3. Option Period and Limitations on Exercise . . . . . . . . . . . . . . . . . . . . . 6
11.4. Method of Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
12. TRANSFERABILITY OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
13. TERMINATION OF EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . 8
14.1. Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
14.2. Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
15. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
16. SECURITIES LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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17. EXCHANGE ACT: RULE 16b-3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
17.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
17.2. Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
17.3. Restriction on Transfer of Stock . . . . . . . . . . . . . . . . . . . . . . . . . 11
17.4. Requirement of Stockholders' Approval . . . . . . . . . . . . . . . . . . . . . . 11
18. AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
19. EFFECT OF CHANGES IN CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
19.1 Changes in Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
19.2. Reorganization With Corporation Surviving . . . . . . . . . . . . . . . . . . . . 12
19.3. Other Reorganizations; Sale of Assets or Stock . . . . . . . . . . . . . . . . . . 12
19.4. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
19.5. No Limitations on Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 13
20. WITHHOLDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
21. DISCLAIMER OF RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
22. NONEXCLUSIVITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
23. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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McLEOD, INC.
1996 EMPLOYEE STOCK OPTION PLAN
McLEOD, INC., a Delaware corporation (the "Corporation"), sets
forth herein the terms of the 1996 Employee Stock Option Plan (the "Plan") as
follows:
1. PURPOSE
The Plan is intended to advance the interests of the
Corporation by providing eligible individuals (as designated pursuant to
Section 5 hereof) an opportunity to acquire or increase a proprietary interest
in the Corporation, which thereby will create a stronger incentive to expend
maximum effort for the growth and success of the Corporation and its
subsidiaries and will encourage such eligible individuals to remain in the
employ of the Corporation or that of one or more of its subsidiaries. Each
stock option granted under the Plan is intended to be an Incentive Stock Option
within the meaning of Section 422 of the Code, except (a) to the extent that
any such Option would exceed the limitations set forth in Section 8 hereof and
(b) for Options specifically designated at the time of grant as not being
Incentive Stock Options.
2. DEFINITIONS
For purposes of interpreting the Plan and related documents
(including Option Agreements), the following definitions shall apply:
2.1 "Affiliate" means McLeod, Inc. and any company or other
trade or business that is controlled by or under common control with the
Corporation, (determined in accordance with the principles of Section 414(b)
and 414(c) of the Code and the regulations thereunder) or is an affiliate of
the Corporation within the meaning of Rule 405 of Regulation C under the 1933
Act.
2.2 "Board" means the Board of Directors of the Corporation.
2.3 "Code" means the Internal Revenue Code of 1986, as now in
effect or as hereafter amended.
2.4 "Committee" means the Compensation Committee of the Board
which must consist of no fewer than two members of the Board and shall be
appointed by the Board.
2.5 "Corporation" means McLeod, Inc.
2.6 "Effective Date" means the date of adoption of the Plan by
the Board.
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2.7 "Employer" means McLeod, Inc. or other Affiliate which
employs the designated recipient of an Option.
2.8 "Exchange Act" means the Securities Exchange Act of 1934,
as now in effect or as hereafter amended.
2.9 "Fair Market Value" means the value of each share of Stock
subject to the Plan determined as follows: if on the Grant Date or other
determination date the shares of Stock are listed on an established national or
regional stock exchange, are admitted to quotation on the National Association
of Securities Dealers Automated Quotation System, or are publicly traded on an
established securities market, the Fair Market Value of the shares of Stock
shall be the closing price of the shares of Stock on such exchange or in such
market (the highest such closing price if there is more than one such exchange
or market) on the trading day immediately preceding the Grant Date or such
other determination date (or if there is no such reported closing price, the
Fair Market Value shall be the mean between the highest bid and lowest asked
prices or between the high and low sale prices on such trading day) or, if no
sale of the shares of Stock is reported for such trading day, on the next
preceding day on which any sale shall have been reported. If the shares of
Stock are not listed on such an exchange, quoted on such System or traded on
such a market, Fair Market Value shall be determined by the Board in good
faith.
2.10 "Grant Date" means the later of (i) the date as of which
the Committee approves the grant and (ii) the date as of which the Optionee and
the Corporation or Affiliate enter the relationship resulting in the Optionee
being eligible for grants.
2.11 "Incentive Stock Option" means an "incentive stock
option" within the meaning of section 422 of the Code.
2.12 "Option" means an option to purchase one or more shares
of Stock pursuant to the Plan.
2.13 "Option Agreement" means the written agreement evidencing
the grant of an Option hereunder.
2.14 "Optionee" means a person who holds an Option under the
Plan.
2.15 "Option Period" means the period during which Options may
be exercised as defined in Section 11.
2.16 "Option Price" means the purchase price for each share of
Stock subject to an Option.
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2.17 "Plan" means the McLeod, Inc. 1996 Employee Stock Option
Plan.
2.18 "1933 Act" means the Securities Act of 1933, as now in
effect or as hereafter amended.
2.19 "Stock" mean the shares of Class A common stock, par
value $.01 per share, of the Corporation.
2.20 "Subsidiary" means any "subsidiary corporation" of the
Corporation within the meaning of Section 425(f) of the Code.
3. ADMINISTRATION
3.1. COMMITTEE
The Plan shall be administered by the Committee appointed by
the Board, which shall have the full power and authority to take all actions
and to make all determinations required or provided for under the Plan or any
Option granted or Option Agreement entered into hereunder and all such other
actions and determinations not inconsistent with the specific terms and
provisions of the Plan deemed by the Committee to be necessary or appropriate
to the administration of the Plan or any Option granted or Option Agreement
entered into hereunder. The interpretation and construction by the Committee
of any provision of the Plan or of any Option granted or Option Agreement
entered into hereunder shall be final and conclusive.
3.2. NO LIABILITY
No member of the Board or of the Committee shall be liable for
any action or determination made, or any failure to take or make an action or
determination, in good faith with respect to the Plan or any Option granted or
Option Agreement entered into hereunder.
4. STOCK
The stock that may be issued pursuant to Options granted under
the Plan shall be Stock, which shares may be treasury shares or authorized but
unissued shares. The number of shares of Stock that may be issued pursuant to
Options granted under the Plan shall not exceed in the aggregate 4,525,000
shares of Stock, which number of shares is subject to adjustment as provided in
Section 19 hereof. If any Option expires, terminates or is terminated for any
reason prior to exercise in full, the shares of Stock that were subject to the
unexercised portion of such Option shall be available for future Options
granted under the Plan. It is the
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intention of the Board that the shares of Stock that are subject to unexercised
Options granted under the Plan, and all other plans of the Corporation pursuant
to which stock options can be granted, shall not exceed 15% of the then-issued
and outstanding shares of Stock and the then-granted and outstanding options.
5. ELIGIBILITY
Options may be granted under the Plan to any officer or key
employee of the Corporation or any Subsidiary (including any such officer or
key employee who is also a director of the Corporation or any Subsidiary) as
the Committee shall determine and designate from time to time prior to
expiration or termination of the Plan. An individual may hold more than one
Option, subject to such restrictions as are provided herein.
6. EFFECTIVE DATE AND TERM
6.1. EFFECTIVE DATE
The Plan shall become effective as of the date of adoption by
the Board, subject to stockholders' approval of the Plan within one year of
such effective date by a majority of the votes cast at a duly held meeting of
the stockholders of the Corporation at which a quorum representing a majority
of all outstanding stock is present, either in person or by proxy, and voting
on the matter, or by written consent in accordance with applicable state law
and the Certificate of Incorporation and By-Laws of the Corporation and in a
manner that satisfies the requirements of Rule 16b-3(b) of the Exchange Act;
provided, however, that upon approval of the Plan by the stockholders of the
Corporation, all Options granted under the Plan on or after the effective date
shall be fully effective as if the stockholders of the Corporation had approved
the Plan on the effective date. If the stockholders fail to approve the Plan
within one year of such effective date, any Options granted hereunder shall be
null, void and of no effect.
6.2. TERM
The Plan shall terminate on the date 10 years after the
effective date.
7. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Committee
may, at any time and from time to time prior to the date of termination of the
Plan, grant to such eligible individuals as the Committee may determine Options
to purchase such number of shares of Stock on such terms and conditions as the
Committee may determine, including any terms or conditions which may be
necessary to qualify
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such Options as Incentive Stock Options. Without limiting the foregoing, the
Committee may at any time, with the consent of the Optionee, amend the terms of
outstanding Options or issue new Options in exchange for the surrender and
cancellation of outstanding Options. The date on which the Committee approves
the grant of an Option (or such later date as is specified by the Committee)
shall be considered the date on which such Option is granted. The maximum
number of shares of Stock subject to Options that can be awarded under the Plan
to any person is 2,000,000 shares.
8. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option (other than an Option described in Section 1 hereof)
shall constitute an Incentive Stock Option only to the extent that 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 any Optionee during any calendar year (under the Plan and all
other plans of the Optionee's employer corporation and its parent and
subsidiary corporations within the meaning of Section 422(d) of the Code) does
not exceed $100,000. This limitation shall be applied by taking Options into
account in the order in which such Options were granted.
9. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by
written agreements to be executed by the Corporation and the Optionee, in such
form or forms as the Committee shall from time to time determine. Option
Agreements covering Options granted from time to time or at the same time need
not contain similar provisions; provided, however, that all such Option
Agreements shall comply with all terms of the Plan.
10. OPTION PRICE
The purchase price of each share of Stock subject to an Option
shall be fixed by the Committee and stated in each Option Agreement. In the
case of an Option that is intended to constitute an Incentive Stock Option, the
Option Price shall be not less than the greater of par value or 100 percent of
the fair market value of a share of the Stock covered by the Option on the date
the Option is granted (as determined in good faith by the Committee); provided,
however, that in the event the Optionee would otherwise be ineligible to
receive an Incentive Stock Option by reason of the provisions of Sections
422(b)(6) and 424(d) of the Code (relating to stock ownership of more than 10
percent), the Option Price of an Option which is intended to be an Incentive
Stock Option shall be not less than the greater of par value or 110 percent of
the fair market value of a share of the Stock covered
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by the Option at the time such Option is granted. In the case of an Option
not intended to constitute an Incentive Stock Option, the Option Price shall be
not less than the greater of par value or 50 percent of the Fair Market Value
of a share of the Stock covered by the Option on the date the Option is granted
(as determined in good faith by the Committee).
11. TERM AND EXERCISE OF OPTIONS
11.1. TERM
Each Option granted under the Plan shall terminate and all
rights to purchase shares thereunder shall cease upon the expiration of 10
years from the date such Option is granted, or on such date prior thereto as
may be fixed by the Committee and stated in the Option Agreement relating to
such Option; provided, however, that in the event the Optionee would otherwise
be ineligible to receive an Incentive Stock Option by reason of the provisions
of Sections 422(b)(6) and 424(d) of the Code (relating to stock ownership of
more than 10 percent), an Option granted to such Optionee which is intended to
be an Incentive Stock Option shall in no event be exercisable after the
expiration of five years from the date it is granted.
11.2. EXERCISE BY OPTIONEE
Only the Optionee receiving an Option (or, in the event of the
Optionee's legal incapacity or incompetency, the Optionee's guardian or legal
representative, and in the case of the Optionee's death, the Optionee's estate)
may exercise the Option.
11.3. OPTION PERIOD AND LIMITATIONS ON EXERCISE
Each Option granted under the Plan shall be exercisable in
whole or in part at any time and from time to time over a period commencing on
or after the date of grant of the Option and ending upon the expiration or
termination of the Option, as the Committee shall determine and set forth in
the Option Agreement relating to such Option. Without limitation of the
foregoing, the Committee, subject to the terms and conditions of the Plan, may
in its sole discretion provide that an Option may not be exercised in whole or
in part for any period or periods of time during which such Option is
outstanding as the Committee shall determine and set forth in the Option
Agreement relating to such Option. Any such limitation on the exercise of an
Option contained in any Option Agreement may be rescinded, modified or waived
by the Committee, in its sole discretion, at any time and from time to time
after the date of grant of such Option. Notwithstanding any other provisions
of the Plan, no Option shall be exercisable in whole or in part prior to the
date the Plan is approved by the stockholders of the Corporation as provided in
Section 6.1 hereof.
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11.4. METHOD OF EXERCISE
An Option that is exercisable hereunder may be exercised by
delivery to the Corporation on any business day, at its principal office
addressed to the attention of the Committee, of written notice of exercise,
which notice shall specify the number of shares for which the Option is being
exercised, and shall be accompanied by payment in full of the Option Price of
the shares for which the Option is being exercised. Payment of the Option
Price for the shares of Stock purchased pursuant to the exercise of an Option
shall be made, as determined by the Committee and set forth in the Option
Agreement pertaining to an Option, (a) in cash or by certified check payable to
the order of the Corporation; (b) through the tender to the Corporation of
shares of Stock, which shares shall be valued, for purposes of determining the
extent to which the Option Price has been paid thereby, at their Fair Market
Value on the date of exercise; or (c) by a combination of the methods described
in Sections 11.4(a) and 11.4(b) hereof; provided, however, that the Committee
may in its discretion impose and set forth in the Option Agreement pertaining
to an Option such limitations or prohibitions on the use of shares of Stock to
exercise Options as it deems appropriate. Payment in full of the Option Price
need not accompany the written notice of exercise provided the notice directs
that the Stock certificate or certificates for the shares for which the Option
is exercised be delivered to a licensed broker acceptable to the Corporation as
the agent for the individual exercising the Option and, at the time such Stock
certificate or certificates are delivered, the broker tenders to the
Corporation cash (or cash equivalents acceptable to the Corporation) equal to
the Option Price plus the amount (if any) of federal and/or other taxes which
the Corporation may, in its judgment, be required to withhold with respect to
the exercise of the Option. An attempt to exercise any Option granted
hereunder other than as set forth above shall be invalid and of no force and
effect. Promptly after the exercise of an Option and the payment in full of
the Option Price of the shares of Stock covered thereby, the individual
exercising the Option shall be entitled to the issuance of a Stock certificate
or certificates evidencing such individual's ownership of such shares. A
separate Stock certificate or certificates shall be issued for any shares
purchased pursuant to the exercise of an Option which is an Incentive Stock
Option, which certificate or certificates shall not include any shares which
were purchased pursuant to the exercise of an Option which is not an Incentive
Stock Option. An individual holding or exercising an Option shall have none of
the rights of a stockholder until the shares of Stock covered thereby are fully
paid and issued to such individual and, except as provided in Section 19
hereof, no adjustment shall be made for dividends or other rights for which the
record date is prior to the date of such issuance.
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12. TRANSFERABILITY OF OPTIONS
No Option shall be assignable or transferable by the Optionee
to whom it is granted, other than by will or the laws of descent and
distribution.
13. TERMINATION OF EMPLOYMENT
The Committee may provide, by inclusion of appropriate
language in any Option Agreement, that an Optionee may (subject to the general
limitations on exercise set forth in Section 11.3 hereof), in the event of
termination of employment of the Optionee with the Corporation or a Subsidiary,
exercise an Option, in whole or in part, at any time subsequent to such
termination of employment and prior to termination of the Option pursuant to
Section 11.1 hereof, either subject to or without regard to any installment
limitation on exercise imposed pursuant to Section 11.3 hereof, as the
Committee, in its sole and absolute discretion, shall determine and set forth
in the Option Agreement. Whether a leave of absence or leave on military or
government service shall constitute a termination of employment for purposes of
the Plan shall be determined by the Committee, which determination shall be
final and conclusive. For purposes of the Plan, a termination of employment
with the Corporation or a Subsidiary shall not be deemed to occur if the
Optionee is immediately thereafter employed with the Corporation or any other
Subsidiary.
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
14.1. DEATH
If an Optionee dies while employed by the Corporation or a
Subsidiary or within the period following the termination of employment during
which the Option is exercisable under Section 13 or 14.2 hereof, the executors,
administrators, legatees or distributees of such Optionee's estate shall have
the right (subject to the general limitations on exercise set forth in Section
11.3 hereof), at any time within three months after the date of such Optionee's
death and prior to termination of the Option pursuant to Section 11.1 hereof,
to exercise any Option held by such Optionee at the date of such Optionee's
death, to the extent such Option was exercisable immediately prior to such
Optionee's death; provided, however, that the Committee may provide by
inclusion of appropriate language in any Option Agreement that, in the event of
the death of an Optionee, the executors, administrators, legatees or
distributees of such Optionee's estate may exercise an Option (subject to the
general limitations on exercise set forth in Section 11.3 hereof), in whole or
in part, at any time subsequent to such Optionee's death and prior to
termination of the Option pursuant to Section 11.1 hereof, either subject to or
without regard to any installment limitation on exercise imposed pursuant to
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Section 11.3 hereof, as the Committee, in its sole and absolute discretion,
shall determine and set forth in the Option Agreement.
14.2. DISABILITY
If an Optionee terminates employment with the Corporation or a
Subsidiary by reason of the "permanent and total disability" (within the
meaning of Section 22(e) (3) of the Code) of such Optionee, then such Optionee
shall have the right (subject to the general limitations on exercise set forth
in Section 11.3 hereof), at any time within three months after such termination
of employment and prior to termination of the Option pursuant to Section 11.1
hereof, to exercise, in whole or in part, any Option held by such Optionee at
the date of such termination of employment, to the extent such Option was
exercisable immediately prior to such termination of employment; provided,
however, that the Committee may provide, by inclusion of appropriate language
in any Option Agreement, that an Optionee may (subject to the general
limitations on exercise set forth in Section 11.3 hereof), in the event of the
termination of employment of the Optionee with the Corporation or a Subsidiary
by reason of the "permanent and total disability" (within the meaning of
Section 22(e)(3) of the Code) of such Optionee, exercise an Option, in whole or
in part, at any time subsequent to such termination of employment and prior to
termination of the Option pursuant to Section 11.1 hereof, either subject to or
without regard to any installment limitation on exercise imposed pursuant to
Section 11.3 hereof, as the Committee, in its sole and absolute discretion,
shall determine and set forth in the Option Agreement. Whether a termination
of employment is to be considered by reason of "permanent and total disability"
for purposes of the Plan shall be determined by the Committee, which
determination shall be final and conclusive.
15. USE OF PROCEEDS
The proceeds received by the Corporation from the sale of
Stock pursuant to Options granted under the Plan shall constitute general funds
of the Corporation.
16. SECURITIES LAWS
The Corporation shall not be required to sell or issue any
shares of Stock under any Option if the sale or issuance of such shares would
constitute a violation by the individual exercising the Option or by the
Corporation of any provisions of any law or regulation of any governmental
authority, including, without limitation, any federal or state securities laws
or regulations. If at any time the Corporation shall determine, in its
discretion, that the listing, registration or qualification of any shares
subject to the Option upon any securities exchange or
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under any state or federal law, or the consent of any government regulatory
body, is necessary or desirable as a condition of, or in connection with, the
issuance or purchase of shares, the Option may not be exercised in whole or in
part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Corporation, and any delay caused thereby shall in no way affect the date
of termination of the Option. Specifically in connection with the Securities
Act, upon exercise of any Option, unless a registration statement under the
Securities Act is in effect with respect to the shares of Stock covered by such
Option, the Corporation shall not be required to sell or issue such shares
unless the Corporation has received evidence satisfactory to the Corporation
that the Optionee may acquire such shares pursuant to an exemption from
registration under the Securities Act. Any determination in this connection by
the Corporation shall be final and conclusive. The Corporation may, but shall
in no event be obligated to, register any securities covered hereby pursuant to
the Securities Act. The Corporation shall not be obligated to take any
affirmative action in order to cause the exercise of an Option or the issuance
of shares pursuant thereto to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option shall not be exercisable unless and until the shares
of Stock covered by such Option are registered or are subject to an available
exemption from registration, the exercise of such Option (under circumstances
in which the laws of such jurisdiction apply) shall be deemed conditioned upon
the effectiveness of such registration or the availability of such an
exemption.
17. EXCHANGE ACT: RULE 16B-3
17.1. GENERAL
The Plan is intended to comply with Rule 16b-3 ("Rule 16b-3")
(and any successor thereto) under the Exchange Act. Any provision inconsistent
with Rule 16b-3 shall, to the extent permitted by law and determined to be
advisable by the Committee (constituted in accordance with Section 17.2
hereof), be inoperative and void.
17.2. COMPENSATION COMMITTEE
The Committee appointed in accordance with Section 3.1 hereof
shall consist of not fewer than two members of the Board each of whom shall
qualify (at the time of appointment to the Committee and during all periods of
service on the Committee) in all respects as a "disinterested person" as
defined in Rule 16b-3.
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17.3. RESTRICTION ON TRANSFER OF STOCK
No director, officer or other "insider" of the Corporation
subject to Section 16 of the Exchange Act shall be permitted to sell Stock
(which such "insider" had received upon exercise of an Option) during the six
months immediately following the grant of such Option.
17.4. REQUIREMENT OF STOCKHOLDERS' APPROVAL
No amendment by the Board shall, without approval by a
majority of the votes cast at a duly held meeting of the stockholders of the
Corporation at which a quorum representing a majority of all outstanding stock
is present, either in person or by proxy, and voting on the amendment, or by
written consent in accordance with applicable state law and the Certificate of
Incorporation and By-Laws of the Corporation, materially increase the benefits
accruing to Section 16 "insiders" under the Plan or take any other action that
would require the approval of such stockholders pursuant to Rule 16b-3.
18. AMENDMENT AND TERMINATION
The Board may, at any time and from time to time, amend,
suspend or terminate the Plan as to any shares of Stock as to which Options
have not been granted; provided, however, that no amendment by the Board shall,
without approval by a majority of the votes cast at a duly held meeting of the
stockholders of the Corporation at which a quorum representing a majority of
all outstanding stock is present, either in person or by proxy, and voting on
the amendment, or by written consent in accordance with applicable state law
and the Certificate of Incorporation and By-Laws of the Corporation, materially
change the requirements as to eligibility to receive Options or increase the
maximum number of shares of Stock in the aggregate that may be sold pursuant to
Options granted under the Plan (except as permitted under Section 19 hereof).
The Corporation also may retain the right in an Option Agreement to cause a
forfeiture of the shares or gain realized by an Optionee on account of the
Optionee taking actions in "competition with the Corporation," as defined in
the applicable Option Agreement. Furthermore, the Corporation may, in the
Option Agreement, retain the right to annul the grant of an Option if the
holder of such grant was an employee of the Corporation or a Subsidiary and is
terminated "for cause," as defined in the applicable Option Agreement. Except
as permitted under Section 19 hereof, no amendment, suspension or termination
of the Plan shall, without the consent of the Optionee, alter or impair rights
or obligations under any Option theretofore granted under the Plan.
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19. EFFECT OF CHANGES IN CAPITALIZATION
19.1 CHANGES IN STOCK
If the number of outstanding shares of Stock is increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Corporation by reason of any recapitalization,
reclassification, stock split-up, combination of shares, exchange of shares,
stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration
by the Corporation, occurring after the effective date of the Plan, a
proportionate and appropriate adjustment shall be made by the Corporation in
the number and kind of shares for which Options are outstanding, so that the
proportionate interest of the Optionee immediately following such event shall,
to the extent practicable, be the same as immediately prior to such event. Any
such adjustment in outstanding Options shall not change the aggregate Option
Price payable with respect to shares subject to the unexercised portion of the
Option outstanding but shall include a corresponding proportionate adjustment
in the Option Price per share.
19.2. REORGANIZATION WITH CORPORATION SURVIVING
Subject to Section 19.3 hereof, if the Corporation shall be
the surviving entity in any reorganization, merger or consolidation of the
Corporation with one or more other entities, any Option theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Option would have been
entitled immediately following such reorganization, merger or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger or consolidation.
19.3. OTHER REORGANIZATIONS; SALE OF ASSETS OR STOCK
Upon the dissolution or liquidation of the Corporation, or
upon a merger, consolidation or reorganization of the Corporation with one or
more other entities in which the Corporation is not the surviving entity, or
upon a sale of substantially all of the assets of the Corporation to another
entity, or upon any transaction (including, without limitation, a merger or
reorganization in which the Corporation is the surviving entity) approved by
the Board that results in any person or entity (other than persons who are
holders of stock of the Corporation at the time the Plan is approved by the
Stockholders and other than an Affiliate) owning 80 percent or more of the
combined voting power of all classes of stock of the Corporation, the Plan and
all Options outstanding hereunder shall terminate,
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except to the extent provision is made in connection with such transaction for
the continuation of the Plan and/or the assumption of the Options theretofore
granted, or for the substitution for such Options of new options covering the
stock of a successor entity, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kinds of shares and exercise
prices, in which event the Plan and Options theretofore granted shall continue
in the manner and under the terms so provided. In the event of any such
termination of the Plan, each Optionee shall have the right (subject to the
general limitations on exercise set forth in Section 11.3 hereof and except as
otherwise specifically provided in the Option Agreement relating to such
Option), immediately prior to the occurrence of such termination and during
such period occurring prior to such termination as the Committee in its sole
discretion shall designate, to exercise such Option in whole or in part, to the
extent such Option was otherwise exercisable at the time such termination
occurs, but subject to any additional provisions that the Committee may, in its
sole discretion, include in any Option Agreement. The Committee shall send
written notice of an event that will result in such a termination to all
Optionees not later than the time at which the Corporation gives notice thereof
to its stockholders.
19.4. ADJUSTMENTS
Adjustments under this Section 19 relating to stock or
securities of the Corporation shall be made by the Committee, whose
determination in that respect shall be final and conclusive. No fractional
shares of Stock or units of other securities shall be issued pursuant to any
such adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share or
unit.
19.5. NO LIMITATIONS ON CORPORATION
The grant of an Option pursuant to the Plan shall not affect
or limit in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
20. WITHHOLDING
The Corporation or a Subsidiary may be obligated to withhold federal
and local income taxes and Social Security taxes to the extent that an Optionee
realizes ordinary income in connection with the exercise of an Option. The
Corporation or a Subsidiary may withhold amounts needed to cover such taxes
from payments otherwise due and owing to an Optionee, and upon demand the
Optionee will promptly pay to the Corporation or a Subsidiary having such
obligation any
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additional amounts as may be necessary to satisfy such withholding tax
obligation. Such payment shall be made in cash or cash equivalents.
21. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option
Agreement entered into pursuant to the Plan shall be construed to confer upon
any individual the right to remain in the employ of the Corporation or any
Subsidiary, or to interfere in any way with the right and authority of the
Corporation or any Subsidiary either to increase or decrease the compensation
of any individual at any time, or to terminate any employment or other
relationship between any individual and the Corporation or any Subsidiary. The
obligation of the Corporation to pay any benefits pursuant to the Plan shall be
interpreted as a contractual obligation to pay only those amounts described
herein, in the manner and under the conditions prescribed herein. The Plan
shall in no way be interpreted to require the Corporation to transfer any
amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any participant or beneficiary under the terms of the
Plan.
22. NONEXCLUSIVITY
Neither the adoption of the Plan nor the submission of the
Plan to the stockholders of the Corporation for approval shall be construed as
creating any limitations upon the right and authority of the Board to adopt
such other incentive compensation arrangements (which arrangements may be
applicable either generally to a class or classes of individuals or
specifically to a particular individual or individuals) as the Board in its
discretion determines desirable, including, without limitation, the granting of
stock options otherwise than under the Plan.
23. GOVERNING LAW.
This Plan and all Options to be granted hereunder shall be
governed by the laws of the State of Delaware (but not including the choice of
law rules thereof).
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The Plan was duly adopted and approved by the Board on
March 28, 1996 and was duly approved by the stockholders of the Corporation on
April 30, 1996.
/s/ CASEY D. MAHON
--------------------------------
Casey D. Mahon, Esq.
Secretary
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