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EXHIBIT 10.2
COOPERATIVE COMPUTING HOLDING COMPANY, INC.
1998 STOCK OPTION PLAN
(amended 6/14/99)
1. Purpose.
Cooperative Computing Holding Company, Inc., a Texas corporation
(herein, together with its successors, referred to as the "Company"), by means
of this 1998 Stock Option Plan (the "Plan"), desires to afford certain
individuals and key employees of the Company and any subsidiary corporation
thereof now existing or hereafter formed or acquired (such subsidiary
corporations sometimes referred to herein as "Related Entities") who are
responsible for the continued growth of the Company an opportunity to acquire a
proprietary interest in the Company, and thus to create in such persons an
increased interest in and a greater concern for the welfare of the Company and
any Related Entities.
The stock options described in Sections 6 and 7 (the "Options"), and
the shares of Common Stock (as hereinafter defined) acquired pursuant to the
exercise of such Options are a matter of separate inducement and are not in
lieu of any salary or other compensation for services. As used in the Plan, the
terms "parent corporation" and "subsidiary corporation" shall mean,
respectively, a corporation within the definition of such terms contained in
Sections 424(e) and 424(f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
2. Administration.
The Plan shall be administered by the Option Committee, or any
successor thereto, of the Board of Directors of the Company (the "Board of
Directors"), or by any other committee appointed by the Board of Directors to
administer this Plan (the "Committee"); provided, the entire Board of Directors
may act as the Committee if it chooses to do so. The number of individuals that
shall constitute the Committee shall be determined from time to time by a
majority of all the members of the Board of Directors, and, unless that
majority of the Board of Directors determines otherwise, shall be no less than
two individuals. A majority of the Committee shall constitute a quorum (or if
the Committee consists of only two members, then both members shall constitute
a quorum), and subject to the provisions of Section 5,
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the acts of a majority of the members present at any meeting at which a quorum
is present, or acts approved in writing by all members of the Committee, shall
be the acts of the Committee. Whenever the Company shall have a class of equity
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), each member of the Committee shall be
required to be a "Non-Employee Director" within the meaning of Rule 16b-3, as
amended ("Rule 16b-3"), or other applicable rules under Section 16(b) of the
Exchange Act and the Committee shall administer the Plan so as to comply at all
times with the Exchange Act.
The members of the Committee shall serve at the pleasure of the Board
of Directors, which shall have the power, at any time and from time to time, to
remove members from or add members to the Committee. Removal from the Committee
may be with or without cause. Any individual serving as a member of the
Committee shall have the right to resign from membership in the Committee by
written notice to the Board of Directors. The Board of Directors, and not the
remaining members of the Committee, shall have the power and authority to fill
vacancies on the Committee, however caused. The Board of Directors shall
promptly fill any vacancy that causes the number of members of the Committee to
be less than two or, if the Company has a class of equity securities registered
pursuant to Section 12 of the Exchange Act, any other number that Rule 16b-3
may require from time to time.
3. Shares Available.
Subject to the adjustments provided in Section 11, the maximum
aggregate number of shares of common stock, par value $.000125 per share, of
the Company ("Common Stock") in respect of which Options may be granted for all
purposes under the Plan shall be 5,050,000 shares. The maximum aggregate number
of shares that may be granted under the Plan to any Key Employee or Eligible
Non-Employee shall be 500,000 shares. If, for any reason, any shares as to
which Options have been granted cease to be subject to purchase thereunder,
including the expiration of such Option, the termination of such Option prior
to exercise, or the forfeiture of such Option, such shares shall thereafter be
available for grants under the Plan. Options granted under the Plan may be
fulfilled in accordance with the terms of the Plan with (i) authorized and
unissued shares of the Common Stock, (ii) issued shares of such Common Stock
held in the Company's treasury, or (iii) issued shares of Common Stock
reacquired by the Company in each situation as the Board of Directors or the
Committee may determine from time to time.
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4. Eligibility and Bases of Participation.
Grants of Incentive Options (as hereinafter defined) and Non-Qualified
Options (as hereinafter defined) may be made under the Plan, subject to and in
accordance with Section 6, to Key Employees; provided, however, that no grants
may be made to any officer or employee who either directly or beneficially
received founders' shares and any officer or employee who is a member of the
Board of Directors. As used herein, the term "Key Employee" shall mean any
employee of the Company or any Related Entity, including officers and directors
of the Company or any Related Entity who are also employees of the Company or
any Related Entity, who are regularly employed on a salaried basis and who are
so employed on the date of such grant, whom the Committee identifies as having
a direct and significant effect on the performance of the Company or any
Related Entity.
Grants of Non-Qualified Options may be made, subject to and in
accordance with Section 7, to any Eligible Non-Employee. As used herein, the
term "Eligible Non-Employee" shall mean any person or entity of any nature
whatsoever, specifically including an individual, a firm, a company, a
corporation, a partnership, a trust, or other entity (collectively, a
"Person"), that the Committee designates as eligible for a grant of Options
pursuant to this Plan because such Person performs bona fide consulting,
advisory, or other services for the Company or any Related Entity (other than
services in connection with the offer or sale of securities in a
capital-raising transaction) and the Board of Directors or the Committee
determines that the Person has a direct and significant effect on the financial
development of the Company or any Related Entity.
The adoption of this Plan shall not be deemed to give any Person a
right to be granted any Options.
5. Authority of Committee.
Subject to and not inconsistent with the express provisions of the
Plan, the Code and, if applicable, Rule 16b-3, the Committee shall have plenary
authority to:
a. determine the Key Employees and Eligible Non-Employees to
whom Options shall be granted, the time when such Options
shall be granted, the number of Options, the purchase price
or exercise price of each Option, the period(s) during which
such Options shall be exercisable (whether in whole or in
part, including whether such Options shall become immediately
exercisable upon the consummation of a Change in Control),
the restrictions to be applicable to Options and all other
terms and provisions thereof (which need not be identical);
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b. require, as a condition to the granting of any Option, that
the Person receiving such Option agree not to sell or
otherwise dispose of such Option, any Common Stock acquired
pursuant to such Option, or any other "derivative security"
(as defined by Rule 16a-1(c) under the Exchange Act) for a
period of six months following the later of (i) the date of
the grant of such Option or (ii) the date when the exercise
price of such Option is fixed if such exercise price is not
fixed at the date of grant of such Option, or for such other
period as the Committee may determine;
c. provide an arrangement through registered broker-dealers
whereby temporary financing may be made available to an
optionee by the broker-dealer, under the rules and
regulations of the Board of Governors of the Federal Reserve,
for the purpose of assisting the optionee in the exercise of
an Option, such authority to include the payment by the
Company of the commissions of the broker-dealer;
d. provide the establishment of procedures for an optionee (i) to
have withheld from the total number of shares of Common Stock
to be acquired upon the exercise of an Option (other than an
Incentive Option) that number of shares having a Fair Market
Value which, together with such cash as shall be paid in
respect of fractional shares, shall equal the aggregate
exercise price under such Option for the number of shares then
being acquired (including the shares to be so withheld), and
(ii) to exercise a portion of an Option by delivering that
number of shares of Common Stock already owned by such
optionee having an aggregate Fair Market Value which shall
equal the partial Option exercise price and to deliver the
shares thus acquired by such optionee in payment of shares to
be received pursuant to the exercise of additional portions of
such Option, the effect of which shall be that such optionee
can in sequence utilize such newly acquired shares in payment
of the exercise price of the entire Option, together with such
cash as shall be paid in respect of fractional shares;
provided, however, that in the case of an Incentive Option, no
shares shall be used to pay the exercise price unless such
shares were not acquired through the exercise of an Incentive
Option or, if so acquired, have been held for more than two
years since the grant of such Option and for more than one
year since the exercise of such Option;
e. provide (in accordance with Section 14 or otherwise) the
establishment of a procedure whereby a number of shares of
Common Stock or other securities may be
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withheld from the total number of shares of Common Stock or
other securities to be issued upon exercise of an Option
(other than an Incentive Option) to meet the obligation of
withholding for income, social security and other taxes
incurred by an optionee upon such exercise or required to be
withheld by the Company or a Related Entity in connection
with such exercise;
f. prescribe, amend, modify and rescind rules and regulations
relating to the Plan;
g. make all determinations permitted or deemed necessary,
appropriate or advisable for the administration of the Plan,
interpret any Plan or Option provision, perform all other
acts, exercise all other powers, and establish any other
procedures determined by the Committee to be necessary,
appropriate, or advisable in administering the Plan or for
the conduct of the Committee's business. Any act of the
Committee, including interpretations of the provisions of the
Plan or any Option and determinations under the Plan or any
Option shall be final, conclusive and binding on all parties.
The Committee may delegate to one or more of its members, or to one or
more agents, such administrative duties as it may deem advisable, and the
Committee or any Person to whom it has delegated duties as aforesaid may employ
one or more Persons to render advice with respect to any responsibility the
Committee or such Person may have under the Plan; provided, however, that
whenever the Company has a class of equity securities registered under Section
12 of the Exchange Act, the Committee may not delegate any duties to a member
of the Board of Directors who, if elected to serve on the Committee, would not
qualify as a "Non-Employee Director" to administer the Plan as contemplated by
Rule 16b-3, as amended, or other applicable rules under the Exchange Act. The
Committee may employ attorneys, consultants, accountants, or other Persons and
the Committee, the Company, and its officers and directors shall be entitled to
rely upon the advice, opinions, or valuations of any such Persons. No member or
agent of the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan and all members
and agents of the Committee shall be fully protected by the Company in respect
of any such action, determination or interpretation.
6. Stock Options for Key Employees.
Subject to the express provisions of this Plan, the Committee shall
have the authority to grant incentive stock options pursuant to Section 422 of
the Code ("Incentive Options"), to grant non-qualified stock options (options
which do not qualify under Section 422 of the Code) ("Non-Qualified
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Options"), and to grant both types of Options to Key Employees. No Incentive
Option shall be granted pursuant to this Plan after the earlier of ten years
from the date of adoption of the Plan or ten years from the date of approval of
the Plan by the stockholders of the Company. Incentive Options may be granted
only to Key Employees. The terms and conditions of the Options granted under
this Section 6 shall be determined from time to time by the Committee;
provided, however, that the Options granted under this Section 6 shall be
subject to all terms and provisions of the Plan (other than Section 7),
including the following:
a. Option Exercise Price. Subject to Section 4, the Committee
shall establish the Option exercise price at the time any
Option is granted at such amount as the Committee shall
determine; provided, that, in the case of an Incentive
Option, such price shall not be less than the Fair Market
Value per share of Common Stock at the date the Option is
granted; and provided, further, that in the case of an
Incentive Option granted to a person who, at the time such
Incentive Option is granted, owns shares of the Company or
any Related Entity which possess more than 10% of the total
combined voting power of all classes of shares of the Company
or of any Related Entity, the option exercise price shall not
be less than 110% of the Fair Market Value per share of
Common Stock at the date the Option is granted. The Option
exercise price shall be subject to adjustment in accordance
with the provisions of Section 11 of the Plan.
b. Payment. The price per share of Common Stock with respect to
each Option exercise shall be payable at the time of such
exercise. Such price shall be payable in cash or by any other
means acceptable to the Committee, including delivery to the
Company of shares of Common Stock owned by the optionee or by
the delivery or withholding of shares pursuant to a procedure
created pursuant to Section 5.d. of the Plan (but, with
respect to Incentive Options, subject to the limitations
described in such Section 5.d.). Shares delivered to or
withheld by the Company in payment of the Option exercise
price shall be valued at the Fair Market Value of the Common
Stock on the day preceding the date of the exercise of the
Option.
c. Exercisability of Stock Option. Unless otherwise determined
by the Committee at the time of grant, on September 30 of
each succeeding Plan Year, Options granted hereunder shall
become exercisable according to the vesting schedule set
forth below:
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(i) 10% of the Options shall have become exercisable
on the first anniversary of the last day of the Grant
Year and remain exercisable until the Options expire;
(ii) 20% of the Options shall have become exercisable
on the second anniversary of the last day of the
Grant Year and remain exercisable until the Options
expire;
(iii) 30% of the Options shall have become
exercisable on the third anniversary of the last day
of the Grant Year and remain exercisable until the
Options expire;
(iv) 65% of the Options shall have become exercisable
on the fourth anniversary of the last day of the
Grant Year and remain exercisable until the Options
expire; and
(v) 100% of the Options shall have become exercisable
on the fifth anniversary of the last day of the Grant
Year and remain exercisable until the Options expire.
Provided, however, that in the event of a Public Offering all
shares that were not exercisable at the time of the Public
Offering shall vest ratably over a period of years equal to
five (5) minus the number of complete years of vesting that
had occurred prior to the Public Offering.
No Option by its terms shall be exercisable after the
expiration of ten years from the date of grant of the Option,
unless, as to any Non-Qualified Option, otherwise expressly
provided in such Option; provided, however, that no Incentive
Option granted to a person who, at the time such Option is
granted, owns stock of the Company, or any Related Entity,
possessing more than 10% of the total combined voting power
of all classes of stock of the Company, or any Related
Entity, shall be exercisable after the expiration of five
years from the date such Option is granted.
d. Death. If any optionee's employment with the Company or a
Related Entity terminates due to the death of such optionee,
the estate of such optionee, or a Person who acquired the
right to exercise such Option by bequest or inheritance or by
reason of the death of the optionee, shall have the right to
exercise such Option in accordance with its terms at any time
and from time to time within 180 days after the date of death
unless a longer or shorter period is expressly provided in
such Option or established by the Committee pursuant to
Section 8 (but in no event after the expiration date of such
Option).
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e. Disability. If the employment of any optionee terminates
because of such optionee's Disability (as defined in Section
19), such optionee or such optionee's legal representative
shall have the right to exercise the Option in accordance
with its terms at any time and from time to time within 180
days after the date of such termination unless a longer or
shorter period is expressly provided in such Option or
established by the Committee pursuant to Section 8 (but not
after the expiration date of the Option); provided, however,
that in the case of an Incentive Option, the optionee or such
optionee's legal representative shall in any event be
required to exercise the Incentive Option within one year
after termination of the optionee's employment due to such
optionee's Disability.
f. Termination for Cause; Voluntary Termination. Unless an
optionee's Option expressly provides otherwise, such optionee
shall immediately forfeit all rights under his Option, except
as to the shares of stock already purchased thereunder, if
the employment of such optionee with the Company or a Related
Entity is terminated by the Company or any Related Entity for
Good Cause (as defined below) or if such optionee voluntarily
terminates employment without the consent of the Company or
any Related Entity. The determination that there exists Good
Cause for termination shall be made by the Option Committee
(unless otherwise agreed to in writing by the Company and the
optionee).
g. Other Termination of Employment. If the employment of an
optionee with the Company or a Related Entity terminates for
any reason other than those specified in subsections 6(d),
(e) or (f) above, such optionee shall have the right to
exercise his Option in accordance with its terms, within 30
days after the date of such termination, unless a longer or
shorter period is expressly provided in such Option or
established by the Committee pursuant to Section 8 (but not
after the expiration date of the Option); provided, that no
Incentive Option shall be exercisable more than three months
after such termination.
h. Maximum Exercise. The aggregate Fair Market Value of stock
(determined at the time of the grant of the Option) with
respect to which Incentive Options are exercisable for the
first time by an optionee during any calendar year under all
plans of the Company and any Related Entity shall not exceed
$100,000.
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i. Continuation of Employment. Each Incentive Option shall
require the optionee to remain in the continuous employ of
the Company or any Related Entity from the date of grant of
the Incentive Option until no more than three months prior to
the date of exercise of the Incentive Option.
7. Stock Option Grants to Eligible Non-Employees.
Subject to the express provisions of this Plan, the Committee shall
have the authority to grant Non-Qualified Options (and not Incentive Options)
to Eligible Non-Employees; provided, however, that whenever the Company has any
class of equity securities registered pursuant to Section 12 of the Exchange
Act, no Eligible Non-Employee then serving on the Committee (or such other
committee then administering the Plan) shall be granted Options hereunder if
the grant of such Options would cause such Eligible Non-Employee to no longer
be a "Non-Employee Director" as set forth in Section 2 hereof. The terms and
conditions of the Options granted under this Section 7 shall be determined from
time to time by the Committee; provided, however, that the Options granted
under this Section 7 shall be subject to all terms and provisions of the Plan
(other than Section 6), including the following:
a. Option Exercise Price. Subject to Section 4, the Committee
shall establish the Option exercise price at the time any
Non-Qualified Option is granted at such amount as the
Committee shall determine. The Option exercise price shall be
subject to adjustment in accordance with the provisions of
Section 11 of the Plan.
b. Payment. The price per share of Common Stock with respect to
each Option exercise shall be payable at the time of such
exercise. Such price shall be payable in cash or by any other
means acceptable to the Committee, including delivery to the
Company of shares of Common Stock owned by the optionee or by
the delivery or withholding of shares pursuant to a procedure
created pursuant to Section 5.d. of the Plan. Shares
delivered to or withheld by the Company in payment of the
Option exercise price shall be valued at the Fair Market
Value of the Common Stock on the day preceding the date of
the exercise of the Option.
c. Exercisability of Stock Option. Subject to Section 8, each
Option shall be exercisable in one or more installments as the
Committee may determine at the time of the grant. No Option
shall be exercisable after the expiration of ten years from
the date of grant of the Option, unless otherwise expressly
provided in such Option.
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d. Death. If the retention by the Company or any Related Entity
of the services of any Eligible Non-Employee terminates
because of such Eligible Non-Employee's death, the estate of
such optionee, or a Person who acquired the right to exercise
such Option by bequest or inheritance or by reason of the
death of the optionee, shall have the right to exercise such
Option in accordance with its terms, at any time and from
time to time within 180 days after the date of death unless a
longer or shorter period is expressly provided in such Option
or established by the Committee pursuant to Section 8 (but in
no event after the expiration date of such Option).
e. Disability. If the retention by the Company or any Related
Entity of the services of any Eligible Non-Employee
terminates because of such Eligible Non-Employee's
Disability, such optionee or his legal representative shall
have the right to exercise the Option in accordance with its
terms at any time and from time to time within 180 days after
the date of the optionee's termination unless a longer or
shorter period is expressly provided in such Option or
established by the Committee pursuant to Section 8 (but not
after the expiration of the Option).
f. Termination for Cause; Voluntary Termination. If the
retention by the Company or any Related Entity of the
services of any Eligible Non-Employee is terminated (i) for
Good Cause, (ii) as a result of removal of the optionee from
office as a director of the Company or of any Related Entity
for cause by action of the stockholders of the Company or
such Related Entity in accordance with the by-laws of the
Company or such Related Entity, as applicable, and the
corporate law of the jurisdiction of incorporation of the
Company or such Related Entity, or (iii) as a result of the
voluntarily termination by optionee of optionee's service
without the consent of the Company or any Related Entity,
then such optionee shall immediately forfeit his rights under
his Option except as to the shares of stock already
purchased. The determination that there exists Good Cause for
termination shall be made by the Option Committee (unless
otherwise agreed to in writing by the Company and the
optionee).
g. Other Termination of Relationship. If the retention by the
Company or any Related Entity of the services of any Eligible
Non-Employee terminates for any reason other than those
specified in subsections 7(d), (e) or
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(f) above, such optionee shall have the right to exercise his
or its Option in accordance with its terms within 30 days
after the date of such termination, unless a longer or shorter
period is expressly provided in such Option or established by
the Committee pursuant to Section 8 (but not after the
expiration date of the Option).
h. Ineligibility for Other Grants. Any Eligible Non-Employee who
receives an Option pursuant to this Section 7 shall be
ineligible to receive any Options under any other Section of
the Plan.
8. Change of Control.
If (i) a Change of Control shall occur, (ii) the Company shall enter
into an agreement providing for a Change of Control, or (iii) any member of the
Shareholder Group shall enter into an agreement providing for a Change in
Control, then the Committee may declare any or all Options outstanding under
the Plan to be exercisable in full at such time or times as the Committee shall
determine, notwithstanding the express provisions of such Options. Each Option
accelerated by the Committee pursuant to the preceding sentence shall
terminate, notwithstanding any express provision thereof or any other provision
of the Plan, on such date (not later than the stated exercise date) as the
Committee shall determine.
9. Purchase Option.
a. Except as otherwise expressly provided in any particular
Option, if (i) any optionee's employment (or, in the case of
any Option granted under Section 7, the optionee's
relationship) with the Company or a Related Entity terminates
for any reason at any time, or (ii) a Change of Control
occurs or (iii) (A) the Company is engaged in or proposes to
engage in a transaction in which any shares, notes or other
securities will be issued to any optionee in a transaction
constituting a "sale" within the meaning of Section 2(3) of
the Securities Act, whether through a merger, consolidation,
exchange or purchase, (B) the optionee is not an "accredited
investor" as defined in Regulation D promulgated under the
Securities Act ("Regulation D") at the time of the respective
transaction and (C) the issuer of the shares, notes or other
securities involved in such transaction certifies in writing
to the Company that it has not prepared and is not expected
to prepare in connection with such transaction appropriate
disclosure documents that are sufficient to register such
shares, notes or other securities under the Securities Act or
to exempt such shares, notes or other securities from
registration
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pursuant to Regulation D (each of the foregoing events being
a "Purchase Option Trigger Event"), the Company and/or its
designee(s) shall have the option (the "Purchase Option") to
purchase, and if the option is exercised, the optionee (or
the optionee's executor or the administrator of the
optionee's estate, in the event of the optionee's death, or
the optionee's legal representative in the event of the
optionee's incapacity (hereinafter, collectively with such
optionee, the "Grantor")) shall sell to the Company and/or
its assignee(s), all or any portion (at the Company's option)
of the shares of Common Stock and/or Options held by the
Grantor (such shares of Common Stock and Options collectively
being referred to as the "Purchasable Shares").
b. The Company shall give notice in writing to the Grantor of
the exercise of the Purchase Option within one year from the
date of the Purchase Option Trigger Event. Such notice shall
state the number of Purchasable Shares to be purchased and
the determination of the per share purchase price of such
Purchasable Shares. If no notice is given within the time
limit specified above, the Purchase Option shall terminate.
c. The purchase price to be paid for the Purchasable Shares
purchased pursuant to the Purchase Option shall be, in the
case of any Common Stock, the Fair Market Value per share as
of the date of the notice of exercise of the Purchase Option
times the number of shares being purchased, and in the case
of any Option, the Fair Market Value per share times the
number of vested shares subject to such Option which are
being purchased, less the applicable per share Option
exercise price; provided, however, that in the event that an
optionee's employment (or, in the case of any Option granted
under Section 7, the optionee's relationship) with the
Company is terminated in a manner contemplated by Section
6(f) (or, in the case of any Option granted under Section 7,
in the manner contemplated by Section 7(f)), then the
foregoing calculation shall be made using the lower of (i)
the Fair Market Value per share and (ii) the exercise price
per share in respect of the Purchasable Shares. The purchase
price shall be paid in cash. The closing of such purchase
shall take place at the Company's principal executive offices
within ten days after the purchase price has been determined.
At such closing, the Grantor shall deliver to the
purchaser(s) the certificates or instruments evidencing the
Purchasable Shares being purchased, duly endorsed (or
accompanied by duly executed stock powers) and otherwise in
good form for delivery, against payment of the purchase
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price by check of the purchaser(s). In the event that,
notwithstanding the foregoing, the Grantor shall have failed
to obtain the release of any pledge or other encumbrance on
any Purchasable Shares by the scheduled closing date, at the
option of the purchaser(s) the closing shall nevertheless
occur on such scheduled closing date, with the cash purchase
price being reduced to the extent of all unpaid indebtedness
for which such Purchasable Shares are then pledged or
encumbered.
d. To assure the enforceability of the Company's rights under
this Paragraph 9, each certificate or instrument representing
Common Stock or an Option held by him or it shall bear a
conspicuous legend in substantially the following form:
"THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE
PURSUANT TO THIS AGREEMENT] ARE SUBJECT TO AN OPTION TO
REPURCHASE PROVIDED UNDER THE PROVISIONS OF THE COMPANY'S
1998 STOCK OPTION PLAN AND A STOCK OPTION AGREEMENT ENTERED
INTO PURSUANT THERETO. A COPY OF SUCH OPTION PLAN AND OPTION
AGREEMENT ARE AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY
AT ITS PRINCIPAL EXECUTIVE OFFICES."
The Company's rights under this Section 9 shall terminate upon the
consummation of a Qualifying Public Offering.
10. Decedent's Put Option.
a. If any optionee's employment (or, in the case of any Option
granted under Section 7, the optionee's relationship) with
the Company terminates due to the death of such optionee, the
estate of such optionee, or a Person who acquired the right
to exercise such Option by bequest or inheritance or by
reason of death of the optionee, shall have the option (a
"Decedent's Put Option") to sell to the Company, and the
Company shall purchase from such estate or other Person, all
or any portion of the shares of Common Stock and/or Options
acquired by such estate or other Person upon or as a result
of the optionee's death (any such shares of Common Stock and
Options collectively being referred to herein as "Decedent's
Shares").
b. The Person exercising a Decedent's Put Option shall give
notice in writing to the Company within one year from the
date of the optionee's death. Such notice shall state the
number of Decedent's Shares to be sold. If no notice is given
within the time limit specified above, the Decedent's Put
Option shall terminate.
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c. The purchase price to be paid for the Decedent's Shares sold
pursuant to the Decedent's Put Option shall be, in the case
of any Common Stock, the Fair Market Value per share as of
the date of the notice of exercise of the Decedent's Put
Option times the number of shares being purchased, and in the
case of any Option, the Fair Market Value per share times the
number of vested shares subject to such Option which are
being purchased, less the applicable per share Option
exercise price. The purchase price shall be paid in cash. The
closing of such purchase shall take place at the Company's
principal executive offices within sixty days after the
receipt by the Company of the notice required pursuant to
Section 10(b). At such closing, the Person exercising the
Decedent's Put Option shall deliver to the Company the
certificates or instruments evidencing the Decedent's Shares
being sold, duly endorsed (or accompanied by duly executed
stock powers) and otherwise in good form for delivery and
free and clear of all pledges and other encumbrances, against
payment of the purchase price therefor by check.
11. Adjustment of Shares.
Unless otherwise expressly provided in a particular Option, in the
event that, by reason of any merger, consolidation, combination, liquidation,
reorganization, recapitalization, stock dividend, stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares or other like
change in capital structure of the Company (collectively, a "Reorganization"),
the Common Stock is substituted, combined, or changed into any cash, property,
or other securities, or the shares of Common Stock are changed into a greater
or lesser number of shares of Common Stock, the number and/or kind of shares
and/or interests subject to an Option and the per share price or value thereof
shall be appropriately adjusted by the Committee to give appropriate effect to
such Reorganization. Any fractional shares or interests resulting from such
adjustment shall be eliminated. Notwithstanding the foregoing, (i) each such
adjustment with respect to an Incentive Option shall comply with the rules of
Section 424(a) of the Code, and (ii) in no event shall any adjustment be made
which would render any Incentive Option granted hereunder other than an
"incentive stock option" for purposes of Section 422 of the Code.
In the event the Company is not the surviving entity of a
Reorganization and, following such Reorganization, any optionee will hold
Options issued pursuant to this Plan which have not been exercised, cancelled,
or terminated in connection therewith, the Company shall cause such Options to
be assumed (or cancelled and replacement Options issued) by the surviving
entity or a Related Entity.
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12. Assignment or Transfer.
Except as otherwise expressly provided in any Nonqualified Option, no
Option granted under the Plan or any rights or interests therein shall be
assignable or transferable by an optionee except by will or the laws of descent
and distribution, and during the lifetime of an optionee, Options granted to
him or her hereunder shall be exercisable only by the optionee or, in the event
that a legal representative has been appointed in connection with the
Disability of an optionee, such legal representative.
13. Compliance with Securities Laws.
The Company shall not in any event be obligated to file any
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") or any applicable state securities law to permit exercise of
any Option or to issue any Common Stock in violation of the Securities Act or
any applicable state securities law. Each optionee (or, in the event of his
death or, in the event a legal representative has been appointed in connection
with his Disability, the Person exercising the Option) shall, as a condition to
his right to exercise any Option, deliver to the Company an agreement or
certificate containing such representations, warranties and covenants as the
Company may deem necessary or appropriate to ensure that the issuance of shares
of Common Stock pursuant to such exercise is not required to be registered
under the Securities Act or any applicable state securities law.
Certificates for shares of Common Stock, when issued, may have
substantially the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED
FOR SALE, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF
UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE
ISSUER (WHICH, IN THE DISCRETION OF THE ISSUER, MAY INCLUDE
AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH
OFFER, SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT
VIOLATE APPLICABLE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Common Stock issued
pursuant to an effective registration statement under the Securities Act and in
accordance with applicable state securities laws.
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14. Withholding Taxes. By acceptance of the Option, the optionee will be
deemed to (i) agree to reimburse the Company or Related Entity by
which the optionee is employed for any federal, state, or local taxes
required by any government to be withheld or otherwise deducted by
such corporation in respect of the optionee's exercise of all or a
portion of the Option; (ii) authorize the Company or any Related
Entity by which the optionee is employed to withhold from any cash
compensation paid to the optionee or in the optionee's behalf, an
amount sufficient to discharge any federal, state, and local taxes
imposed on the Company, or the Related Entity by which the optionee is
employed, and which otherwise has not been reimbursed by the optionee,
in respect of the optionee's exercise of all or a portion of the
Option; and (iii) agree that the Company may, in its discretion, hold
the stock certificate to which the optionee is entitled upon exercise
of the Option as security for the payment of the aforementioned
withholding tax liability, until cash sufficient to pay that liability
has been accumulated, and may, in its discretion, effect such
withholding by retaining shares issuable upon the exercise of the
Option having a Fair Market Value on the date of exercise which is
equal to the amount to be withheld.
15. Costs and Expenses. The costs and expenses of administering the Plan
shall be borne by the Company and shall not be charged against any
Option nor to any employee receiving an Option.
16. Funding of Plan. The Plan shall be unfunded. The Company shall not be
required to make any segregation of assets to assure the payment of
any Option under the Plan.
17. Other Incentive Plans
The adoption of the Plan does not preclude the adoption by appropriate
means of any other incentive plan for employees.
18. Effect on Employment.
Nothing contained in the Plan or any agreement related hereto or
referred to herein shall affect, or be construed as affecting, the terms of
employment of any Key Employee except to the extent specifically provided
herein or therein. Nothing contained in the Plan or any agreement related
hereto or referred to herein shall impose, or be construed as imposing, an
obligation on (i) the Company or any Related Entity to continue the employment
of any Key Employee, and (ii) any Key Employee to remain in the employ of the
Company or any Related Entity.
19. Definitions.
In addition to the terms specifically defined elsewhere in the Plan,
as used in the Plan, the following terms shall have the respective meanings
indicated:
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"Affiliate" shall mean, as to any Person, a Person that directly, or
indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person.
"Board of Directors" shall have the meaning set forth in Section 2
hereof.
"Change of Control" shall mean the first to occur of the following
events: (i) any sale, lease, exchange, or other transfer (in one
transaction or series of related transactions) of all or substantially
all of the assets of the Company to any Person or group of related
Persons for purposes of Section 13(d) of the Exchange Act, other than
one or more members of the Shareholder Group, (ii) a majority of the
Board of Directors of the Company shall consist of Persons who are not
Continuing Directors; or (iii) the acquisition by any Person or Group
(other than one or more members of the Shareholder Group) of the
power, directly or indirectly, to vote or direct the voting of
securities having more than 50% of the ordinary voting power for the
election of directors of the Company.
"Code" shall have the meaning set forth in Section 1 hereof.
"Committee" shall have the meaning set forth in Section 2 hereof.
"Common Stock" shall have the meaning set forth in Section 3 hereof.
"Company" shall have the meaning set forth in Section 1 hereof.
"Continuing Director" shall mean, as of the date of determination, any
Person who (i) was a member of the Board of Directors of the Company
on the date of adoption of this Plan, (ii) was nominated for election
or elected to the Board of Directors of the Company with the
affirmative vote of a majority of the Continuing Directors who were
members of such Board of Directors at the time of such nomination or
election, or (iii) is a member of the Shareholder Group.
"Disability" shall mean permanent disability as defined under the
appropriate provisions of the applicable long-term disability plan
maintained for the benefit of employees of the Company or any Related
Entity who are regularly employed on a salaried basis unless another
meaning shall be agreed to in writing by the Committee and the
optionee; provided, however, that in the case of an Incentive Option
"disability" shall have the meaning specified in Section 22(e)(3) of
the Code.
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"Eligible Non-Employee" shall have the meaning set forth in Section 4
hereof.
"Exchange Act" shall have the meaning set forth in Section 2 hereof.
"Fair Market Value" shall, as it relates to the Common Stock, mean the
average of the high and low prices of such Common Stock as reported on
the principal national securities exchange on which the shares of
Common Stock are then listed on the date specified herein, or if there
were no sales on such date, on the next preceding day on which there
were sales, or if such Common Stock is not listed on a national
securities exchange, the last reported bid price in the
over-the-counter market, or if such shares are not traded in the
over-the-counter market, the per share cash price for which all of the
outstanding Common Stock could be sold to a willing purchaser in an
arms length transaction (without regard to minority discount, absence
of liquidity, or transfer restrictions imposed by any applicable law
or agreement) at the date of the event giving rise to a need for a
determination. Except as may be otherwise expressly provided in a
particular Option, Fair Market Value shall be determined in good faith
by the Committee.
"Good Cause", with respect to any Key Employee, shall mean (unless
another definition is agreed to in writing by the Company and the
optionee) termination by action of the Board of Directors because of:
(A) the optionee's conviction of, or plea of nolo contendere to, a
felony or a crime involving moral turpitude; (B) the optionee's
personal dishonesty, incompetence, willful misconduct, willful
violation of any law, rule, or regulation (other than minor traffic
violations or similar offenses) or breach of fiduciary duty which
involves personal profit; (C) the optionee's commission of material
mismanagement in the conduct of his duties as assigned to him by the
Board of Directors or the optionee's supervising officer or officers
of the Company; (D) the optionee's willful failure to execute or
comply with the policies of the Company or his stated duties as
established by the Board of Directors or the optionee's supervising
officer or officers of the Company, or the optionee's intentional
failure to perform the optionee's stated duties; or (E) substance
abuse or addiction on the part of the optionee. "Good Cause", with
respect to any Eligible Non-Employee, shall mean (unless another
definition is agreed to in writing by the Company and the optionee)
termination by action of the Board of Directors because of: (A) the
optionee's conviction of, or plea of nolo contendere to, a felony or a
crime involving moral turpitude; (B) the optionee's personal
dishonesty, incompetence, willful misconduct, willful violation of any
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law, rule, or regulation (other than minor traffic violations or
similar offenses) or breach of fiduciary duty which involves personal
profit; (C) the optionee's commission of material mismanagement in
providing services to the Company or any Related Entity; (D) the
optionee's willful failure to comply with the policies of the Company
in providing services to the Company or any Related Entity, or the
optionee's intentional failure to perform the services for which the
optionee has been engaged; (E) substance abuse or addiction on the
part of the optionee; or (F) the optionee's willfully making any
material misrepresentation or willfully omitting to disclose any
material fact to the board of directors of the Company or any Related
Entity with respect to the business of the Company or any Related
Entity.
"Grant Year" shall mean the Plan Year in which the Options are granted
and shall be deemed a full Plan Year.
"Grantor" has the meaning set forth in Section 9 hereof.
"Incentive Options" shall have the meaning set forth in Section 6
hereof.
The term "including" when used herein shall mean "including, but not
limited to".
"Key Employee" shall have the meaning set forth in Section 4 hereof.
"Marketable Securities" shall mean securities (i) of a class or series
listed or traded on the New York Stock Exchange, American Stock
Exchange, or NASDAQ National Market and (ii) which, as a matter of
law, shall at the time of acquisition be (or which at the date of
acquisition are legally committed to become within six months after
the date of acquisition) freely saleable in unlimited quantities by
the Shareholder Group to the public, either pursuant to an effective
registration statement under the Securities Act of 1933, as amended
(including a current prospectus which is available for delivery), or
without the necessity of such registration.
"Non-Qualified Options" shall have the meaning set forth in Section 6
hereof.
"Options" shall have the meaning set forth in Section 1 hereof.
"Person" shall have the meaning set forth in Section 4 hereof.
"Plan" shall have the meaning set forth in Section 1 hereof.
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"Plan Year" shall mean the twelve month period ending on September
30th.
"Public Offering" shall mean the sale of shares of Common Stock
through one or more underwriters pursuant to a registration statement
on Form S-1, Form SB-1, or Form SB-2 (or any form subsequently
promulgated by the Securities and Exchange Commission that may be used
for substantially the same purposes as any of the forms just
specified) filed and declared effective under the Securities Act of
1933, as amended, in which the aggregate net proceeds received from
the sale of such shares are at least $10,000,000.
"Purchasable Shares" shall have the meaning set forth in Section 9
hereof.
"Purchase Option" shall have the meaning set forth in Section 9
hereof.
"Qualifying Public Offering" shall mean a firm commitment underwritten
Public Offering of Common Stock the result of which is that the
Persons comprising the Shareholder Group shall own collectively less
than 10% of the fully diluted Common Stock.
"Related Entities" shall have the meaning set forth in Section 1
hereof.
"Reorganization" shall have the meaning set forth in Section 11
hereof.
"Rule 16b-3" shall have the meaning set forth in Section 2 hereof.
"Securities Act" shall have the meaning set forth in Section 13
hereof.
"Shareholder Group" shall mean (i) Hicks, Muse, Tate & Furst
Incorporated, its Affiliates and their respective employees, officers,
and directors (and members of their respective families and trusts for
the primary benefit of such family members) and (ii) Glenn E. Staats
and Preston W. Staats, Jr. (and members of their respective families
and trusts for the primary benefit of such family).
"Subsidiary" shall mean, with respect to any Person, any other Person
of which such first Person owns or has the power to vote, directly or
indirectly, securities representing a majority of the votes ordinarily
entitled to be cast for the election of directors or other governing
Persons.
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20. Amendment of Plan.
The Board of Directors shall have the right to amend, modify, suspend
or terminate the Plan at any time; provided, that no amendment shall be made
which shall increase the total number of shares of the Common Stock which may
be issued and sold pursuant to Options granted under the Plan or decrease the
minimum Option exercise price in the case of an Incentive Option, or modify the
provisions of the Plan relating to eligibility with respect to Incentive
Options unless such amendment is made by or with the approval of the
stockholders. The Board of Directors shall be authorized to amend the Plan and
the Options granted thereunder (i) to qualify as "incentive stock options"
within the meaning of Section 422 of the Code or (ii) to comply with Rule 16b-3
(or any successor rule) under the Exchange Act (or any successor law) and the
regulations (including any temporary regulations) promulgated thereunder. No
amendment, modification, suspension or termination of the Plan shall alter or
impair any Options previously granted under the Plan, without the consent of
the holder thereof.
21. Effective Date.
The Plan shall be effective as of March 1, 1998, and shall be void
retroactively if not approved by the stockholders of the Company within twelve
months thereafter.
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