EHXIBIT A
1996
STOCK PLAN
1. Purpose and Eligibility. This Stock Plan (the "Plan") is intended to
advance the interests of Advanced Financial, Inc. (the "Company") and its
Related Corporations, as defined bellow by enhancing the ability of the Company
to attract and retain qualified employees, consultants, officers and directors
by creating incentives and rewards for their contributions to the success of the
Company. This Plan will provide to: (a) officers and other employees of the
Company and its Related Corporations opportunities to purchase stock in the
Company pursuant to Options granted hereunder which qualify as incentive stock
Options ("ISOs") under Section 422A(b) of the Internal Revenue Code of 1986, as
amended (the "Code"); (b) directors, officers, employees and consultants of the
Company and Related Corporations opportunities to purchase stock in the Company
pursuant to Options granted hereunder which do not qualify as ISOs ("Non-
Qualified Options") and to receive stock appreciation rights ("SARs") pursuant
to such Non-Qualified Options; (c) directors, officers, employees and
consultants of the Company and Related Corporations awards of stock in the
Company ("Awards"); (d) directors, officers, employees and consultants of the
Company and Related Corporations opportunities to make direct purchases of stock
in the Company ("Purchases"); and (e) directors of the Company and Related
Corporations who are not officers or employees of the Company or Related
Corporations with the opportunities to purchase stock in the Company pursuant to
Options granted hereunder ("Non-Discretionary Options"). ISOs, Non-Discretionary
Options, Non-Qualified Options and Stock Appreciation Rights are referred to
hereafter as "Options". Options, Awards and authorizations to make Purchases are
referred to hereafter collectively as "Stock Rights". For purposes of the Plan,
the term "Related Corporations" shall mean a corporation which is a subsidiary
corporation with respect to the Company within the meaning of Section 425 (f) of
the Code.
2. Administration of the Plan
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a. The Plan shall be administered by the board of directors of the
Company (the "Board"). The Board may, in its discretion, delegate its powers
with respect to the Plan to an employee benefit plan committee or any other
committee (the "Committee"). The Committee shall consist of not fewer than three
members. Each of the members must be a "disinterested person" as that term is
defined in Rule 16b-3 adopted pursuant to the Securities Exchange Act of 1934
(the "Exchange Act"). A majority of the members of any such Committee shall
constitute a quorum, and all determinations of the Committee shall be made by
the majority of its members present at a meeting. Any determination of the
Committee under the Plan may be made without notice or meeting of the Committee
by a writing signed by all of the Committee members. Subject to ratification of
the grant or authorization of each Stock Right by the Board (but only if so
required by applicable state law), and subject to the terms of the Plan, the
Committee shall have the authority to (i) determine the employees of the Company
and Related Corporations (from among the class of employees eligible under
Paragraph 3 to receive ISOs) to whom ISOs may be granted, and to determine (from
among the class of individuals and entities eligible under Paragraph 3 to
receive Non-Qualified Options and Awards and to make Purchases) to whom
Non-Qualified Options, Awards and authorizations to make Purchases may be
granted; (ii) determine the time or times at which Options or Awards may be
granted or Purchases made; (iii) determine the exercise price of shares subject
to each Option which price for any ISO shall not be less than the minimum price
specified in Paragraph 7, and the purchase price of shares subject to each
Purchase; (iv) determine whether each Option granted shall be an ISO or a
Non-Qualified Option; (v) determine (subject to paragraph 9) the time or times
when each Option, except for non-discretionary Options, shall become
exercisable, the duration of the exercise period and when each Option shall
vest; (vi) determine whether restrictions such as repurchase options are to be
imposed on shares subject to Options, Awards and Purchases and the nature of
such restrictions, if any, and (vii) interpret the Plan and promulgate and
rescind the rules and regulations relating to it. The interpretation and
construction by the Committee of any provisions of the Plan or of any Stock
Right granted under it shall be final, binding and conclusive unless otherwise
determined by the Board. The Committee may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem best.
b. The Committee may select one of its members as its chairman and shall
hold meetings at such time and places as it may determine. All references in the
Plan to the Committee shall mean the Board if no Committee has been appointed.
From time to time the Board may increase the size of the Committee and appoint
additional member thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies however caused or remove
all members of the Committee and thereafter directly administer the Plan.
c. Stock rights may be granted to members of the Board, whether such
grants are in their capacity as directors, officers, or consultants, but no
discretionary Stock Rights shall be granted to any person who is, at the time of
the proposed grant, a member of the Board unless such grant has been approved as
provided in paragraph 2d. All grants of Stock Rights to members of the Board
shall in all other respects be made in accordance with the provisions of this
Plan applicable to other eligible persons. Members of the Board who are either
(i) eligible for Stock Rights pursuant to the Plan or (ii) have been granted
Stock Rights may vote on any matters affecting the administration of the Plan or
the grant of any Stock Rights pursuant to the Plan, except that no such member
shall act upon the granting to himself of discretionary Stock Rights but any
such member may be counted in determining the existence of a quorum at any
meeting of the Board during which action is taken with respect to the granting
to him of Stock Rights.
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d. Notwithstanding any other provision of Paragraph 2, any discretionary
grants to a person who is a member of the Board shall be made only by the Board
provided, however, that if a majority of the Board is eligible to participate in
the Plan or in any other stock option or other stock plan of the Company or any
of its Related Corporations, or has been so eligible at any time within the
preceding year, any grant to directors of Stock Rights must be made by, or only
in accordance with the recommendation of a Committee consisting of three or more
persons, who shall be directors of the Company, appointed by the Board but
having full authority to act on the matter, none of whom is eligible to
participate in this Plan or any other stock option or other stock plan of the
Company or any of its affiliates, or has been eligible at any time within the
preceding year. The requirements imposed by this subparagraph 2d shall also
apply with respect to grants to officers who are also directors. Once appointed,
such Committee shall continue to serve until otherwise directed by the Board.
e. In addition to such other rights of indemnification as he may have as
a member of the Board, and with respect to administration of the Plan and the
granting of Options under it, each member of the Board and of the Committee
shall be entitled without further act on his part to indemnification from the
Company for all expenses (including advances in litigation expenses, the amount
of judgment and the amount of approved settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by him in connection with or arising out of any
action, suit or proceeding with respect to the administration of the Plan or the
granting of Options under it in which he may be involved by reason of his being
or having been a member of the Board or the Committee, whether or not he
continues to be such member of the Board or the Committee at the time of the
incurring of such expenses. A person shall only be indemnified if (i) he
conducted himself in good faith, (ii) he reasonably believed that his conduct
was for a purpose he reasonably believed to be in the interests of the
participants or beneficiaries of this Plan and (iii) in the case of any criminal
proceeding, he had no reasonable cause to believe that his conduct was unlawful.
Provided however, a director shall not be entitled to indemnification in
connection with a proceeding by or on behalf of the Company in which the
director is adjudged liable to the Company or in connection with any proceeding
charging improper personal benefit to the director in which the director is
found to be personally liable on the basis that personal benefit was improperly
received by him. Provided further that no right of indemnification under the
provisions set forth herein shall be available to any such member of the Board
or the Committee unless within 10 days after the later of institution of or
learning of any such action, suit or proceeding he shall have offered the
Company in writing the opportunity to handle and defend such action, suit or
proceeding at its own expense. The foregoing right of indemnification shall
inure to the benefit of the heirs, executors or administrators of each such
member of the Board or the Committee and shall be in addition to all other
rights to which such member of the Board or the Committee would be entitled to
as a matter of law, contract or otherwise. The indemnification provided by this
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Section 2e shall only be made after the requirements of Section 145(d) of the
Delaware General Corporation Law (the "Law") have been complied with except that
the Company may pay for or reimburse reasonable expenses incurred by a director
who is a party to a proceeding in advance of the final disposition of the
proceeding in accordance with the requirement of Section 145(e) of the Law.
3. Eligible Employees and Others.
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a. ISOs may be granted to any employee of the Company or any Related
Corporation. Those officers and directors of the Company who are not employees
may not be granted ISOs under the Plan. Subject to compliance with Rule 16b-3
and other applicable securities laws, Non-Qualified Options, Awards and
authorizations to make Purchases may be granted to any director (whether or not
an employee), officer, employee or consultant of the Company or any Related
Corporation. The Committee may take into consideration a recipient's individual
circumstances in determining whether to grant an ISO, a Non-Qualified Option or
an authorization to make a Purchase. Granting of any Stock Right to any
individual or entity shall neither entitle that individual or entity to, nor
disqualify him from participation in any other grant of Stock Rights.
b. All directors of the Company who are not employees of the Company or
Related Corporations shall automatically receive Non-Qualified Options (i) upon
election or appointment to the Board if not a member of the Board at the time
this Plan is adopted by the Board; and (ii) upon election to the Board after all
stock grants and Options previously granted have vested. The amount and terms of
such Non-Qualified Options shall be determined by the Board in full compliance
with the terms of the Plan.
(1) The exercise price of the Options shall be fair market value on the
date of grant as defined by Paragraph 7.
(2) The Options granted to each Director pursuant to this subparagraph b
shall vest in equal increments of 50% on September 30 and March 31 of each year,
provided that the director is still serving as a director on the Company. To the
extent that any Options which have not been exercised do not vest, the Options
shall lapse and no longer be exercisable
c. The Options shall be exercisable for a period of 5 years from the
date of grant.
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4. Stock. The stock subject to Options, Awards and Purchases shall be
authorized but unissued shares of Common stock or shares of Common Stock
reacquired by the Company in any manner. The aggregate number of shares of
Common Stock which may be issued pursuant to the Plan is 1,000,000, subject to
adjustment as provided in Paragraph 15. Any such shares may be issued as ISOs,
Non-Qualified Options or Awards, or to persons or entities making Purchases, so
long as the number of shares so issued does not exceed such number, as adjusted.
If any Option granted under the Plan shall expire or terminate for any reason
without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part, or if the Company shall reacquire any unvested
shares issued pursuant to Awards or Purchases, the unpurchased shares subject to
such Options and any unvested shares so reacquired by the Company shall again be
available for grants of Stock Rights under the Plan.
5. Granting of Stock Rights. Stock Rights may be granted under the Plan at
any time on and after July 15, 1996, provided however that no ISO shall be
granted more than 10 years after the effective date of this Plan. The date of
grant of a Stock Right under the Plan will be the date of grant by the Committee
unless otherwise specified at the time it grants the Stock Right; provided,
however, that such date shall not be prior to the date on which the Committee
acts to approve the grant. The Committee shall have the right with the consent
of the optionee, to convert an ISO granted under the Plan to a Non-Qualified
Option pursuant to Paragraph 18.
6. Sale of Shares. Any shares of the Company's Common Stock granted
pursuant to an Award or acquired pursuant to a Purchase as set forth herein,
cannot be sold for at least six months after acquisition except in case of death
or disability. Nothing in this paragraph 6 shall be deemed to reduce the holding
period set forth under the applicable securities laws.
7. ISO Minimum Option Price and Other Limitations.
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a. The exercise price per share specified in the stock option agreement
relating to each ISO granted under the Plan shall not be less than the fair
market value per share of Common Stock on the date of such grant. In the case of
an ISO to be granted to an employee owning stock which represents more than 10
percent of the total combined voting power of all classes of stock of the
Company or any Related Corporation, the price per share specified in the
agreement relating to such ISO shall not be less than 110 percent of the fair
market value per share of Common Stock on the date of grant and such ISO shall
not be exercisable after the expiration of five years from the date of grant.
b. In no event shall the aggregate fair market value (determined at the
time an ISO is granted) of Common Stock for which ISOs granted to any employee
are exercisable for the first time by such employee during any calendar year
(under all stock option plans of the Company and any Related Corporation) exceed
$100,000.
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c. If, at the time an Option is granted under the Plan, the Company's
Common Stock is publicly traded, "fair market value" shall be determined as of
the last business day for which the prices or quotes discussed in this sentence
are available prior to the date such Option is granted and shall mean:
(1) the average closing price of the Company's shares appearing on
the American Stock Exchange if such shares are listed on such exchange or if not
listed, appearing on the National Associates of Securities Dealers, Inc.'s
electronic bulletin board; or
(2) If the Company's shares are not listed on the National
Association of Securities Dealers, Inc's electronic bulletin board, then the
average bid and asked price for the Company's shares as listed in the National
Quotation Bureau's "pink sheets", or
(3) if there are no listed bid and asked prices published in the
pink sheets, then the fair market value shall be based upon the average closing
bid and asked price as determined following a polling of all dealers making a
market in the Company's shares.
8. Stock Appreciation Rights.
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a. Stock appreciation rights may be granted by the Company under this
Plan upon such terms and conditions as the Committee may prescribe. A stock
appreciation right may be granted only in connection with a Non-Qualified Option
right previously granted or to be granted under this Plan. Each stock
appreciation right shall contain a provision that it shall become nonexercisable
and be forfeited if the related option right is exercised. "Stock Appreciation
right" as used in this Plan means a right to receive the excess of the fair
market value of a share of the Company's Common Stock on the date on which an
appreciation right is exercised over the option price provided for in the
related stock option and which is issued in consideration of services performed
for the Company or for its benefit by the optionee. Such excess is hereafter
called "the differential". "Option right" means the right to purchase shares of
the Company's Common Stock under a Non-Qualified Option granted under this Plan.
b. Stock appreciation rights shall be exercisable and be payable in the
following manner:
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(1) A stock appreciation right shall be exercisable by the optionee
at any time the option to which it relates could be exercised. An optionee
wishing to exercise a stock option appreciation right shall give written notice
of such exercise to the Company addressed to the Company's Secretary, which such
notice shall be forwarded by the Company's Secretary to the Committee. Upon
receipt of such notice, the Committee shall determine whether the optionee's
stock appreciation rights shall be paid in cash or Common Stock or a combination
of cash and shares. Upon receipt of such notice, the Company shall, without
transfer or issue tax to the optionee or other person entitled to exercise the
stock appreciation rights, deliver to the person exercising such right a
certificate or certificates for shares of the Common Stock which are issuable
upon exercise of the stock appreciation right or cash or a combination thereof
as the case may be. The date the Company's Secretary receives the written notice
of exercise hereunder is referred to herein as the exercise date.
(2) The exercise of a stock appreciation right shall automatically
result in the surrender of the related stock option right by the grantee on a
share for share basis to the extent shares under such related stock option are
used to calculate the shares or cash or combination thereof to be received by
such grantee upon the exercise of such stock appreciation right. Shares covered
by such surrendered option rights shall not be available for granting further
options under this Plan.
(3) The Committee may impose any other conditions it prescribes upon
the exercise of a stock appreciation right, which conditions may include a
condition that the stock appreciation right may only be exercised in accordance
with rules and regulations adopted by the Committee from time to time.
(4) Upon the exercise of a stock appreciation right and surrender of
the related option right, the Company shall give to the person surrendering the
related option right an amount equivalent to the differential, in cash or shares
of the Company's Common Stock or any combination thereof as determined in
accordance with subdivision b (1) of this paragraph 8. The shares to be issued
upon the exercise of a stock appreciation right may consist either in whole or
in part of shares of the Company's authorized and issued Common Stock reacquired
by the Company and held in its treasury. No fractional share of Common Stock
shall be issued and the Committee shall determine whether cash shall be given in
lieu of such fractional share or whether such fractional share shall be
eliminated.
c. Notwithstanding any other provision of this Plan, the Committee may
from time to time determine, including at the time of exercise, the maximum
amount of cash or stock which may be given upon exercise of any stock
appreciation right in any year provided, however, that all such amounts shall be
paid in full no later than the end of the year immediately following the year in
which the optionee exercised such stock appreciation rights. Any determination
under this paragraph may be changed by the Committee from time to time provided
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that no such change shall require the holder to return to the Company any amount
theretofore received or to extend the period within which the Company is
required to make full payment of the amount due as the result of the exercise of
the optionee's stock appreciation right.
d. Stock appreciation rights granted pursuant to this paragraph shall
terminate or expire as follows:
(1) Each stock appreciation right and all rights and obligations
thereunder shall expire on a date to be determined by the Committee, such date,
however, in no event to be later than ten years from the date on which the
related option right was granted.
(2) A stock appreciation right shall terminate and may no longer be
exercised upon the termination of the related option right.
9. Duration of Stock Rights. Subject to earlier termination as provided in
Paragraph 11 and 12, each Stock Right shall expire on the date specified in the
original instrument granting such Stock Right, (except with respect to any part
of an ISO that is converted into a Non-Qualified Option pursuant to Paragraph
18) provided, however, that such instrument must comply with Section 422A of the
Code with regard to ISOs granted to all employees and Rule 16b-3 of the Exchange
Act with regard to all Stock Rights granted to executive officers, directors and
10% stockholders of the Company.
10. Exercise of Options. Subject to the provisions of Paragraphs 3b and 11
through 15, each Option granted under the Plan shall be exercisable as follow:
a. The Options shall either be fully exercisable from the date of grant
or shall become exercisable thereafter in such installments as the Committee may
specify.
b. Once an installment becomes exercisable it shall remain exercisable
until expiration or termination of the Option, unless otherwise specified by the
Committee.
c. Each Option or installment, once it becomes exercisable, may be
exercised at any time or from time to time, in whole or in part, for up to the
total number of shares with respect to which it is then exercisable.
d. The Committee shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Committee shall not
accelerate the exercise date of any installment of any Option granted to any
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employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 18) if such acceleration would violate the annual vesting
limitation contained in Section 422A(d) of the Code as described in Paragraph
7(b). The date of exercise of all Options shall accelerate in the event of any
of the following: (i) the Company is to merge or consolidate with or into any
other corporation or entity except a transaction where the Company is the
surviving corporation or change of domicile merger or similar transaction exempt
from registration under the Securities Act of 1933, (ii) the sale of all or
substantially all of the Company's assets, (iii) the sale of at least 90% of the
outstanding Common Stock of the Company to a third party (subparagraphs (i),(ii)
and (iii) collectively referred to as an "Acquisition"); or (iv) the Company is
dissolved. Upon a minimum of 20 days prior written notice to the optionees, the
exercisability of such Options shall commence two business days prior to the
earlier of the scheduled closing of an Acquisition or proposed dissolution or
the actual closing of an Acquisition or proposed dissolution.
e. All Options and stock grants shall be subject to any vesting
requirements imposed by the Committee. In the event of any Acquisition or
dissolution of the Company, all unvested Options and stock grants shall
immediately vest two business days prior to the earlier of the scheduled closing
of the Acquisition or proposed dissolution or the actual closing of the
Acquisition or proposed dissolution and a minimum of 20 days notice of such
vesting shall be give to the holders of such Options and unvested shares of
Common Stock.
11. Termination of Employment. Subject to any greater restrictions or
limitations as may be imposed by the Committee upon the granting of any ISO, if
an ISO optionee ceases to be employed by the Company and all Related
Corporations other than by reason of death or disability as defined in Paragraph
12, no further installments of his ISOs shall become exercisable or vest, and
his ISOs shall terminate on the day three months after the day of the
termination of his employment, but in no event later than on their specified
expiration dates, except to the extent that such ISOs (or unexercised
installments thereof) have been converted into Non-Qualified Options pursuant to
Paragraph 18. Employment shall be considered as continuing uninterpreted during
any bona fide leave of absence (such as those attributable to illness, military
obligations or governmental service) provided that the period of such leave does
not exceed 90 days or, if longer, any period during which such optionee's right
to re-employment is guaranteed by statute. A leave of absence with the written
approval of the Company's Board shall not be considered an interruption of
employment under the Plan, provided that such written approval contractually
obligates the Company or any Related Corporation to continue employment of the
optionee after the approved period of absence. ISOs granted under the Plan shall
not be affected by any change of employment within or among the Company and
Related Corporations so long as the optionee continues to be an employee of the
Company or any Related Corporation.
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12. Death or Disability. Subject to any greater restrictions or limitations
as may be imposed by the Committee upon the granting of any ISO:
a. If an ISO optionee ceases to be employed by the Company and all
Related Corporations by reason of his death, any ISO of his may be exercised to
the extent of the number of shares with respect to which he could have exercised
it on the date of his death, by his estate, personal representative or
beneficiary who has acquired the ISO by will or by the laws of descent and
distribution, at any time prior to the earlier of the ISO's specified expiration
date or three months from the date of the optionee's death.
b. If an ISO optionee ceases to be employed by the Company and all
Related Corporations by reason of his disability, he shall have the right to
exercise any ISO held by him on the date of termination of employment to the
extent of the number of shares with respect to which he could on the earlier of
the ISO's specified expiration date or one year from the date of the termination
of the optionee's employment. For the purposes of the Plan, the term
"disability" shall mean "permanent and total disability" as defined in Section
22 (e)(3) of the Code or successor statute.
13. Assignability. No Option granted to an executive officer or director of
the Company or beneficial owner of 10% or more of the Company's equity
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934 and no ISO shall be assignable or transferable by the grantee except by
will or by laws of descent and distribution and during the lifetime of the
grantee each Option shall be exercisable only by him, his guardian or legal
representative.
14. Terms and Conditions of Options. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in Paragraph 7 through 13 hereof and may contain such other
provisions as the Committee deems advisable which are not inconsistent with the
Plan, including restrictions applicable to shares of Common Stock issuable upon
exercise of Options. In granting any Non-Qualified Option, the Committee may
specify that such Non-Qualified Option shall be subject to the restrictions set
forth herein with respect to ISOs, or to such other termination and cancellation
provisions as the Committee may determine. The Committee may from time to time
confer authority and responsibility on one or more of its own members and/or one
or more officers of the Company to execute and deliver such instruments.
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The proper officers of the Company are authorized and directed to take any and
all action necessary or advisable from time to time to carry out the terms of
such instruments.
15. Adjustments. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to him hereunder shall be
adjusted as hereinafter provided unless otherwise specifically provided in the
written agreement between the optionee and the Company relating to such Option:
a. If the shares of Common Stock shall be subdivided or combined into a
greater or smaller number of shares or if the Company shall issue any shares of
Common Stock as a stock dividend on its outstanding Common Stock, the number of
shares of Common Stock deliverable upon the exercise of Options shall be
appropriately increased or decreased proportionately, and appropriate
adjustments shall be made in the purchase price per share to reflect such
subdivision, combination or stock dividend.
b. If the Company is to be consolidated with or acquired by another
entity pursuant to an Acquisition, the Committee or the board of directors of
any entity assuming the obligations of the Company hereunder (the "Successor
Board") shall, as to outstanding Options not exercised pursuant to Paragraph 9,
either (i) make appropriate provision for the continuation of such Options by
substituting on an equitable basis for the shares then subject to such Options
the consideration payable with respect to the outstanding shares of Common Stock
in connection with the Acquisition; or (ii) terminate all Options in exchange
for a cash payment equal to the excess of the fair market value of the shares
subject to such Options over the exercise price thereof.
c. In the event of a recapitalization or reorganization of the Company
(other than a transaction described in subparagraph b above) pursuant to which
securities of the Company or of another corporation are issued with respect to
the outstanding shares of Common Stock, an optionee upon exercising an Option
shall be entitled to receive for the purchase price paid upon such exercise the
securities he would have received if he had exercised his Option prior or such
recapitalization or reorganization.
d. Notwithstanding the foregoing, any adjustments made pursuant to
subparagraphs a,b or c with respect to ISOs shall be made only after the
Committee, after consulting with counsel for the Company, determines whether
such adjustments would constitute a "modification" of such ISOs (as that term is
defined in Section 425(h) of the Code) or would cause any adverse tax
consequences for the holders of such ISOs. If the Committee determines that such
adjustments made with respect to ISOs would constitute a modification of such
ISOs it may refrain from making such adjustments.
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e. Except as expressly provided herein, no issuance by the Company of
shares of Common Stock of any class or securities convertible into shares of
Common Stock of any class shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares subject to Options.
No adjustments shall be made for dividends or other distributions paid in cash
or in property other than securities of the Company.
f. No fractional share shall be issued under the Plan and the optionee
shall receive from the Company cash in lieu of such fractional shares.
g. Upon the happening of any of the foregoing events described in
subparagraphs a, b or c above, the class and aggregate number of shares set
forth in Paragraph 4 hereof that are subject to Stock Rights which previously
have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee or the Successor Board shall determine the specific adjustments to
be made under this Paragraph 15 and, subject to Paragraph 2, its determination
shall be conclusive. If any person or entity owning restricted Common Stock
obtained by exercise of a Stock Right made hereunder receives shares or
securities or cash in connection with a corporate transaction described in
subparagraphs a, b and c above as a result owning such restricted Common Stock,
such shares or securities or cash shall be subject to all of the conditions and
restrictions applicable to the restricted Common Stock with respect to which
such shares or securities or cash were issued, unless otherwise determined by
the Committee or the Successor Board.
16. Means of Exercising Stock Rights.
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a. A Stock Right (or any part or installment thereof) shall be exercised by
giving written notice to the Company at its principal office address. Such
notice shall identify the Stock Right being exercised and specify the number of
shares as to which such Stock Right is being exercised, accompanied by full
payment of the purchase or exercise price therefor either (i) in United States
dollars in cash or by check; (ii) at the discretion of the Committee, through
delivery of shares of Common Stock having a fair market value equal as of the
date of the exercise to the cash exercise price of the Stock Right; (iii) at the
discretion of the Committee, by delivery of the grantee's personal recourse note
bearing interest payable not less than annually at no less than 100% of the
lowest applicable federal rate, as defined in Section 1275(d) of the Code, or
(iv) at the discretion of the Committee, by any combination of (i), (ii) and
(iii) above. If the Committee exercises its discretion to permit payment of the
exercise price of an ISO by means of the methods set forth in clauses (ii),
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(iii) or (iv) of the preceding sentence, such discretion shall be exercised in
writing at the time of the grant of the ISO in question. The holder of Stock
right shall not have the rights of a shareholder with respect to the shares
covered by his Stock Right until the date of issuance of a stock certificate to
him for such shares. Except as expressly provided above in Paragraph 15 with
respect to changes in capitalization and stock dividends, no adjustment shall be
made for dividends or similar rights for which the record date is before the
date such stock certificate is issued.
b. Each notice of exercise shall, unless the Option shares are covered
by a then current registration statement under the Securities Act of 1933, as
amended (the "Act"), contain the optionee's acknowledgment in form and substance
satisfactory to the Company that (i) such Option shares are being purchased for
investment and not for distribution or resale (other than a distribution or
resale which, in the opinion of counsel satisfactory to the Company, may be made
without violating the registration provision of the Act), (ii) the optionee has
been advised and understands that (1) the Option shares have not been registered
under the Act and are "restricted securities" within the meaning of Rule 144
under the Act and are subject to restrictions on transfer and (2) the Company is
under no obligation to register the Option shares under the Act or to take any
action which would make available to the optionee any exemption from such
registration, and (iii) such Option shares may not by transferred without
compliance with all applicable federal and state securities laws. Not
withstanding the above, should the Company be advised by counsel that issuance
of shares should be delayed pending registration under federal or state
securities laws or the receipt of an opinion than an appropriate exemption
therefrom is available, the Company may defer exercise of any option granted
hereunder until either such event has occurred.
17. Terms and Amendment of Plan. This Plan was adopted by the Board on
July 15, 1996 and if not approved by the holders of at least a majority of all
shares present in person and by proxy and entitled to vote therein at a meeting
of the stockholders of the Company within 12 months from the date of the Plan's
adoption by the Board, no ISOs may be granted pursuant to the Plan. Nor shall
the Plan in such event conform to Rule 16b-3 promulgated under the Securities
Exchange Act of 1934. This Plan shall have no expiration date, provided however
that no ISOs shall be granted more than 10 years after the Plan's effective
date. The Board may terminate or amend the Plan in any respect at any time.
However, if not approved by the stockholders on or before July 15, 1997,
approval of the stockholders must be obtained within 12 months before or after
the Board adopts a resolution authorizing any of the following actions: (a)
increase of the total number of shares that may be issued under the Plan (except
by adjustment pursuant to Paragraph 15); (b) modification of the provisions of
Paragraph 3 regarding eligibility for grants of ISOs; and (c) any other act
requiring stockholder approval under Rule 16b-3 (or successor rule) promulgated
under the Securities Exchange Act of 1934. Except as provided herein or as
specified in the original instrument granting such Stock Right, no action of the
Board or stockholders may alter or impair the rights of a grantee, without his
consent, under any Stock Right previously granted to him.
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18. Conversion of ISOs into Non-Qualified Options; Termination of ISOs. The
Committee, at the written request of any optionee, may in its discretion take
such actions as may be necessary to convert such optionee's ISOs (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the optionee is an employee of
the Company or a Related Corporation at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise period of the appropriate installments of such Options. At
the time of such conversion, the Committee (with the consent of the optionee)
may impose such conditions on the exercise of the resulting Non-Qualified
Options as the Committee in its discretion may determine, provided that such
condition shall not be inconsistent with this Plan. Nothing in the Plan shall be
deemed to give any optionee the right to have such optionee's ISOs converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Committee takes appropriate action. The Committee, with the consent of the
optionee, may also terminate any portion of any ISO that has not been exercised
at the time of such termination.
19. Application of Funds. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.
20. Government Regulations. The Company's obligation to sell and deliver
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
21. Withholding of Additional Income Taxes. Upon the exercise of a
Non-Qualified Option, the granting or vesting of an Award, the Purchase of
Common Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in Paragraph 22) the Company, in accordance with Section
3402(a) of the Code may require the optionee, award recipient or purchaser to
pay additional withholding taxes in respect of the amount that is considered
compensation includable in such person's gross income. The Committee in its
discretion may condition (i) the exercise of any Option; (ii) the granting or
vesting of an award; or (iii) the making of a purchase of Common Stock for less
than its fair market value on the payment of such withholding taxes.
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To the extent that the Company is required to withhold taxes for federal
income tax purposes in connection with the exercise of any Option, the optionee
shall have the right to elect to satisfy such withholding requirement by (i)
paying the amount of the requires withholding tax to the Company; (ii)
delivering to the Company shares of its Common Stock previously owned by the
optionee; or (iii) having the Company retain a portion of the shares covered by
the Option exercise. The number of shares to be delivered to or withheld by the
Company times the fair market value of such shares shall equal the cash of
required to be withheld. To the extent that the Participant elects to either
deliver or have withheld shares of the Company's Common Stock, the Board, or the
Committee, may require him to make such election only during certain periods of
time as may be necessary to comply with appropriate exemptive procedures
regarding the "short-swing" profit provisions of Section 16(b) of the Securities
Exchange Act of 1934 or to meet certain Code requirements.
22. Notice of Company of Disqualifying Disposition. Each employee who
receives an ISO must agree to notify the Company in writing immediately after
the employee makes a Disqualifying Disposition of any Common Stock acquired
pursuant to the exercise of an ISO. A Disqualifying Disposition is any
disposition (including any sale) of such Common Stock before the later of (i)
two years after the date of employee was granted the ISO or (ii) one year after
the date the employee acquired Common Stock by exercising the ISO. If the
employee has died before such stock is sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter.
23. Continued Employment. The grant of an Option pursuant to the Plan shall
not be construed to imply or to constitute evidence of any agreement, express or
implied, on the part of the Company or any Related Corporation to retain the
optionee in the employ of the Company or Related Corporation, as a member of the
Company's board of directors or in any other capacity, whichever the case may
be.
24. Bonuses or Loans to Exercise Options. If requested by any person to
whom a grant of a Stock Right has been made, the Company or any Related
Corporation may loan such person or guarantee a bank loan to such person for the
purpose of paying for the shares of the Common Stock. If requested by any person
to whom a grant of a Stock Right has been made, the Company or any Related
Corporation may loan such person, guarantee a bank loan to such person, or pay
such person additional compensation equal to the amount of money necessary to
pay the federal income taxes incurred as a result of the grant of the Stock
Rights or the Exercise of any Options, assuming that such person is in the
maximum federal income tax bracket six months from the time of grant or exercise
and assuming that such person has no deductions which would reduce the amount of
such tax owed. The tax loan shall be made or tax offset bonus paid on or before
April 15th of the year following the year in which the amount of tax is
determined, and any loan shall be made on such terms as the Company or lending
bank determines.
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25. Governing Law; Construction.The validity and construction of the Plan
and the instruments evidencing Stock Rights shall be governed by the laws of the
State of Kansas. In construing this Plan, the singular shall include the plural
and the masculine gender shall include the feminine and neuter, unless the
context otherwise requires.
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