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EXHIBIT 10.24
STOCK OPTION PLAN
(Attachment to Explanatory Memorandum for Resolutions
included in Notice of Special Meeting)
1. Adoption and Purpose of the Plan. This stock option plan, to be known as the
"Catuity Inc. Stock Option Plan" (but referred to herein as the "Plan") has been
adopted by the board of directors (the "Board") of Catuity Inc., a Delaware
corporation (the "Company"), and is subject to the approval of its stockholders
pursuant to section 7 below. The purpose of this Plan is to advance the
interests of the Company and its stockholders by enabling the Company to attract
and retain qualified directors, officers, employees, independent contractors,
consultants and advisers by providing them with an opportunity for investment in
the Company. The options that may be granted hereunder ("Options") represent the
right by the grantee thereof (each, including any permitted transferee, an
"Optionee") to acquire shares of the Company's common stock ("Shares" which if
acquired pursuant to the exercise of an Option will be referred to as "Option
Shares") subject to the terms and conditions of this Plan and a written
agreement between the Company and the Optionee to evidence each such Option (an
"Option Agreement").
2. Certain Definitions. The defined terms set forth in Exhibit A attached hereto
and incorporated herein (together with other capitalized terms defined elsewhere
in this Plan) will govern the interpretation of this Plan.
3. Eligibility. The Company may grant Options under this Plan only to (i)
persons who, at the time of such grant, are directors, officers, and employees
of the Company and/or any of its Subsidiaries, and (ii) persons who, and
entities which, at the time of such grant, are independent contractors,
consultants or advisers of the Company and/or any of its Subsidiaries
(collectively, "Eligible Participants"). No person will be an Eligible
Participant following his or her Termination of Eligibility Status and no Option
may be granted to any person other than an Eligible Participant. There is no
limitation on the number of Options that may be granted to an Eligible
Participant.
4. Option Pool; Shares Reserved for Options. In no event will the Company issue,
in the aggregate, more than Seven Hundred and Fifty Thousand (750,000) Shares
(the "Option Pool") pursuant to the exercise of all Options granted under this
Plan, exclusive of those Option Shares that may be reacquired by the Company by
re-purchase or otherwise; provided that in order to comply with the requirements
of Section 260.140.45 of Title 10 of the California Code of Regulations (the
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total number of Shares provided for under any stock bonus or similar plan of the
Company in the aggregate exceed 30% of the total number of then issued and
outstanding Shares of the Company (or such higher percentage as has been
approved by the holders of at least two-thirds of the outstanding Shares of the
Company (including all securities convertible into Shares) entitled to vote), as
calculated in accordance with the conditions and exclusions of the 30% Rule. At
all times while Options granted under this Plan are outstanding, the Company
will reserve for issuance for the purposes hereof, a sufficient number of
authorized and unissued Shares to fully satisfy the Company's obligations under
all such outstanding Options. 5. Administration. This Plan will be administered
and interpreted by the Board, or by a committee consisting of two or more
members of the Board, appointed by the Board for such purpose (the Board, or
such committee, referred to herein as the "Administrator"). Subject to the
express terms and conditions hereof, the Administrator is authorized to
prescribe, amend and rescind rules and regulations relating to this Plan, and to
make all other determinations necessary or advisable for its administration and
interpretation. Specifically, the Administrator will have full and final
authority in its discretion, subject to the specific limitations on that
discretion as are set forth herein and in the Certificate of Incorporation and
By-laws of the Company, at any time:
(a) to select and approve the Eligible Participants to whom Options
will be granted from time to time hereunder;
(b) to determine the Fair Market Value of the Shares as of the Grant
Date for any Option that is granted hereunder;
(c) with respect to each Option it decides to grant, to determine the
terms and conditions of that Option, to be set forth in the Option
Agreement evidencing that Option (the form of which also being subject to
approval by the Administrator), which may vary from the "default" terms and
conditions set forth in section 6 below, except to the extent otherwise
provided in this Plan, including, without limitation, as follows:
(i) the total number of Option Shares that may be acquired by the
Optionee pursuant to the Option;
(ii) if the Option satisfies the conditions under Section 422(b)
of the Code, whether the Option will be treated as an ISO;
(iii) the per share purchase price to be paid to the Company by
the Optionee to acquire the Option Shares issuable upon exercise of
the Option (the "Option Price"), provided that the Option Price will
not be less than 85% of the Fair Market Value of the Shares as of the
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Grant Date, unless the Optionee is a 10% stockholder, in which case
the Option Price will not be less than 110% of such Fair Market Value;
(iv) the maximum period or term during which the Option will be
exercisable (the "Option Term"), provided that in no event may the
Option Term be longer than 10 years from the Grant Date;
(v) the maximum period following any Termination of Eligibility
Status, whether resulting from an Optionee's death, disability or any
other reason, during which period (the "Grace Period") the Option will
be exercisable, subject to Vesting and to the expiration of the Option
Term, provided that in no event may the Administrator designate a
Grace Period that is shorter than six months after such Termination of
Eligibility Status by reason of the Optionee's death or disability, or
30 days after such Termination of Eligibility for any other reason,
except in the event of a Termination for Cause, in which case no Grace
Period will be required (i.e., the Option will terminate immediately);
(vi) whether to accept a promissory note or other form of legal
consideration in addition to cash as payment for all or a portion of
the Option Price and/or Tax Withholding Liability to be paid by the
Optionee upon the exercise of an Option granted hereunder;
(vii) the conditions (e.g., the passage of time or the occurrence
of events), if any, that must be satisfied prior to the vesting of the
right to exercise all or specified portions of an Option (such
portions being described as the number of Option Shares, or the
percentage of the total number of Option Shares that may be acquired
by the Optionee pursuant to the Option; the vested portion being
referred to as a "Vested Option" and the unvested portion being
referred to as an "Unvested Option"), provided that no such conditions
(except an Optionee's Termination of Eligibility Status, after which
no Unvested Option will become a Vested Option) may be imposed which
prevents an Optionee who is an employee, but who is neither an officer
or director, of the Company or any of its Subsidiaries, from
purchasing at least 20% of the Option Shares initially subject to the
Option as of the first anniversary of the Grant Date, and as of each
anniversary thereafter, such that by the fifth anniversary of the
Grant Date (assuming no such Termination of Eligibility Status) the
entire Option would be deemed a Vested Option; and
(viii) in addition, or as an alternative, to imposing conditions
on the right to exercise an Option as provided in section 5(c)(vii)
above, whether any portion of the Option Shares acquired by an
Optionee
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upon exercise of an Option will be subject to repurchase by the
Company or its assigns at the Option Price paid for such Shares or at
some other price that may be less than the Fair Market Value of such
Shares (such Shares, if subject to repurchase at less than Fair Market
Value, being referred to as "Unvested Shares") following a Termination
of Eligibility Status or other designated event, and the conditions
(e.g., the passage of time or the occurrence of events), if any, that
must be satisfied for such Shares to be no longer subject to such
right of repurchase at less than Fair Market Value (such Shares being
referred to as "Vested Shares"); provided that no such conditions
(except an Optionee's Termination of Eligibility Status, after which
no Unvested Shares will become Vested Shares) may be imposed which
prevent Unvested Shares held by an employee, who is neither an officer
or director, of the Company and/or any of its Subsidiaries, from
becoming Vested Shares at the rate of at least twenty percent (20%)
per year following the Grant Date, such that by the fifth anniversary
of the Grant Date (assuming no earlier Termination of Eligibility
Status) all of the Shares would be deemed Vested Shares; and
(d) to delegate all or a portion of the Administrator's authority
under sections 5(a), (b) and (c) above to one or more members of the Board
who also are executive officers of the Company, and subject to such
restrictions and limitations as the Administrator may decide to impose on
such delegation.
6. Default Terms and Conditions of Option Agreements. Unless otherwise expressly
provided in an Option Agreement based on the Administrator's determination
pursuant to section 5(c) above, the following terms and conditions will be
deemed to apply to each Option as if expressly set forth in the Option
Agreement:
6.1 ISO. No Option will be treated as an ISO unless treatment as an ISO is
expressly provided for in an Option Agreement and such Option satisfies the
conditions of Section 422(b) of the Code.
6.2 Option Term. The Option Term will be for a period of 10 years beginning
on the Grant Date, except that in the case of an ISO granted to a 10%
stockholder, the Option Term will be for a period of 5 years beginning on the
Grant Date.
6.3 Grace Periods. Following a Termination of Eligibility Status:
(a) the Grace Period will be thirty (30) days, unless the Termination
of Eligibility Status is a result of a Termination for Cause or the death
or disability of the Optionee;
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(b) the Grace Period will be six months if the Termination of
Eligibility Status is a result of the death or disability of the Optionee;
and
(c) the Option will terminate, and there will be no Grace Period,
effective immediately as of the date and time of a Termination for Cause of
the Optionee, regardless of whether the Option is Vested or Unvested.
6.4 Vesting. The Option initially will be deemed an entirely Unvested
Option, but portions of the Option will become a Vested Option on the
following schedule:
(a) twenty percent (20%) will become a Vested Option as of the first
anniversary of the "Vesting Start Date" specified in the Option Agreement
(which may be earlier but may not be later than the Grant Date specified
therein); and
(b) ten percent (10%) of the Option will become a Vested Option on the
last day of each six-month period thereafter, such that the Option will
become a fully Vested Option as of the fifth anniversary of the Vesting
Start Date;
provided that the Optionee does not suffer a Termination of Eligibility Status
prior to each such vesting date and provided further that additional vesting
will be suspended during any period while the Optionee is on a leave of absence
from the Company or its Subsidiaries, as determined by the Administrator.
6.5 Exercise of the Option; Issuance of Share Certificate.
(a) The portion of the Option that is a Vested Option may be exercised
by giving written notice thereof to the Company, on such form as may be
specified by the Administrator, but in any event stating: the Optionee's
intention to exercise the Option; the date of exercise; the number of full
Option Shares to be purchased (which number will be no less than 100
Shares, without regard to adjustments to the number of Shares subject to
the Option pursuant to section 8 below, or, if less, all of the remaining
Shares subject to the Option); the amount and form of payment of the Option
Price; and such assurances of the Optionee's investment intent as the
Company may require to ensure that the transaction complies in all respects
with the requirements of the 1933 Act and other applicable securities laws.
The notice of exercise will be signed by the person or persons exercising
the Option. In the event that the Option is being exercised by the
representative of the Optionee, the notice will be accompanied by proof
satisfactory to the Company of the representative's right to exercise the
Option. The notice of exercise will be accompanied by full payment of the
Option Price for the number of Option Shares to be purchased, in United
States dollars, in cash, by check made payable to the
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Company, or by delivery of such other form of payment (if any) as approved
by the Administrator in the particular case. Payment also may be made by
delivering a copy of irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds sufficient to
pay the Option Price and, if required, the amount of any Tax Withholding
Liability.
(b) To the extent required by applicable federal, state, local or
foreign law, and as a condition to the Company's obligation to issue any
Shares upon the exercise of the Option in full or in part, the Optionee
will make arrangements satisfactory to the Company for the payment of any
applicable Tax Withholding Liability that may arise by reason of or in
connection with such exercise. Such arrangements may include, in the
Company's sole discretion, that the Optionee tender to the Company the
amount of such Tax Withholding Liability, in cash, by check made payable to
the Company, or in the form of such other payment as may be approved by the
Administrator, in its discretion pursuant to section 5(c)(vi) above.
(c) After receiving a proper notice of exercise and payment of the
applicable Option Price and Tax Withholding Liability, the Company will
cause to be issued a certificate or certificates for the Option Shares as
to which the Option has been exercised, registered in the name of the
person rightfully exercising the Option and the Company will cause such
certificate or certificates to be delivered to such person.
6.6 Compliance with Law. Notwithstanding any other provision of this Plan,
Options may be granted pursuant to this Plan, and Option Shares may be issued
pursuant to the exercise thereof by an Optionee, only after and on the
condition that there has been compliance with all applicable federal and state
securities laws. The Company will not be required to list, register or qualify
any Option Shares upon any securities exchange, under any applicable state,
federal or foreign law or regulation, or with the Securities and Exchange
Commission or any state agency, or secure the consent or approval of any
governmental regulatory authority, except that if at any time the Board
determines, in its discretion, that such listing, registration or
qualification of the Option Shares, or any such consent or approval, is
necessary or desirable as a condition of or in connection with the exercise of
an Option and the purchase of Option Shares thereunder, that Option may not be
exercised, in whole or in part, unless and until such listing, registration,
qualification, consent or approval is effected or obtained free of any
conditions that are not acceptable to the Board, in its discretion. However,
the Company will seek to register or qualify with, or as may be provided by
applicable local law, file for and secure an exemption from such registration
or qualification requirements from, the applicable securities administrator
and other officials of each jurisdiction in which an Eligible Participant
would be granted an Option hereunder prior to such grant.
6.7 Restrictions on Transfer.
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(a) Options Nontransferable. No Option will be transferable by an
Optionee otherwise than by will or the laws of descent and distribution.
During the lifetime of a natural person who is granted an Option under this
Plan, the Option will be exercisable only by him or her. Notwithstanding
anything else in this Plan to the contrary, no Option Agreement will
contain any provision which is contrary to, or which modifies, the
provisions of this section 6.7(a).
(b) Prohibited Transfers. Prior to the Initial Registration, no Holder
of any Option Shares may Transfer such Shares, or any interest therein,
other than in full compliance with all applicable securities laws and any
applicable restrictions on Transfer provided in the Company's Certificate
of Incorporation and/or Bylaws, which will be deemed incorporated by
reference into this Plan. All Transfers of Option Shares not complying with
the specific limitations and conditions set forth in this section 6.7 are
expressly prohibited. Any prohibited Transfer is void and of no effect, and
no purported transferee in connection therewith will be recognized as a
Holder of Option Shares for any purpose whatsoever. Should such a Transfer
purport to occur, the Company may refuse to carry out the Transfer on its
books, attempt to set aside the Transfer, enforce any undertakings or
rights under this Plan, or exercise any other legal or equitable remedy.
(c) Conditions to Transfer. It will be a condition to any Transfer of
any Option Shares that:
(i) the transferee of the Shares will execute such documents as
the Company may reasonably require to ensure that the Company's rights
under this Plan, and any applicable Option Agreement, are adequately
protected with respect to such Shares, including, without limitation,
the transferee's agreement to be bound by all of the terms and
conditions of this Plan and such Agreement, as if he or she were the
original Holder of such Shares; and
(ii) the Company is satisfied that such Transfer complies in all
respects with the requirements imposed by applicable state and federal
securities laws and regulations.
(d) Market Standoff. If in connection with any public offering of
securities of the Company (or any Successor Entity), the underwriter or
underwriters managing such offering so requests, then each Optionee and
each Holder of Option Shares will agree to not sell or otherwise Transfer
any such Shares (other than Shares included in such underwriting) without
the prior written consent of such underwriter, for such period of time as
may be requested by the underwriter commencing on the effective date of the
registration statement filed with the Securities and Exchange Commission
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in connection with such offering but in no event longer than the period of
time that the officers and directors of the Company are generally
prohibited from Transferring their Shares in connection with such public
offering.
6.8 Change of Control Transactions. In the event of a Change of Control
Transaction, the Company shall endeavor to cause the Successor Entity (or its
parent or its Subsidiary) in such transaction either to assume all of the
Options which have been granted hereunder and which are outstanding as of the
consummation of such transaction ("Change of Control Closing"), or to issue
(or cause to be issued) in substitution thereof comparable options of such
Successor Entity (or of its parent or its Subsidiary). If the Successor Entity
(or its parent or its Subsidiary) is unwilling to either assume such Options
or grant comparable options in substitution for such Options, on terms that
are acceptable to the Company as determined by the Board in the exercise of
its discretion, then the Board may cancel all outstanding Vested Options, and
terminate this Plan, effective as of the Change of Control Closing, provided
that (i) it will notify all Optionees of the proposed Change of Control
Transaction a reasonable amount of time prior to the Change of Control Closing
so that each Optionee will be given the opportunity to exercise all Vested
Options prior to the Change of Control Closing and (ii) any and all Unvested
Options will survive the termination of the Plan without impairment. For
purposes of this section 6.8, the term "Change of Control Transaction" means a
Business Combination in which less than (50%) of the outstanding voting
securities of the Successor Entity immediately following the Closing of the
Business Combination are beneficially held by those persons and entities in
the same proportion as such persons and entities beneficially held the voting
securities of the Company immediately prior to such transaction; the term
"Business Combination" means a transaction or series of transactions
consummated within any period of 90 days resulting in (A) the sale of all or
substantially all of the assets of the Company, (B) a merger or consolidation
or other reorganization of which the Company or a Subsidiary is a merging
party, or (C) the sale or other change of beneficial ownership of at least
Thirty Three and One Third Percent of the outstanding voting securities of the
Company.
6.9 Additional Restrictions on Transfer: Investment Intent. By accepting an
Option and/or Option Shares under this Plan, the Optionee will be deemed to
represent, warrant and agree that, unless a registration statement is in
effect with respect to the offer and sale of Option Shares: (i) neither the
Option nor any such Shares will be freely tradeable and must be held
indefinitely unless such Option and such Shares are either registered under
the 1933 Act or an exemption from such registration is available; (ii) the
Company is under no obligation to register the Option or any such Shares;
(iii) upon exercise of the Option, the Optionee will purchase the Option
Shares for his or her own account and not with a view to distribution within
the meaning of the 1933 Act, other than as may be effected in compliance with
the 1933 Act and the rules and regulations promulgated thereunder; (iv) no one
else will have any beneficial interest in the
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Option Shares; (v) the Optionee has no present intention of disposing of the
Option Shares at any particular time; and (vi) neither the Option nor the
Shares have been qualified under the securities laws of any state and may only
be offered and sold pursuant to an exception from qualification under
applicable state securities laws.
6.9 Stock Certificates: Legends. Certificates representing Option Shares
will bear all legends required by law and necessary or appropriate in the
Administrator's discretion to effectuate the provisions of this Plan and of
the applicable Option Agreement. The Company may place a "stop transfer" order
against Option Shares until full compliance with all restrictions and
conditions set forth in this Plan, in any applicable Option Agreement and in
the legends referred to in this section 6.10.
6.10 Notices. Any notice to be given to the Company under the terms of an
Option Agreement will be addressed to the Company at its principal executive
office, Attention: Secretary, or at such other address as the Company may
designate in writing. Any notice to be given to an Optionee will be addressed
to him or her at the address provided to the Company by the Optionee. Any such
notice will be deemed to have been duly given if and when enclosed in a
properly sealed envelope, addressed as aforesaid, deposited, postage prepaid,
in a post office or branch post office regularly maintained by the local
postal authority.
6.11 Other Provisions. Each Option Agreement may contain such other terms,
provisions and conditions, including restrictions on the Transfer of Option
Shares, and rights of the Company to repurchase such Shares, not inconsistent
with this Plan and applicable law, as may be determined by the Administrator
in its sole discretion.
6.12 Specific Performance. Under those circumstances in which the Company
chooses to timely exercise its rights to repurchase Option Shares as provided
herein or in any Option Agreement, the Company will be entitled to receive
such Shares in specie in order to have the same available for future issuance
without dilution of the holdings of other stockholders of the Company. By
accepting Option Shares, the Holder thereof therefore acknowledges and agrees
that money damages will be inadequate to compensate the Company and its
stockholders if such a repurchase is not completed as contemplated hereunder
and that the Company will, in such case, be entitled to a decree of specific
performance of the terms hereof or to an injunction restraining such holder
(or such Holder's personal representative) from violating this Plan or Option
Agreement, in addition to any other remedies that may be available to the
Company at law or in equity.
7. Term of the Plan. This Plan will become effective on the date of its adoption
by the Board, provided that this Plan is approved by the stockholders of the
Company (excluding Option Shares issued by the Company pursuant to the
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exercise of Options granted under this Plan) within 12 months before or after
that date. If this Plan is not so approved by the stockholders of the Company
within that 12-month period of time, any Options granted under this Plan will be
rescinded and will be void. This Plan will expire on the tenth (10th)
anniversary of the date of its adoption by the Board or its approval by the
stockholders of the Company, whichever is earlier, unless it is terminated
earlier pursuant to section 11 of this Plan, after which no more Options may be
granted under this Plan, although all outstanding Options granted prior to such
expiration or termination will remain subject to the provisions of this Plan,
and no such expiration or termination of this Plan will result in the expiration
or termination of any such Option prior to the expiration or early termination
of the applicable Option Term.
8. Adjustments Upon Changes in Stock. In the event of any change in the
outstanding Shares of the Company as a result of a stock split, reverse stock
split, stock bonus or distribution, recapitalization, combination or
reclassification, appropriate proportionate adjustments as permitted by any
listing rules applying to the Company, will be made in: (i) the aggregate number
of Shares that are reserved for issuance in the Option Pool pursuant to section
4 above, under outstanding Options or future Options granted hereunder; (ii) the
Option Price and the number of Option Shares that may be acquired under each
outstanding Option granted hereunder; and (iii) other rights and matters
determined on a per share basis under this Plan or any Option Agreement
evidencing an outstanding Option granted hereunder. Any such adjustments will be
made only by the Board, and when so made will be effective, conclusive and
binding for all purposes with respect to this Plan and all Options then
outstanding. No such adjustments will be required by reason of the issuance or
sale by the Company for cash or other consideration of additional Shares or
securities convertible into or exchangeable for Shares. The rights of all
Optionee's will be changed to the extent necessary to comply with any listing
rules applying to the re-organisation of capital at the time of the
re-organisation.
9. Modification, Extension and Renewal of Options. Subject to the terms and
conditions and within the limitations of this Plan, the Administrator may
modify, extend or renew outstanding Options granted under this Plan, or accept
the surrender of outstanding Options (to the extent not theretofore exercised)
and authorize the granting of new Options in substitution therefor (to the
extent not theretofore exercised). Notwithstanding the foregoing, no
modification of any Option will, without the consent of the Optionee, reduce the
number of Shares covered by the Option, defer vesting of the Option, or convert
a Vested Option to an Unvested Option.
10. Governing Law; Venue. The internal laws of the State of Delaware
(irrespective of its choice of law principles) will govern the validity of this
Plan, the construction of its terms and the interpretation of the rights and
duties of the parties hereunder and under any Option Agreement. Any party may
seek to
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enforce its rights under this Plan or any Option Agreement entered into
under this Plan in any court of competent jurisdiction located within the
judicial district in which the Company then has a principal place of business.
11. Amendment and Discontinuance. The Board may amend, suspend or discontinue
this Plan at any time or from time to time; provided that no action of the Board
will, without the approval of the stockholders of the Company, materially
increase (other than by reason of an adjustment pursuant to section 8 hereof)
the maximum aggregate number of Option Shares in the Option Pool, materially
increase the benefits accruing to Eligible Participants, or materially modify
the category of, or eligibility requirements for persons who are Eligible
Participants. However, except as provided in section 6.8, no such action may
alter or impair any Option previously granted under this Plan without the
consent of the Optionee, nor may the number of Option Shares in the Option Pool
be reduced to a number that is less than the aggregate number of Option Shares
(i) that may be issued pursuant to the exercise of all outstanding and unexpired
Options granted hereunder, and (ii) that have been issued and are outstanding
pursuant to the exercise of Options granted hereunder.
12. Information Provided by Company. Prior to the date on which the Company is
required to file its annual financial statements with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, the Company
annually will provide the Company's financial statements (which statements need
not be audited) to each Optionee who is an employee of the Company or any of its
Subsidiaries, and each Optionee will, by virtue of entering into an Option
Agreement, be deemed to have agreed (and to cause any investment advisers to
whom the Optionee proposes to make such information available to agree) to keep
such information confidential and not to use, disclose or copy such information
for any purpose whatsoever other than determining whether to exercise an Option.
The Company deems such financial statements to be the valuable trade secrets of
the Company, and in the event of any wrongful use, disclosure or other breach of
the obligation to maintain the confidentiality of such financial information,
the Company may seek to enforce all of its available legal and equitable rights
and remedies, and may notify local law enforcement officials that a criminal
misappropriation of the Company's trade secrets has taken place.
13. No Stockholder Rights. No rights or privileges of a stockholder in the
Company are conferred by reason of the granting of an Option. No Optionee will
become a stockholder in the Company with respect to any Option Shares unless and
until the Option has been properly exercised and the Option Price fully paid as
to the portion of the Option exercised. No Optionee will become entitled to
participate in any new issue of securities, other than securities issued under
section 8 of this Plan, unless and until the Option has been properly exercised
and the Option Price fully paid as to the portion of the Option exercised.
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14. Copies of Plan. A copy of this Plan will be delivered to each Optionee at
or before the time he, she or it executes an Option Agreement.
Date Plan Adopted by Board of Directors: _____________________
Date Plan Approved by the Stockholders: _____________________
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CATUITY INC.
STOCK OPTION PLAN
Exhibit A
Definitions
1. "10% stockholder" means a person who owns, either directly or indirectly by
virtue of the ownership attribution provisions set forth in Section 424(d) of
the Code at the time he or she is granted an Option, stock possessing more than
10% of the total combined voting power or value of all classes of stock of the
Company and/or of its Subsidiaries.
2. "1933 Act" means the Securities Act of 1933, as amended.
3. "Administrator" has the meaning set forth in section 5 of the Plan.
4. "Board" has the meaning set forth in section 1 of the Plan.
5. "Business Combination" has the meaning set forth in section 6.8 of the Plan.
6. "Change of Control Closing" has the meaning set forth in section 6.8 of the
Plan.
7. "Change of Control Transaction" has the meaning set forth in section 6.8 of
the Plan.
8. "Code" means the Internal Revenue Code of 1986, as amended (references herein
to Sections of the Code are intended to refer to Sections of the Code as enacted
at the time of the Plan's adoption by the Board and as subsequently amended, or
to any substantially similar successor provisions of the Code resulting from
recodification, renumbering or otherwise).
9. "Company" has the meaning set forth in section 1 of the Plan.
10. "Disability" means any physical or mental disability which results in a
Termination of Eligibility Status under applicable law, except that for purposes
of section 6.1(c) of the Plan, the term "disability" means permanent and total
disability within the meaning of Section 22(e)(3) of the Code.
11. "Donative Transfer" with respect to Option Shares means any voluntary
Transfer by a transferor other than for value or the payment of consideration to
the transferor.
12. "Eligible Participants" has the meaning set forth in section 3 of the Plan.
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20. "Option Agreement" has the meaning set forth in section 1 of the Plan.
21. "Option Pool" has the meaning set forth in section 4 of the Plan.
22. "Option Price" has the meaning set forth in section 5(c)(iii) of the Plan.
23. "Option Shares" has the meaning set forth in section 1 of the Plan, provided
that for purposes of section 6, the term "Option Shares" includes all Shares
issued by the Company to a Holder (or his, her or its predecessor) by reason of
such holdings, including any securities which may be acquired as a result of a
stock split, stock dividend, and other distributions of Shares in the Company
made upon, or in exchange for, other securities of the Company.
24. "Option Term" has the meaning set forth in section 5(c)(iv) of the Plan.
25. "Optionee" has the meaning set forth in section 1 of the Plan.
26. "Options" has the meaning set forth in section 1 of the Plan.
27. "Plan" has the meaning set forth in section 1 of the Plan.
28. "Shares" has the meaning set forth in section 1 of the Plan.
29. "Subsidiary" has the same meaning as "subsidiary corporation" as defined in
Section 424(f) of the Code.
30. "Successor Entity" means a corporation or other entity that acquires all or
substantially all of the assets of the Company, or which is the surviving or
parent entity resulting from a Business Combination, as that term is defined in
section 6.8 of the Plan.
31. "Tax Withholding Liability" in connection with the exercise of any Option
means all federal and state income taxes, social security tax, and any other
taxes applicable to the compensation income arising from the transaction
required by applicable law to be withheld by the Company.
32. "Termination of Eligibility Status" means (i) in the case of any employee of
the Company and/or any of its Subsidiaries, a termination of his or her
employment, whether by the employee or employer, and whether voluntary or
involuntary, including without limitation as a result of the death or disability
of the employee, (ii) in the case of any advisor, consultant, or independent
contractor of the Company and/or any of its Subsidiaries, the termination of the
services relationship pursuant to any contract between the parties or otherwise
under applicable law, and (iii) in the case of any director of the Company
and/or any of its Subsidiaries, the death of or resignation by the director or
his or her removal from the board in the manner provided by the articles of
incorporation, bylaws or
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other organic instruments of the Company or Subsidiary or otherwise in
accordance with applicable law.
33. "Termination for Cause" means (i) in the case of an Optionee who is an
employee of the Company and/or any of its Subsidiaries, a termination by the
employer of the Optionee's employment for "cause" as defined by applicable law,
by any contract of employment or the Option Agreement, or if not defined
therein, pursuant to the "For Cause Standard" set forth below, (ii) in the case
of an Optionee who is or which is an advisor, consultant or independent
contractor to the Company and/or any of its Subsidiaries, a termination of the
services relationship by the hiring party for "cause" or breach of contract, as
defined by applicable law, by any contract between the parties or the Option
Agreement, or if not defined therein, pursuant to the "For Cause Standard" set
forth below, and (iii) in the case of an Optionee who is a director of the
Company and/or any of its Subsidiaries, removal of him or her from the board of
directors by action of the stockholders or, if permitted by applicable law and
the articles, bylaws or other organic documents of the Company or the
Subsidiary, as the case may be, or pursuant to applicable law, by the other
directors), in connection with the good faith determination of the board of
directors (or of the Company's or Subsidiary's stockholders if so required, but
in either case excluding the vote of the subject individual if he or she is a
director or a stockholder) that the Optionee has engaged in any acts which
breach any fiduciary duty to the Company, any of its Subsidiaries or their
stockholders, or in any acts involving dishonesty or moral turpitude or in any
acts that materially and adversely affect the business, affairs or reputation of
the Company or any of its Subsidiaries (the "For Cause Standard").
34. "Transfer" with respect to Option Shares, includes, without limitation, a
voluntary or involuntary sale, assignment, transfer, conveyance, pledge,
hypothecation, encumbrance, disposal, loan, gift, attachment or levy of those
Shares, including any Involuntary Transfer, Donative Transfer or transfer by
will or under the laws of descent and distribution.
35. "Unvested Option" has the meaning set forth in section 5(c)(vii) of the
Plan.
36. "Unvested Shares" has the meaning set forth in section 5(c)(viii) of the
Plan.
37. "Vested Option" has the meaning set forth in section 5(c)(vii) of the Plan.
38. "Vested Shares" has the meaning set forth in section 5(c)(viii) of the Plan.
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