EMPLOYEE STOCK PURCHASE PLAN
1. Purpose.
The purpose of the CyCare Systems, Inc. Employee Stock Purchase Plan
(hereinafter called the "Plan"), is to provide employees of CyCare Systems,
Inc., a Delaware corporation , or any successor corporation, (hereinafter called
the "Company"), and its affiliated companies with an opportunity to acquire a
proprietary interest in the Company through the purchase of Common Stock of the
Company, with a par value of $.01 per share (the "stock"). It is the intention
of the Company to have the Plan qualify as an "employee stock purchase plan"
under Section 423 of the Internal Revenue Code of 1986 (the "Code"). The
provisions of the Plan shall, accordingly, be construed so as to extend and
limit participation in a manner consistent with the requirements of that Section
of the Code.
2. Definitions.
(a) "Base pay" means all compensation paid by the Company to the employee,
(before withholding or other deductions), including regular straight time
earnings plus payments for overtime, commissions, incentive compensation,
bonuses, and other special payments.
(b) "Employee" means any person, including an officer, who is customarily
employed for more than 20 hours per week and more than five months in a calendar
year by (1) the Company, or (2) any affiliated company, 50% or more of whose
voting shares are owned directly or indirectly by the Company.
3. Eligibility.
(a) Any employee as defined in Paragraph 2 who shall be employed by the
Company on the date his participation in the Plan is to become effective shall
be eligible to participate in the Plan, subject to the limitations imposed by
Section 423 (b) of the Code.
(b) Any provision of the Plan to the contrary notwithstanding, no employee
shall be granted an option:
(1) If, immediately after the grant, such employee would own shares,
and/or hold outstanding options to purchase stock, possessing 5% or more of the
total combined voting power or value of all classes of shares of the Company or
of any subsidiary of the Company, as defined by Section 424(f) of the Code,
taking into account in determining stock ownership, any stock owned by the
brothers, sisters, spouse, ancestors or descendants of such employee and stock
owned by corporations, partnerships, estates or trusts of which such employee is
a shareholder, partner or beneficiary, as the case may be, as required by
Section 424(d) of the Code; or
(2) Which permits his rights to purchase shares under all employee
stock purchase plans of the Company and its subsidiaries, as defined by Section
424(f) of the Code, to accrue at a rate which exceeds $25,000.00 determined by
the fair market value of the shares (determined at the time such option is
granted) for each calendar year in which such stock option is outstanding at any
time, all determined in the manner provided by Section 423 (b) (8) of the Code.
4. Offering Dates.
The Plan will be implemented by means of one or more offerings, each offering
being one year in length. The first offering shall commence on a date determined
by the Board, if a majority of the Directors then in office are ineligible to
participate in the Plan, or a committee of Directors not eligible to participate
in the Plan (the "Committee") designated by the Board to administer the Plan, on
which date the Board shall allocate stock to the Plan; provided, however, that
such date shall not be more than six months after the date on which stock of the
Company is first offered for sale to the public and further provided that in no
event shall the Plan become effective unless within twelve months of the date of
its adoption by the Board, it has been approved at a duly called meeting of the
stockholders of the Company. Subsequent offerings may be made by the Board at
one year intervals after the date on which the first offering commences, and any
such subsequent offering shall be one year in length as well.
On or prior to the date on which any offering commences, the Board shall
determine the number of shares allocated to the Plan which shall be available
for purchase under said offering. Any of such shares which are not purchased
under any such offering may be available for purchase in subsequent offerings if
the Board so determines.
5. Participation.
(a) An eligible employee may become a participant by completing an
authorization for a payroll deduction on the form provided by the Company and
filing it with the payroll office during the thirty day period before the date
the offering commences. An authorization shall become effective on the date that
it is filed with the payroll office.
(b) Payroll deductions for a participant shall commence on the date when
the authorization for a payroll deduction becomes effective and shall end on the
termination date of the offering to which such authorization is applicable
unless sooner terminated as provided in Paragraph 10.
(c) Participation in any offering under the Plan shall neither limit, nor
require, participation in any other offering except that no employee may have
more than one authorization for a payroll deduction in effect simultaneously.
6. Payroll deductions.
(a) At the time a participant files an authorization for a payroll deduction,
the participant shall elect to have deductions made from his pay on each payday
during the time he is a participant in an offering at a rate not to exceed 10%
of the base pay, as defined in Paragraph 2, which the participant is entitled to
receive on such payday.
(b) All payroll deductions made for a participant shall be credited to the
participant's account under the Plan. A participant may not make any separate
cash payment into such account.
(c) A participant may discontinue his participation in the Plan as provided
in Paragraph 10, but no other change can be made by a participant during an
offering.
7. Granting of Option.
(a) On the offering date following the date when a participant's
authorization for a payroll deduction becomes effective, he shall be granted an
option for as many full shares as he will be able to purchase with the payroll
deductions credited to his account during his participation in that offering.
(b) The option price of shares purchased with payroll deductions made for a
participant therein shall be the lower of:
(1) 85% of the fair market value of the stock on the date the option
is granted (which is the date on which the respective offering commences), or
(2) 85% of the fair market value of the stock on the date the option
is exercised (which is the date the respective offering ends), but in no event
shall the purchase price be less than the par value of the stock.
8. Exercise of Option.
(a) Unless a participant gives written notice to the company as hereinafter
provided, his option for the purchase of shares with payroll deductions made
during the applicable offering will be exercised automatically for him on the
date on which said offering ends, if the participant is an employee on that
date, for the purchase of the number of full shares which the accumulated
payroll deductions in his account at that time will purchase at the applicable
option price, subject to the provisions of Paragraph 12. The balance in the
account with interest thereon shall be paid to the participant.
(b) By written notice to the Company during the 60 day period preceding the
date on which an offering ends, a participant may elect, effective at the
termination of said offering, to:
(1) Withdraw all the accumulated payroll deductions in his or her
account on the date the offering ends, with interest thereon; or
(2) Exercise the option for a specified number of full shares less
than the number of full shares which the accumulated payroll deductions in this
account will purchase at the applicable option price and withdraw the balance of
the accumulated payroll deductions in the account at that time, with interest
thereon.
9. Delivery.
As promptly as practicable after the termination of each offering, the Company
will deliver to each participant, as appropriate, either the shares purchased
upon the exercise of the option together with a cash payment equal to the
balance credited to his account during such offering which was not used for the
purchase of shares, with interest thereon, or a cash payment equal to the total
of the payroll deductions credited to his account during such offering, with
interest thereon.
10. Withdrawal.
(a) A participant may withdraw payroll deductions credited to his account
under the Plan at any time by giving written notice to the Company. All of the
participant's payroll deductions credited to his account, with interest thereon,
will be paid to him promptly after receipt of his notice of withdrawal, and no
further payroll deductions will be made from his pay except in accordance with
an authorization for a new payroll deduction filed in accordance with Paragraph
5, for subsequent years.
(b) A participant's withdrawal will not have any effect upon his
eligibility to participate in a succeeding offering or in any similar plan which
may hereafter be adopted by the Company.
(c) Upon termination of the participant's employment for any reason,
including retirement, the payroll deductions credited to his account with
interest thereon will be returned to him, or, in the case of his death, to the
person or persons entitled thereto under Paragraph 14.
11. Interest.
In any situation where the Plan specifically provides for the payment of
interest on a participant's payroll deductions, such interest paid shall be
simple interest, calculated at the rate of 6% per annum, computed on the balance
in the participant's account at the end of each month.
12. Stock.
(a) The shares to be sold to participants under the Plan may, at the election
of the Company, be either treasury shares or shares originally issued for such
purpose. The maximum number of shares which shall be made available for sale
under the Plan during the offerings under the Plan shall be 1,320,000 shares,
subject to adjustment upon changes in capitalization of the Company as provided
in Paragraph 17. If the total number of shares for which options are to be
granted on any date in accordance with Paragraph 7 exceeds the number of shares
then available under the Plan (after deduction of all shares for which options
have been exercised or are then outstanding), the Company shall make a pro rata
allocation of the shares available in as nearly a uniform manner as shall be
practicable and as it shall determine to be equitable.
(b) The participant will have no interest in shares covered by his option
until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be registered
in the name of the participant, or, if the participant so directs, by written
notice to the Company prior to the termination date of the pertinent offering,
in the names of the participant and one such other person as may be designated
by the participant, as joint tenants with rights of survivorship, to the extent
permitted by applicable law.
13. Administration of the Plan.
The Plan shall be administered so as to ensure that all participants have the
same rights and privileges as are provided by Section 423(b)(5) of the Code.
Members of the Committee may be appointed from time to time by the Board and
shall be subject to removal by the Board. The decision of a majority in number
of the members of the Committee in office at the time shall be deemed to be the
decision of the Committee.
The Board or the Committee, from time to time, may approve the forms of any
documents or writings provided for in the Plan, and may adopt, amend and rescind
rules and regulations not inconsistent with the Plan for carrying out the Plan
and may construe the Plan. The Board or the Committee may delegate the
responsibility for maintaining all or a portion of the records pertaining to
participants' accounts to persons not affiliated with the Participating
Companies. All expenses of administering the Plan shall be paid by the
Participating Companies.
14. Designation of Beneficiary.
A participant may file a written designation of a beneficiary who is to receive
any shares and cash to the participant's credit under the Plan in the event of
such participant's death prior to delivery to him of such shares and cash. Such
designation of beneficiary may be changed by the participant at any time by
written notice. Upon the death of a participant and upon receipt by the Company
of proof of the identity and existence at the participant's death of a
beneficiary validly designated by him under the Plan, the Company shall deliver
such shares and cash to such beneficiary. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and cash to the executor or administrator of the estate of
the participant, or if no such executor or administrator has been appointed (to
the knowledge of the Company) the Company, in its discretion, may deliver such
shares and cash to the spouse or to any one or more dependents or relatives of
the participant, or if no spouse, dependent, or relative is known to the
Company, then to such other person as the Company may designate. No designated
beneficiary shall prior to the death of the participant by whom he has been
designated, acquire any interest in the shares or cash credited to the
participant under the Plan.
15. Transferability.
Neither payroll deductions credited to a participant's account nor any rights
with regard to the exercise of an option or to receive shares under the Plan may
be assigned, transferred, pledged, or otherwise disposed of in any way by the
participant. Any such attempted assignment, transfer, pledge, or other
disposition shall be without effect, except that the Company may treat such act
as an election to withdraw funds in accordance with Paragraph 10.
16. Changes in Capitalization.
If any option under this Plan is exercised subsequent to any stock dividend,
split-up, spin-off, recapitalization, merger, consolidation, exchange of shares,
or the like, occurring after such option was granted, as a result of which
shares of any class shall be issued in respect of the outstanding shares, or
shares shall be changed into the same class or classes, the number of shares to
which such option shall be applicable and the option price for such shares shall
be appropriately adjusted by the Company.
17. Amendment or termination.
The Board of Directors of the Company may at any time terminate or amend the
Plan, provided however, that amendments to the Plan relating to the amount,
price, or timing of grants shall not be made more than once in any six month
period, other than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules thereunder.
Notwithstanding the foregoing, no such termination can affect options previously
granted, nor may an amendment make any change in any option theretofore granted
which would adversely affect the rights of any participant nor may an amendment
be made without prior approval of the shareholders of the Company if such
amendment would materially increase the benefits accruing to participants under
the Plan or materially modify the requirements as to eligibility for
participation in the Plan. Without limiting the generality of the foregoing, an
amendment may not be made without prior stockholder approval if it would:
(a) Require the sale of more shares than are authorized under Paragraph 12
of the Plan; or
(b) Permit payroll deductions at a rate in excess of 10% of a participant's
base pay; or
(c) Decrease the purchase price of the stock for any purchase period below
the lower of 85% of the fair market value of the stock on te date the option is
granted or 85% of the fair market value of the stock on the date the option is
exercised.
The Plan shall terminate in any event on such date as all of the shares
allocated to the Plan shall have been purchased pursuant to the provisions of
the Plan.
18. Notices.
All notices or other communications by a participant to the Company under or in
connection with the Plan shall be deemed to have been duly given when received
by the Treasurer of the Company, or when received in the form specified by the
Company at the location, or by the person, designated by the Company for the
receipt thereof.
19.Miscellaneous.
Except as otherwise expressly provided herein, any authorization, election, or
notice of document under the Plan from an eligible employee or participant shall
be delivered to his employer corporation and, subject to any limitations
specified in the Plan, shall be effective when so delivered.
The term "business day" shall mean any day other than Saturday, Sunday or
a legal holiday in Iowa.
The masculine pronoun shall include the feminine.
The Plan, and the Company's obligation to sell and deliver shares of Stock
hereunder, shall be subject to all applicable federal, state and foreign laws,
rules and regulations, and to such approval by any regulatory or governmental
agency as may, in the opinion of counsel for the Company, be required.