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Exhibit 10.1(a)
QUALITY CARE SOLUTIONS, INC.
A NEVADA CORPORATION
1996 STOCK OPTION PLAN
(AS AMENDED AND RESTATED THROUGH JANUARY 13, 2000)
1. Purposes of the Plan. The purposes of this Plan are to attract and
retain the best available personnel for positions of substantial responsibility
and to serve as Directors of the Company, to provide additional incentive to
Employees, Directors and Consultants and to promote the success of the business
of Quality Care Solutions, Inc., a Nevada corporation (the "Company"). Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant. Stock Purchase
Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
a. "Administrator" means the Board or any of its Committees as
shall be administering the Plan in accordance with Section 4 hereof.
b. "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any other country or jurisdiction where Options or Stock Purchase Rights are
granted under the Plan.
c. "Board" means the Board of Directors of the Company.
d. "Code" means the Internal Revenue Code of 1986, as amended.
e. "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 hereof.
f. "Common Stock" means the Common Stock of the Company.
g. "Company" means Quality Care Solution, Inc., a Nevada
Corporation.
h. "Consultant" means any person who is engaged by the Company
or any Parent or Subsidiary to render consulting or advisory services to such
entity.
i. "Director" means a member of the Board of Directors of the
Company.
j. "Disability" means total and permanent disability as
defined in Company policy then in effect, provided, however, that in the case of
an Optionee who has entered into an Employment Agreement with the Company, any
definition of "Disability" in such agreement shall govern and be incorporated
herein by this reference.
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k. "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
l. "Employment Agreement" shall mean an agreement between the
Optionee and the Company which is valid and in force on the date of any action
or determination required hereunder.
m. "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
n. "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of
The Nasdaq Stock Market, its Fair Market Value shall be the closing
sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system for the last market
trading day prior to the time of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its
Fair Market Value shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the
day of determination; or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Administrator.
o. "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
p. "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
q. "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
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r. "Option" means a stock option granted pursuant to the Plan.
s. "Option Agreement" means a written or electronic agreement
between the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
t. "Option Exchange Program" means a program whereby
outstanding Options are exchanged for Options with a lower exercise price.
u. "Optioned Stock" means the Common Stock subject to an
Option or a Stock Purchase Right.
v. "Optionee" means the holder of an outstanding Option or
Stock Purchase Right granted under the Plan.
w. "Outside Director" means a director of the Company who is
not an Employee.
x. "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
y. "Plan" means this 1996 Amended and Restated Stock Option
Plan.
z. "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 11 below.
aa. "Section 16(b)" means Section 16(b) of the Securities
Exchange Act of 1934, as amended.
bb. "Service Provider" means an Employee, Director or
Consultant.
cc. "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 below.
dd. "Stockholders Agreement" shall have the meaning set forth
in Section 20 of this Plan.
ee. "Stock Purchase Right" means a right to purchase Common
Stock pursuant to Section 11 below.
ff. "Subsidiary" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12
of the Plan, the maximum aggregate number of Shares which may be subject to
option and sold under the Plan is 4,500,000 Shares. The Shares may be authorized
but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right granted pursuant to the
Plan expires or
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becomes unexercisable without having been exercised in full, or is surrendered
pursuant to an Option Exchange Program, the unpurchased Shares which were
subject thereto shall become available for future grant or sale under the Plan
(unless the Plan has terminated). However, Shares that have actually been issued
under the Plan, upon exercise of either an Option or Stock Purchase Right, shall
not be returned to the Plan and shall not become available for future
distribution under the Plan, except that if Shares of Restricted Stock are
repurchased by the Company at their original purchase price, such Shares shall
become available for future grant under the Plan.
4. Administration of the Plan.
a. Administrator. The Plan shall be administered by the Board,
which shall be the Administrator. The Board may appoint a Committee with the
power to make recommendations to the Board for its approval with respect to any
matter delegated by the Board to the Committee. The initial Administrator of the
Plan shall be the Compensation Committee of the Board of Directors.
b. Powers of the Administrator. Subject to the provisions of
the Plan, the Administrator shall have the authority, in its discretion to:
(i) determine the Fair Market Value;
(ii) select the Service Providers to whom Options and
Stock Purchase Rights may from time to time be granted hereunder;
(iii) determine the number of Shares to be covered by
each such award granted hereunder;
(iv) approve forms of agreement for use under the
Plan;
(v) determine the terms and conditions, of any Option
or Stock Purchase Right granted hereunder. Such terms and conditions
include, but are not limited to, the exercise price, the time or times
when Options or Stock Purchase Rights may be exercised (which may be
based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding
any Option or Stock Purchase Right or the Common Stock relating
thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
(vi) determine whether and under what circumstances
to make an offer that an Option may be settled in cash under subsection
9(e) instead of Common Stock;
(vii) reduce the exercise price of any Option to the
then current Fair Market Value if the Fair Market Value of the Common
Stock covered by such Option has declined since the date the Option was
granted;
(viii) initiate an Option Exchange Program;
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(ix) prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations
relating to sub-plans established for the purpose of qualifying for
preferred tax treatment under foreign tax laws;
(x) allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to
be issued upon exercise of an Option or Stock Purchase Right that
number of Shares having a Fair Market Value equal to the amount
required to be withheld. The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be
withheld is to be determined. All elections by Optionees to have Shares
withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable; and
(xi) construe and interpret the terms of the Plan and
awards granted pursuant to the Plan.
c. Effect of Administrator's Decision. Subject to any contrary
provisions in any Stock Option Agreement or Employment Agreement, all decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees.
5. Eligibility.
a. Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Service Providers, provided, however, that only Nonstatutory Stock
Options may be granted to Outside Directors. Incentive Stock Options may be
granted only to Employees.
b. Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
c. Neither the Plan nor any Option or Stock Purchase Right
shall confer upon any Optionee any right with respect to continuing the
Optionee's relationship as a Service Provider with the Company, nor shall it
interfere in any way with his or her right or the Company's right to terminate
such relationship at any time, with or without cause, subject to the terms and
conditions of any Employment Agreements.
d. The maximum number of Shares of Common Stock with respect
to which Options may be granted to any single Optionee during any three year
period shall be 50% of all Shares reserved for issuance pursuant to the Plan.
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e. On June 1 of each calendar year during the term of the
Plan, each person who is then serving as a Outside Director on such date, shall
be granted automatically and without any further action by the Board or the
Administrator, a Nonstatutory Stock Option to purchase 10,000 shares of the
Common Stock of the Company, provided, that:
(i) such person is serving as an Outside Director on
the date of the grant;
(ii) such person has not declined to participate in
the Plan; and
(iii) such person has attended seventy-five percent
(75%) of all Board meetings and meetings of Board committees to which
such person is assigned during that portion of the year prior to which
they served as an Outside Director.
6. Term of Plan. The Plan shall become effective upon its adoption by
the Board. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 14 of the Plan.
7. Term of Option. The term of each Option shall be stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. In the case of an Incentive Stock
Option granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant or such shorter term as may be provided
in the Option Agreement.
8. Option Exercise Price and Consideration.
a. The per share exercise price for the Shares to be issued
upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time
of grant of such Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the exercise price
shall be no less than 110% of the Fair Market Value per Share
on the date of grant.
(B) granted to any other Employee, the per
Share exercise price shall be not less than 100% of the Fair
Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
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(A) granted to a Service Provider who, at
the time of grant of such Option, owns stock representing more
than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the exercise
price shall be no less than 110% of the Fair Market Value per
Share on the date of grant.
(B) granted to any other Service Provider,
the per Share exercise price shall be no less than 85% of the
Fair Market Value per Share on the date of grant.
(C) granted to an Outside Director, the same
exercise price shall be 100% of the Fair Market Value per
share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price other than as required above
pursuant to a merger or other corporate transaction.
b. The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant). Such consideration may consist of (1)
cash, (2) check, (3) promissory note, (4) other Shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six months on the date of surrender, and (y) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which such Option shall be exercised, (5) consideration received by the
Company under a cashless exercise program implemented by the Company in
connection with the Plan, or (6) any combination of the foregoing methods of
payment. In making its determination as to the type of consideration to accept,
the Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.
c. The Administrator may provide for such additional
terms and conditions in the grant of the Option as it deems appropriate, which
terms shall be set forth in a written Option Agreement to be executed by the
Company and the Optionee.
9. Exercise of Option; Vesting; Termination.
a. Procedure for Exercise; Vesting; Rights as a
Shareholder. Any Option granted hereunder shall be exercisable according to the
terms hereof at such times and under such conditions, including vesting
conditions, as determined by the Administrator and set forth in the Option
Agreement. Unless the Administrator provides otherwise, vesting of Options
granted hereunder shall be tolled during any unpaid leave of absence. An Option
may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which
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the Option is exercised. Full payment may consist of any consideration and
method of payment authorized by the Administrator and permitted by the Option
Agreement and the Plan. Shares issued upon exercise of an Option shall be issued
in the name of the Optionee or, if requested by the Optionee, in the name of the
Optionee and his or her spouse. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights
as a shareholder shall exist with respect to the Shares, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 12 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
b. Termination of Relationship as a Service Provider. If an Optionee ceases
to be a Service Provider, such Optionee may exercise his or her Option within
such period of time as is specified in the Option Agreement (of at least ninety
(90) days) to the extent that the Option is vested on the date of termination
(but in no event later than the expiration of the term of the Option as set
forth in the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for three (3) months following
the Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.
c. Disability of Optionee. If an Optionee ceases to be a Service Provider
as a result of the Optionee's Disability, the Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement (of at
least twelve (12) months) to the extent the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the absence of a specified time
in the Option Agreement, the Option shall remain exercisable for twelve (12)
months following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
d. Death of Optionee. If an Optionee dies while a Service Provider, the
Option may be exercised within such period of time as is specified in the Option
Agreement (of at least twelve (12) months) to the extent that the Option is
vested on the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement) by the Optionee's
estate or by a person who acquires the right to exercise the Option by bequest
or inheritance. In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time
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of death, the Optionee is not vested as to the entire Option, the Shares covered
by the unvested portion of the Option shall immediately revert to the Plan. If
the Option is not so exercised within the time specified herein, the Option
shall terminate, and the Shares covered by such Option shall revert to the Plan.
e. Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made, provided,
however, that, subject to the provisions of any Employment Agreement or Option
Agreement, the Optionee shall have no obligation by virtue of this provision to
accept the offer.
10. Transferability of Options and Stock Purchase Rights. Without the
express consent of the Administrator, which may be granted or withheld in the
Administrator's sole discretion at the time of the grant or thereafter, the
Options and Stock Purchase Rights may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee. Notwithstanding the foregoing, Incentive
Stock Options shall not be transferable unless transfers are permitted under
then-applicable provisions of the Code.
11. Stock Purchase Rights.
a. Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically of the terms, conditions and
restrictions related to the offer, including the number of Shares that such
person shall be entitled to purchase, the price to be paid, and the time within
which such person must accept such offer. The offer shall be accepted by
execution of a Restricted Stock purchase agreement in the form determined by the
Administrator.
b. Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine. Except with respect to Shares purchased by
Officers, Directors and Consultants, the repurchase option shall in no case
lapse at a rate of less than 20% per year over five (5) years from the date of
purchase.
c. Other Provisions. The Restricted Stock purchase agreement
shall contain such other terms, provisions and conditions, including vesting
provisions, not inconsistent with the Plan as may be determined by the
Administrator in its sole discretion.
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d. Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have rights equivalent to those of a shareholder
and shall be a shareholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of the Company. No adjustment shall be
made for a dividend or other right for which the record date is prior to the
date the Stock Purchase Right is exercised, except as provided in Section 12 of
the Plan.
12. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.
a. Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option or Stock Purchase Right.
b. Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option or Stock Purchase Right until
fifteen (15) days prior to such transaction as to all of the Optioned Stock
covered thereby, including Shares as to which the Option or Stock Purchase Right
would not otherwise be exercisable. In addition, the Administrator may provide
that any Company repurchase option applicable to any Shares purchased upon
exercise of an Option or Stock Purchase Right shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option or Stock Purchase Right will terminate immediately prior to the
consummation of such proposed action.
c. Merger or Asset Sale. The Option Agreement with any
Optionee may, but need not, in the discretion of the Administrator, contain
provisions regarding acceleration of vesting or other arrangements in the event
of a merger of the Company, the sale of substantially all of its assets, other
business combination or change of control.
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13. Time of Granting Options and Stock Purchase Rights. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date
on which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator. Notice
of the determination shall be given to each Service Provider to whom an Option
or Stock Purchase Right is so granted within a reasonable time after the date of
such grant.
14. Amendment and Termination of the Plan.
a. Amendment and Termination. Subject to any restrictions
under Applicable Laws, the Board may at any time amend the Plan to increase or
decrease any benefits under the Plan, but not to reduce the total number of
Shares subject to grants under Section 3 hereof.
b. Shareholder Approval. The Board shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
c. Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination.
15. Conditions Upon Issuance of Shares.
a. Legal Compliance. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares shall comply with Applicable Laws and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
b. Investment Representations. As a condition to the exercise
of an Option, the Administrator may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
16. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
17. Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
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18. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under Applicable Laws.
19. Information to Optionees and Purchasers. The Company shall provide
to each Optionee and to each individual who acquires Shares pursuant to the
Plan, not less frequently than annually during the period such Optionee or
purchaser has one or more Options or Stock Purchase Rights outstanding, and, in
the case of an individual who acquires Shares pursuant to the Plan, during the
period such individual owns such Shares, copies of annual financial statements.
The Company shall not be required to provide such statements to key employees
whose duties in connection with the Company assure their access to equivalent
information.
20. History of Plan. On January 5, 1996, the Board and the shareholders
adopted this 1996 Stock Option Plan with respect to 2,000,000 shares of Common
Stock. On April 8, 1998, the Board and the shareholders amended the Plan
increasing the amount of shares under the Plan to 2,500,000. On April 22, 1999
the Board approved an amendment to the Plan increasing the shares to 4,500,000.
The shareholders approved this amendment on May 28, 1999. On January 13, 2000,
the Board approved the Plan to reflect its current status.
21. Effect on Outstanding Options. This Plan amends in its entirety the
Company's 1996 Stock Option Plan previously adopted, including all amendments
thereto made prior to the date hereof. All shares previously granted to any
Service Provider pursuant to the terms of the Company's 1996 Stock Option Plan
shall be deemed, for all purposes, to have been granted pursuant to the terms of
the Plan as amended to date, provided, however, that: (i) no provision of this
Plan shall be deemed to amend terms of any option previously granted in any
manner that would adversely affect the rights of any Service Provider or be
deemed to result in a new "measurement date" for purposes of generally accepted
accounting principles; or (ii) no Service Provider having previously entered
into a written agreement with respect to the grant of any options prior to the
adoption of this Plan as amended to date shall be required to enter into a new
agreement containing different or varying terms.
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