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FUTURELINK DISTRIBUTION CORP.
STOCK OPTION PLAN
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TABLE OF CONTENTS
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1. Purpose............................................................... 1
2. Incentive and Non-Qualified Stock Options............................. 1
3. Definitions........................................................... 1
3.1 Board........................................................ 1
3.2 Code......................................................... 1
3.3 Common Stock................................................. 1
3.4 Company...................................................... 1
3.5 Disabled or Disability....................................... 1
3.6 Fair Market Value............................................ 1
3.7 Incentive Stock Option....................................... 2
3.8 Non-Qualified Stock Option................................... 2
3.9 Optionee..................................................... 2
3.10 Plan......................................................... 2
3.11 Plan Administrator........................................... 2
3.12 Stock Option or Option....................................... 2
4. Administration........................................................ 2
4.1 Administration by Board...................................... 2
4.2 Administration by Committee.................................. 3
5. Eligibility........................................................... 3
6. Shares Subject to Options............................................. 3
7. Terms and Conditions of Options....................................... 4
7.1 Number of Shares Subject to Option........................... 4
7.2 Option Price................................................. 4
7.3 Notice and Payment........................................... 4
7.4 Term of Option............................................... 5
7.5 Exercise of Option........................................... 5
7.6 No Transfer of Option........................................ 6
7.7 Limit on Incentive Stock Options............................. 6
7.8 Restriction on Issuance of Shares............................ 6
7.9 Investment Representation.................................... 6
7.10 Rights as a Shareholder or Employee.......................... 7
7.11 No Fractional Shares......................................... 7
7.12 Exercisability in the Event of Death......................... 7
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7.13 Recapitalization or Reorganization of Company................ 7
7.14 Modification, Extension, and Renewal of Options.............. 8
7.15 Other Provisions............................................. 8
8. Termination or Amendment of the Plan.................................. 8
9. Indemnification....................................................... 8
10. Effective Date and Term of Plan....................................... 9
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FUTURELINK DISTRIBUTION CORP.
STOCK OPTION PLAN
1. PURPOSE. The purpose of this FutureLink Distribution Corp.
Stock Option Plan ("Plan") is to further the growth and development of
FutureLink Distribution Corp. (the "Company") by providing, through ownership of
stock of the Company, an incentive to officers, other key employees and
directors who are in a position to contribute materially to the prosperity of
the Company, to increase such persons' interests in the Company's welfare, to
encourage them to continue their services to the Company or its subsidiaries,
and to attract individuals of outstanding ability to enter the employment of the
Company or its subsidiaries, to remain or become directors of the Company and to
provide valuable services to the Company or its subsidiaries.
2. INCENTIVE AND NON-QUALIFIED STOCK OPTIONS. Two types of Stock
Options (referred to herein as "Options" without distinction between such two
types) may be granted under the Plan: Options intended to qualify as Incentive
Stock Options under Section 422 of the Code and Non-Qualified Stock Options not
specifically authorized or qualified for favorable income tax treatment by the
Code.
3. DEFINITIONS. The following definitions are applicable to the
Plan:
3.1 BOARD. The Board of Directors of the Company.
3.2 CODE. The Internal Revenue Code of 1986, as amended
from time to time.
3.3 COMMON STOCK. The shares of the $.01 par value per
share common stock of the Company.
3.4 COMPANY. FutureLink Distribution Corp., a Colorado
corporation.
3.5 DISABLED OR DISABILITY. For the purposes of Section
7.4, a disability of the type defined in Section 22(e)(3) of the Code. The
determination of whether an individual is Disabled or has a Disability is
determined under procedures established by the Plan Administrator for purposes
of the Plan.
3.6 FAIR MARKET VALUE. For purposes of the Plan, the "fair
market value" per share of Common Stock of the Company at any date shall be (a)
if the Common Stock is listed on an established stock exchange or exchanges or
the NASDAQ National Market System, the closing price per share on the last
trading day immediately preceding such date on the principal exchange on which
it is traded or as reported by NASDAQ, or (b) if the Common Stock is not then
listed on an exchange or the NASDAQ National Market System,
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the closing price per share on the last trading day immediately preceding such
date reported by NASDAQ, or if sales are not reported by NASDAQ, the average of
the closing bid and asked prices per share for the Common Stock in the
over-the-counter market as quoted on NASDAQ on the last trading day immediately
preceding such date, or (c) if the Common Stock is not then listed on an
exchange, the NASDAQ National Market System or quoted on NASDAQ, an amount
determined in good faith by the Plan Administrator.
3.7 INCENTIVE STOCK OPTION. Any Stock Option intended to
be and designated as an "incentive stock option" within the meaning of Section
422 of the Code.
3.8 NON-QUALIFIED STOCK OPTION. Any Stock Option that is
not an Incentive Stock Option.
3.9 OPTIONEE. The recipient of a Stock Option.
3.10 PLAN. The FutureLink Distribution Corp. Stock Option
Plan, as amended from time to time.
3.11 PLAN ADMINISTRATOR. The Board or the Compensation
Committee designated pursuant to Section 4.2 hereof to administer, construe and
interpret the terms of the Plan.
3.12 STOCK OPTION OR OPTION. Any option to purchase shares
of Common Stock granted pursuant to Section 7 hereof.
4. ADMINISTRATION.
4.1 ADMINISTRATION BY BOARD. Subject to Section 4.2
hereof, the Plan Administrator shall be the Board of Directors of the Company
(the "Board") during such periods of time as all members of the Board are
"outside directors" as defined in Treas. Regs. Section 1.162-27(e)(3) ("outside
directors"). Anything to the contrary notwithstanding, the requirement that all
members of the Board be outside directors shall not apply for any period of time
during which the Company's Common Stock is not registered pursuant to Section 12
of the Securities Exchange Act of 1934, as amended. Subject to the provisions of
the Plan, the Plan Administrator shall have authority to construe and interpret
the Plan, to promulgate, amend, and rescind rules and regulations relating to
its administration, from time to time to select from among the eligible
employees and directors (as determined pursuant to Section 5) of the Company and
its subsidiaries those employees and directors to whom Stock Options will be
granted, to determine the timing and manner of the grant of the Options, to
determine the exercise price, the number of shares covered by and all of the
terms of the Stock Options, to determine the duration and purpose of leaves of
absence which may be granted to Stock Option holders without constituting
termination of their employment for purposes of the Plan, and to make all of the
determinations necessary or advisable for administration of the Plan. The
interpretation and construction by the Plan Administrator of any provision of
the Plan, or of any agreement issued and executed under the Plan, shall be final
and binding upon all
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parties. No member of the Board shall be liable for any action or determination
undertaken or made in good faith with respect to the Plan or any agreement
executed pursuant to the Plan.
4.2 ADMINISTRATION BY COMMITTEE. The Board may, in its
sole discretion, delegate any or all of its duties as Plan Administrator and,
subject to the provisions of Section 4.1 of the Plan, at any time the Board
includes any person who is not an outside director, the Board shall delegate all
of its duties as Plan Administrator during such period of time to a compensation
committee (the "Committee") of not fewer than two (2) members of the Board, all
of the members of which Committee shall be persons who, in the opinion of
counsel to the Company, are outside directors and "non-employee directors"
within the meaning of Rule 16b-3(b)(3)(i) promulgated by the Securities and
Exchange Commission, to be appointed by and serve at the pleasure of the Board.
Anything to the contrary notwithstanding, the requirement that all members of
the Committee be non-employee directors and outside directors shall not apply
for any period of time during which the Company's Common Stock is not registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended. Those
provisions of the Plan that make express reference to Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, shall apply only to reporting
persons. From time to time, the Board may increase or decrease (to not less than
two members) the size of the Committee, and add additional members to, or remove
members from, the Committee. The Committee shall act pursuant to a majority
vote, or the written consent of a majority of its members, and minutes shall be
kept of all of its meetings and copies thereof shall be provided to the Board.
Subject to the provisions of the Plan and the directions of the Board, the
Committee may establish and follow such rules and regulations for the conduct of
its business as it may deem advisable. No member of the Committee shall be
liable for any action or determination undertaken or made in good faith with
respect to the Plan or any agreement executed pursuant to the Plan.
5. ELIGIBILITY. Any employee or director (including any officer
or director who is an employee) of the Company or any of its subsidiaries shall
be eligible to receive Options under the Plan; provided, however, that no person
who owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or any of its parent or subsidiary
corporations shall be eligible to receive an Incentive Stock Option under the
Plan unless at the time such Incentive Stock Option is granted the Option price
(determined in the manner provided in Section 7.2 hereof) is at least 110% of
the Fair Market Value of the shares subject to the Option and such Option by its
terms is not exercisable after the expiration of five years from the date such
Option is granted. An Optionee may receive more than one Option under the Plan.
However, non-employee directors are not eligible to receive an Incentive Stock
Option under the Plan.
6. SHARES SUBJECT TO OPTIONS. The stock available for grant of
Options under the Plan shall be shares of the Company's authorized but unissued,
or reacquired, Common Stock. The aggregate number of shares which may be issued
pursuant to exercise of Options granted under the Plan, as amended, shall not
exceed 3,400,000 shares of Common Stock (subject to adjustment as provided in
Section 7.13 hereof), including shares previously issued under the Plan. The
maximum number of shares with respect to which options may be
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granted to any employee in any one calendar year shall be 500,000 shares. In the
event that any outstanding Option under the Plan for any reason expires, or is
terminated, the shares of Common Stock allocable to the unexercised portion of
the Option shall again be available for Options under the Plan as if no Option
had been granted with respect to such shares.
7. TERMS AND CONDITIONS OF OPTIONS. Options granted under the
Plan shall be evidenced by agreements (which need not be identical) in such form
and containing such provisions which are consistent with the Plan as the Plan
Administrator shall from time to time approve. Such agreements may incorporate
all or any of the terms hereof by reference and shall comply with and be subject
to the following terms and conditions:
7.1 NUMBER OF SHARES SUBJECT TO OPTION. Each Option
agreement shall specify the number of shares subject to the Option.
7.2 OPTION PRICE. The purchase price for the shares
subject to any Option shall be determined by the Plan Administrator at the time
of grant, but shall not be less than par value per share. Anything to the
contrary notwithstanding, the purchase price for the shares subject to any
Incentive Stock Option shall not be less than 100% of the Fair Market Value of
the shares of Common Stock of the Company on the date the Stock Option is
granted. In the case of an Incentive Stock Option granted to an employee who
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any of its parent or subsidiary corporations,
the Option price shall not be less than 110% of the fair market value per share
of the Common Stock of the Company on the date the Option is granted.
7.3 NOTICE AND PAYMENT. Any exercisable portion of a Stock
Option may be exercised only by:
(a) delivery of a written notice to the Company,
prior to the time when such Stock Option becomes unexercisable under Section 7.4
hereof, stating the number of shares being purchased and complying with all
applicable rules established by the Plan Administrator;
(b) payment in full of the exercise price of such
Option by, as applicable, (i) cash or check for an amount equal to the aggregate
Option exercise price for the number of shares being purchased, (ii) in the
discretion of the Plan Administrator, upon such terms as the Plan Administrator
shall approve, a copy of instructions to a broker directing such broker to sell
the Common Stock for which such Option is exercised, and to remit to the Company
the aggregate exercise price of such Options (a "cashless exercise"), or (iii)
in the discretion of the Plan Administrator, upon such terms as the Plan
Administrator shall approve, the Optionee may pay all or a portion of the
purchase price for the number of shares being purchased by tendering shares of
the Company's Common Stock owned by the Optionee, duly endorsed for transfer to
the Company, with a Fair Market Value on the date of delivery equal
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to the aggregate purchase price of the shares with respect to which such Stock
Option or portion is thereby exercised (a "stock-for-stock exercise");
(c) payment of the amount of tax required to be
withheld (if any) by the Company or any parent or subsidiary corporation as a
result of the exercise of a Stock Option. At the discretion of the Plan
Administrator, upon such terms as the Plan Administrator shall approve, the
Optionee may pay all or a portion of the tax withholding by (i) cash or check
payable to the Company, (ii) cashless exercise, (iii) stock-for-stock exercise,
or (iv) a combination of one or more of the foregoing payment methods; and
(d) delivery of a written notice to the Company
requesting that the Company direct the transfer agent to issue to the Optionee
(or to his designee) a certificate for the number of shares of Common Stock for
which the Option was exercised or, in the case of a cashless exercise, for any
shares that were not sold in the cashless exercise.
Notwithstanding the foregoing, the Company may extend and maintain, or arrange
for the extension and maintenance of, credit to any Optionee to finance the
Optionee's purchase of shares pursuant to exercise of any Stock Option, on such
terms as may be approved by the Plan Administrator, subject to applicable
regulations of the Federal Reserve Board and any other laws or regulations in
effect at the time such credit is extended.
7.4 TERM OF OPTION. No Option shall be exercisable after
the expiration of the earliest of (a) ten years after the date the Option is
granted, (b) three months after the date the Optionee's employment with the
Company and its subsidiaries terminates if such termination is for any reason
other than Disability or death, (c) one year after the date the Optionee's
employment with the Company and its subsidiaries terminates if such termination
is a result of death or Disability; provided, however, that the Option agreement
for any Option may provide for shorter periods in each of the foregoing
instances. In the case of an Incentive Stock Option granted to an employee who
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any of its parent or subsidiary corporations,
the term set forth in (a), above, shall not be more than five years after the
date the Option is granted.
7.5 EXERCISE OF OPTION. No Option shall be exercisable
during the lifetime of an Optionee by any person other than the Optionee.
Subject to the foregoing, the Plan Administrator shall have the power to set the
time or times within which each Option shall be exercisable and to accelerate
the time or times of exercise. Unless otherwise provided by the Plan
Administrator, each Option granted under the Plan shall become exercisable on a
cumulative basis as to one-third (1/3) of the total number of shares covered
thereby at any time after one year from the date the Option is granted and an
additional one-third (1/3) of such total number of shares at any time after the
end of each consecutive one-year period thereafter until the Option has become
exercisable as to all of such total number of shares. To the extent that an
Optionee has the right to exercise an Option and purchase shares pursuant
thereto, the Option may be exercised from time to time by written notice to the
Company,
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stating the number of shares being purchased and accompanied by payment in full
of the exercise price for such shares.
7.6 NO TRANSFER OF OPTION. No Option shall be transferable
by an Optionee otherwise than by will or the laws of descent and distribution.
7.7 LIMIT ON INCENTIVE STOCK OPTIONS. The aggregate fair
market value (determined at the time the Option is granted) of the stock with
respect to which Incentive Stock Options granted after 1986 are exercisable for
the first time by an Optionee during any calendar year (under all Incentive
Stock Option plans of the Company and its subsidiaries) shall not exceed
$100,000. To the extent that the aggregate Fair Market Value (determined at the
time of the Stock Option is granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by an Optionee during
any calendar year (under all Incentive Stock Option plans of the Company and any
parent or subsidiary corporations) exceeds $100,000, such Stock Options shall be
treated as NonQualified Stock Options. The determination of which Stock Options
shall be treated as NonQualified Stock Options shall be made by taking Stock
Options into account in the order in which they were granted.
7.8 RESTRICTION ON ISSUANCE OF SHARES. The issuance of
Options and shares shall be subject to compliance with all of the applicable
requirements of law with respect to the issuance and sale of securities,
including, without limitation, any required qualification under the securities
laws of the United States, Canada, any state of the United States, or any
province of Canada. If an Optionee acquires shares of Common Stock pursuant to
the exercise of an Option at a time when the shares are not registered pursuant
to Section 12 of the Securities Exchange Act of 1934, as amended, the Plan
Administrator, in its sole discretion, may require as a condition of issuance of
shares covered by the Option that the shares of Common Stock shall be subject to
restrictions on transfer. The Company may place a legend on the certificates
evidencing the shares, reflecting the fact that they are subject to restrictions
on transfer pursuant to the terms of this Section. In addition, the Optionee may
be required to execute a shareholders' agreement in favor of the Company, its
designee and/or other shareholders with respect to all or any of the shares so
acquired. In such event, the terms of such agreement shall apply to such shares.
7.9 INVESTMENT REPRESENTATION. Each Option shall contain
and any Optionee may be required, as a condition of the grant of the Option and
the issuance of shares covered by his or her Option, to represent that the
Option and the shares to be acquired pursuant to exercise of the Option will be
acquired for investment and without a view to distribution thereof; and in such
case, the Company may place a legend on the certificate evidencing the shares
reflecting the fact that they were acquired for investment and cannot be sold or
transferred unless registered under the Securities Act of 1933, as amended, or
unless counsel for the Company is satisfied that the circumstances of the
proposed transfer do not require such registration.
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7.10 RIGHTS AS A SHAREHOLDER OR EMPLOYEE. An Optionee or
transferee of an Option shall have no right as a shareholder of the Company with
respect to any shares covered by any Option until the date of the issuance of a
share certificate for such shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether cash, securities, or other property) or
distributions or other rights for which the record date is prior to the date
such share certificate is issued, except as provided in Section 7.13. Nothing in
the Plan or in any Option agreement shall confer upon any employee any right to
continue in the employ of the Company or any of its subsidiaries or interfere in
any way with any right of the Company or any subsidiary to terminate the
Optionee's employment at any time.
7.11 NO FRACTIONAL SHARES. In no event shall the Company
be required to issue fractional shares upon the exercise of an Option.
7.12 EXERCISABILITY IN THE EVENT OF DEATH. In the event of
the death of the Optionee, any Option or unexercised portion thereof granted to
the Optionee, to the extent exercisable by him or her on the date of death, may
be exercised by the Optionee's personal representatives, heirs, or legatees
subject to the provisions of Section 7.4 hereof.
7.13 RECAPITALIZATION OR REORGANIZATION OF COMPANY. Except
as otherwise provided herein, appropriate and proportionate adjustments shall be
made in the number and class of shares subject to the Plan, to the Option rights
granted under the Plan, including the any formula grants or automatic grant
authorizations, and the exercise price of such Option rights, in the event that
the number of shares of Common Stock of the Company are increased or decreased
as a result of a stock dividend (but only on Common Stock), stock split, reverse
stock split, recapitalization, reorganization, merger, consolidation,
separation, or like change in the corporate or capital structure of the Company.
In the event there shall be any other change in the number or kind of the
outstanding shares of Common Stock of the Company, or any stock or other
securities into which such common stock shall have been changed, or for which it
shall have been exchanged, whether by reason of a complete liquidation of the
Company or a merger, reorganization, or consolidation of the Company with any
other corporation in which the Company is not the surviving corporation or the
Company becomes a wholly-owned subsidiary of another corporation, then if the
Plan Administrator shall, in its sole discretion, determine that such change
equitably requires an adjustment to shares of Common Stock currently subject to
Options under the Plan, or to prices or terms of outstanding Options, such
adjustment shall be made in accordance with such determination.
To the extent that the foregoing adjustments relate to
stock or securities of the Company, such adjustments shall be made by the Plan
Administrator, the determination of which in that respect shall be final,
binding, and conclusive. No right to purchase fractional shares shall result
from any adjustment of Options pursuant to this Section. In case of any such
adjustment, the shares subject to the option shall be rounded down to the
nearest whole share. Notice of any adjustment shall be given by the Company to
each Optionee whose Options shall have been so adjusted and such adjustment
(whether or not notice is given) shall be effective and binding for all purposes
of the Plan.
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In the event of a complete liquidation of the Company or a
merger, reorganization, or consolidation of the Company with any other
corporation in which the Company is not the surviving corporation or the Company
becomes a wholly-owned subsidiary of another corporation, any unexercised
Options theretofore granted under the Plan shall be deemed cancelled unless the
surviving corporation in any such merger, reorganization, or consolidation
elects to assume the Options under the Plan or to issue substitute Options in
place thereof; provided, however, that, notwithstanding the foregoing, if such
Options would be cancelled in accordance with the foregoing, the Optionee shall
have the right, exercisable during a ten-day period ending on the fifth day
prior to such liquidation, merger, or consolidation, to exercise such Option in
whole or in part without regard to any installment exercise provisions in the
Option agreement.
7.14 MODIFICATION, EXTENSION, AND RENEWAL OF OPTIONS.
Subject to the terms and conditions and within the limitations of the Plan, the
Plan Administrator may modify, extend, or renew outstanding Options granted
under the Plan, and accept the surrender of outstanding Options (to the extent
not theretofore exercised). The Plan Administrator shall not, however, modify
any outstanding Incentive Stock Option in any manner which would cause the
Option not to qualify as an Incentive Stock Option within the meaning of Section
422 of the Code. Notwithstanding the foregoing, no modification of an Option
shall, without the consent of the Optionee, alter or impair any rights of the
Optionee under the Option. However, a termination of the Option in which the
Optionee receives a cash payment equal to the difference between the Fair Market
Value and the exercise price for all shares subject to exercise under any
outstanding Option shall not alter or impair any rights of the Optionee.
7.15 OTHER PROVISIONS. Each Option may contain such other
terms, provisions, and conditions not inconsistent with the Plan as may be
determined by the Plan Administrator.
8. TERMINATION OR AMENDMENT OF THE PLAN. The Board may at any
time terminate or amend the Plan; provided that, without approval of the holders
of a majority of the shares of Common Stock of the Company represented and
voting at a duly held meeting at which a quorum is present (which shares voting
affirmatively also constitute a majority of the required quorum) or by the
written consent of a majority of the outstanding shares of Common Stock, there
shall be, except by operation of the provisions of Section 7.13, no increase in
the total number of shares covered by the Plan, no change in the class of
persons eligible to receive Options granted under the Plan, and no extension of
the term of the Plan beyond ten (10) years after the earlier of the date the
Plan is adopted or the date the Plan is approved by the Company's shareholders;
and provided further that, without the consent of the Optionee or as provided by
Section 7.14 hereof, no amendment may adversely affect any then outstanding
Option or any unexercised portion thereof.
9. INDEMNIFICATION. To the extent permitted by law, the
Certificate of Incorporation of the Company, the Bylaws of the Company and any
indemnity agreements between the Company and its directors or employees, the
Company shall indemnify each member of the Board and of the Plan Administrator,
and any other employee of the Company
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with duties under the Plan, against expenses (including any amount paid in
settlement) reasonably incurred by him in connection with any claims against him
by reason of his conduct in the performance of his duties under the Plan.
10. EFFECTIVE DATE AND TERM OF PLAN. This Plan shall become
effective (the "Effective Date") on June 29, 1998. No options granted under the
Plan will be effective unless the Plan is approved by shareholders of the
Company within 12 months of the date of adoption. Unless sooner terminated by
the Board in its sole discretion, the Plan will expire on June 28, 2008.
Dated: June 29, 1998
FUTURELINK DISTRIBUTION CORP.
By:____________________________________________
Cameron Chell, President and Chief Executive
Officer
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[INSERT]
TERMS OF CLASS K EXCHANGEABLE SHARES
Pursuant to the Share Purchase Agreement dated August 4, 1998,
Riverview Management Company had issued Class K non-voting redeemable
exchangeable shares as follows:
Donald A. Bialik - $1,418,046
Olivia Bialik - $2,881,916
A subsidiary of FutureLink Distribution Corp. will have the right
to exercise a call pursuant to which one share of FutureLink Distribution Corp.,
would be exchangeable for each share of Class K non-voting redeemable preferred
of Riverview Management Corporation.
Pursuant to a "Support Agreement" among the parties FutureLink
USA is restricted, prior to conversion of the Class K exchangeable shares from
taking various action with respect to its common shares. The restrictions
imposed under the Support Agreement would require shareholder consent of
majority of the shareholders of FutureLink Distribution Corp.