EXHIBIT 99.1
HEALTHNET INTERNATIONAL INC.
1999 NON-QUALIFIED STOCK OPTION PLAN
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SECTION 1
INTRODUCTION
1.1 ESTABLISHMENT. Healthnet International Inc., a Colorado
corporation, hereby establishes the Healthnet International Inc. 1999 Stock
Option Plan (the "Plan") for employees, consultants, directors, and other
advisors associated with the Company whom the Board wishes to incentivize.
Healthnet International Inc., together with its affiliated corporations, as
defined in Section 2.1(a) hereafter, are referred to as the "Company," except
where the context otherwise requires.
1.2 PURPOSES. The purposes of the Plan are to provide the Eligible
Participants selected for participation in the Plan with added incentives to
continue in the long-term service of the Company and to create in such persons a
more direct interest in the future success of the operations of the Company by
relating incentive compensation to increases in stockholder value, so that
rewards for the Eligible Participants is more closely aligned with the pursuit
of value for the Company and the Company's stockholders. The Plan also is
designed to attract Eligible Participants and to retain and motivate such
persons by providing an opportunity for investment in the Company.
SECTION 2
DEFINITIONS
2.1 DEFINITIONS. The following terms will have the meanings set forth
below:
(a) "AFFILIATED CORPORATION" means any corporation or other entity
(including, but not limited to, a partnership) that is affiliated with Healthnet
International Inc. through stock ownership or otherwise and is treated as a
common employer under the provisions of Code Sections 414(b) and (c).
(b) "BOARD" means the Board of Directors of Healthnet International
Inc.
(c) "CODE" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
(d) "EFFECTIVE DATE" means the effective date of the Plan, which
will be February 1, 1999.
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(e) "ELIGIBLE PARTICIPANTS" means all employees (including, without
limitation, all officers), directors, consultants and all other advisors whom
the Board wishes to incentivize to contribute to the fortunes of the Company.
(f) "FAIR VALUE" means the value of a Share of Stock as determined
by the Stock Option Committee acting in good faith and in its sole discretion.
Notwithstanding the above, if the Stock is actively traded in an established
stock or quotation market, "FAIR VALUE" will mean the officially quoted closing
price of the Stock on such exchange (a "National Exchange") on a particular date
selected by the Stock Option Committee in establishing the purchase price of
Shares of the Option.
(g) "STOCK OPTION COMMITTEE" means the Board, as defined in Section
2.1(b).
(h) "NON-STATUTORY OPTION" means an Option granted under this Plan
in accordance with the requirements of Code Section 83.
(i) "OPTION" means a right to purchase Stock at a stated price for
a specified period of time.
(j) "OPTION PRICE" means the price at which shares of Stock subject
to an Option may be purchased, determined in accordance with Section 6.2(b).
(k) "OPTION HOLDER" means an Eligible Participant designated by the
Stock Option Committee from time to time during the term of the Plan to receive
one or more Options under the Plan.
(l) "SHARE" or "SHARES" means a share or shares of Stock.
(m) "STOCK" means the common stock of the Company.
2.2 GENDER AND NUMBER. Except where otherwise indicated by the context,
the masculine gender also will include the feminine gender, and the definition
of any term herein in the singular also will include the plural.
SECTION 3
PLAN ADMINISTRATION
The Plan will be administered by the Stock Option Committee. In
accordance with the provisions of the Plan, the Stock Option Committee will, in
accordance with policies approved by the Board and otherwise in its sole
discretion, select the Eligible Participants to whom Options will be granted,
the form of each Option, the amount of each Option, and any other terms and
conditions of each Option as the Stock Option Committee may deem necessary or
desirable and consistent with the terms of the Plan. The Stock Option Committee
will determine the form or forms of the agreements with Option Holders. The
agreements will evidence the particular provisions, terms, conditions, rights
and duties of the Company and the Option Holders with respect to Options granted
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pursuant to the Plan, which provisions need not be identical except as may be
provided herein. The Stock Option Committee may from time to time adopt such
rules and regulations for carrying out the purposes of the Plan as it may deem
proper and in the best interests of the Company. The Stock Option Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or in any agreement entered into hereunder in the manner and to the extent
it will deem expedient and it will be the sole and final judge of such
expediency. No member of the Stock Option Committee will be liable for any
action or determination made in good faith, and all members of the Committee
will, in addition to their rights as directors, be fully protected by the
Company with respect to any such action, determination or interpretation. The
determinations, interpretations, and other actions of the Stock Option Committee
pursuant to the provisions of the Plan will be binding and conclusive for all
purposes and on all persons.
SECTION 4
STOCK SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. 1,200,000 Shares are authorized for issuance
under the Plan in accordance with the provisions of the Plan. Shares that may be
issued upon the exercise of Options will be applied to reduce the maximum number
of Shares remaining available under the Plan and while any Options are
outstanding, the Company will retain as authorized and unissued stock at least
the number of Shares from time to time required under the provisions of the Plan
or otherwise assure itself of its ability to perform its obligations hereunder.
4.2 UNUSED AND FORFEITED STOCK. Any Shares that are subject to an
Option under this Plan that are not used because the terms and conditions of the
Option are not met or any Shares that are used for full or partial payment of
the purchase price of Shares with respect to which an Option is exercised or any
Shares retained by the Company for any purpose of this Plan automatically will
be returned to the Plan pool and become available for use under the Plan.
4.3 ADJUSTMENTS FOR STOCK SPLIT, STOCK DIVIDEND, ETC. If the Company at
any time increases or decreases the number of its outstanding Shares of Stock,
or changes in any way the rights and privileges of such Shares by means of the
payment of a stock dividend or any other distribution upon such Shares payable
in Stock, or through a stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock, then, in relation to
the Stock that is affected by the above events, the provisions of this Section
4.3 will apply. In such event, the numbers, rights and privileges of the
following will be increased, decreased or changed in like manner as if such
Shares had been issued and outstanding, fully paid and nonassessable at the time
of such event: (i) adjustment to the shares of Stock as to which Options may be
granted under the Plan; and (ii) adjustment to the exercise price of each
outstanding Option granted hereunder.
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4.4 GENERAL ADJUSTMENT RULES. If any adjustment or substitution
provided for in this Section 4 will result in the creation of a fractional Share
under any Option, the number of Shares subject to the option will be rounded to
the next higher Share.
4.5 DETERMINATION BY STOCK OPTION COMMITTEE, ETC. Adjustments under
this Section 4 will be made by the Stock Option Committee, whose determinations
with regard thereto will be final and binding upon all parties.
SECTION 5
REORGANIZATION OR LIQUIDATION
In the event that the Company is merged or consolidated with another
corporation (other than a merger or consolidation in which the Company is the
continuing corporation and that does not result in any reclassification or
change of outstanding Shares), or if all or substantially all of the assets or
more than 20% of the outstanding voting stock of the Company is acquired by any
other corporation, business entity or person (other than by a sale or conveyance
in which the Company continues as a holding company of an entity or entities
that conduct the business or businesses formerly conducted by the Company), or
in case of a reorganization (other than a reorganization under the United States
Bankruptcy Code) or liquidation of the Company, the Stock Option Committee will
have the power and discretion to prescribe the terms and conditions for the
exercise or modification of any outstanding Options granted hereunder. By way of
illustration, and not by way of limitation, the Stock Option Committee may
provide for the complete or partial acceleration of the dates of exercise of the
Options, or may provide that such Options will be exchanged or converted into
options to acquire securities of the surviving or acquiring corporation, or may
provide for a payment or distribution in respect of outstanding Options (or the
portion thereof that currently is exercisable) in cancellation thereof. The
Stock Option Committee may provide that Options granted hereunder must be
exercised in connection with the closing of such transaction, and that if not so
exercised such Options will expire. Any such determinations by the Stock Option
Committee may be made generally with respect to all Option Holders, or may be
made on a case-by-case basis with respect to particular Option Holders. The
provisions of this Section 5 will not apply to any transaction undertaken for
the purpose of reincorporating the Company under the laws of another
jurisdiction, if such transaction does not materially affect the beneficial
ownership of the Company's capital stock. Any determination by the Stock Option
Committee hereunder shall not amend the terms of any Option without the consent
of the Option Holder unless, in the opinion of the Committee acting reasonably,
such amendment is necessary to permit the alterations to the Company to be
effected and such is in the interest of shareholders generally.
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SECTION 6
STOCK OPTIONS
6.1 GRANT OF OPTIONS. An Eligible Participant may be granted one or
more Options. Options granted under the Plan will be Non-Statutory Options.
6.2 OPTION AGREEMENTS. Each Option granted under the Plan will be
evidenced by a written stock option agreement that will be entered into by the
Company and the Eligible Participant to whom the Option is granted (the "Option
Holder"), and will contain the following terms and conditions, as well as such
other terms and conditions not inconsistent therewith, as the Stock Option
Committee may consider appropriate in each case. In the event of any
inconsistency between the provisions of the Plan and any such agreement entered
into hereunder, the provisions of the agreement will govern where not
inconsistent with law. However, the provisions of the Plan will govern where the
agreement omits to provide for a matter governed by the Plan and the agreement
will not be complete nor enforceable where it fails to provide for the following
matters, unless such matters are elsewhere provided or are herein provided by
the terms of this Plan:
(a) NUMBER OF SHARES. Each stock option agreement will state that
it covers a specified number of Shares, as determined by the Stock Option
Committee.
(b) PRICE. The price at which each Share covered by an Option may
be purchased will be determined by the Stock Option Committee and set forth in
the stock option agreement.
(c) VESTING PERIOD. Each Stock Option will state the time and the
amount of the Shares of the Option which vest, and are exercisable thereafter,
at specified times during the Option Period. Unless otherwise provided in the
Option agreement, Options will vest and be exercisable for types of Option
Holders a s follows:
(i) Directors and senior officers to Vice-President- 25% of the amount
of the Shares under Option upon granting and 25% each six months
thereafter;
(ii) Employees Generally - 10% at the end of the later of the first
three months or the stated probation period and 5% at the end of each
calendar month thereafter; and
(iii) Other Option Holders - 10% at the end of the first 30 days of
engagement, 20% upon completion of 50% of the term, where a particular
term, or upon 50% of project completion, where project contract
specific, and the remainder upon, and for a period of 90 days
thereafter, the Company's certifying substantial satisfaction, acting
reasonably, with contract and/or project completion.
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(d) DURATION OF OPTIONS. Each stock option agreement will state the
period of time within which the Option may be exercised by the Option Holder
(the "Option Period"). The Option Period must expire, in all cases, not more
than ten years from the date an Option is granted. Unless otherwise stated,
director and senior officer Options shall be the lesser of five years or the
term of their office plus 60 days, employee Options the lesser of five years or
the term of their employment plus 60 days, and other Option Holders the lesser
of five years or the term of the engagement agreement plus 60 days.
Notwithstanding any other provisions hereof, unless otherwise determined by the
Stock Option Committee, any Option granted to an officer, director or more than
10% shareholder of the company hereunder shall not become exercisable until at
least six months following the date of grant.
(e) TERMINATION OF EMPLOYMENT, DEATH, DISABILITY, ETC. Except as
otherwise determined by the Stock Option Committee, each stock option agreement
will provide as follows with respect to the exercise of the Option upon
termination of the employment or the death of the Option Holder:
(i) If the Option Holder's employment or office with the
Company is terminated within the Option Period for cause, as determined by the
Company in its sole discretion, or if the Option Holder resigns without
appropriate or agreed notice and agreed termination terms, the Option thereafter
will be void for all purposes immediately upon notice of termination or
resignation, as the case may be, unless otherwise agreed by the Company. As used
in this Section, "cause" will mean a gross violation, as determined by the
Company, of the Company's established policies and procedures. If the Option
Holder is terminated for another reason, not contemplated in this agreement,
then the Option shall be exercisable, as to the vested portion only on the date
of termination, for a period of 30 days after termination, except as otherwise
permitted by the Stock Option Committee or the Option agreement and not to
exceed the Option Period. The effect of this Section will be limited to
determining the consequences of a termination, and nothing in this Section will
restrict or otherwise interfere with the Company's discretion with respect to
the termination of any employee.
(ii) If the Option Holder's employment with the Company is
terminated within the Option Period because of the Option Holder's death or
disability (within the meaning of Code Section 22(e)), the Option will remain
exercisable, to the extent that it was vested and exercisable on the date of the
Option Holder's death or disability, for a period of twelve months after such
date; provided, however, that in no event may the Option be exercised after the
expiration of the Option Period.
(iii) For all purposes under this Section, an Eligible
Participant who is not an employee or office holder of the Company will be
considered to have a termination at the conclusion of the relevant contract or
upon notice by the Company of termination for default or breach of agreement. If
the contract is terminated for breach or default then the Option shall terminate
immediately. Otherwise the Option shall terminate in accordance with its terms
or sections 6.2(c)(iii) and 6.2(d) above.
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(f) TRANSFERABILITY OF OPTION. Each stock option agreement will
provide that the Option and exercise rights granted therein is not transferable
or subject to assignment or lien for security purposes by the Option Holder
except to the Option Holder's legal representative, his estate, a family
corporation or personal holding corporation, a bona fide lender or in such other
circumstances as the Stock Option Committee may approve, subject to legal advice
and at its sole unfettered discretion which may be exercised contrary without
reason. Each assignment of an interest in an Option must be approved before such
will be enforceable.
(g) EXERCISE, PAYMENTS, ETC.
(i) Each stock option agreement will provide that the method
for exercising the Option granted therein will be by delivery to the Corporate
Secretary of the Company of written notice specifying the particular Option (or
portion thereof) that is being exercised and the number of Shares with respect
to which such Option is exercised, together with payment of the Option Price.
Such notice shall be in a form satisfactory to the Stock Option Committee. The
exercise of the Option will be deemed effective upon receipt of such notice by
the Corporate Secretary and payment to the Company of the Option Price. The
purchase of such Stock will take place at the principal offices of the Company
upon delivery of such notice. A properly executed certificate or certificates
representing the Stock will be issued by the Company and delivered to the Option
Holder. Unless restricted by the Option agreement, the exercise price shall be
paid by any of the following methods or any combination of the following
methods:
(A) in cash;
(B) by cashier's check, certified cheque, or other
acceptable banker's note payable to the order of
the Company;
(C) by net exercise notice whereby the Option Holder
will authorize the return to the Plan pool, and
deduction from the Option Holder's Stock Option,
of sufficient Option Shares whose net value
(Share Fair Value less Option exercise price) is
sufficient to pay the Option Price of the Shares
exercised, the Fair Value of the Shares of the
Option to be returned to the Plan pool as
payment will be determined by the closing price
of the Company's Shares on the date notice is
delivered;
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(D) by delivery to the Company of properly executed
notice of exercise together with irrevocable
instructions (referred to in the industry as
'delivery against payment') to a broker to
deliver to the Company promptly the amount of
the proceeds of the sale of all or a portion of
the stock or of a loan from the broker to the
Option Holder necessary to pay the exercise
price; or
(E) such other method as the Option Holder and the
Stock Option Committee may determine as adequate
including delivery of acceptable securities
(including securities of the Company), set-off
for wages or invoices due, property, or other
adequate value.
(ii) In the discretion of the Stock Option Committee, the
Company may guarantee a third-party loan obtained by an Option Holder to pay
part or all of the Option Price of the Shares provided that such loan or the
Company's guaranty is secured by the Shares.
(h) DATE OF GRANT. An Option will be considered as having been
granted on the date specified in the grant resolution of the Stock Option
Committee.
6.3 STOCKHOLDER PRIVILEGES. Prior to the exercise of the Option and the
transfer of Shares to the Option Holder, an Option Holder will have no rights as
a stockholder with respect to any Shares subject to any Option granted to such
person under this Plan and, until the Option Holder becomes the holder of record
of such Stock, no adjustments, other than those described in Section 4, will be
made for dividends or other distributions or other rights as to which there is a
record date preceding the date such Option Holder becomes the holder of record
of such Stock.
SECTION 7
RIGHTS OF EMPLOYEES AND OPTION HOLDERS
7.1 EMPLOYMENT. Nothing contained in the Plan or in any Option will
confer upon any Eligible Participant any right with respect to the continuation
of employment by the Company, or interfere in any way with the right of the
Company, subject to the terms of any separate employment agreement to the
contrary, at any time to terminate such employment or to increase or decrease
the compensation of such Eligible Participant from the rate in existence at the
time of the grant of an Option.
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SECTION 8
GENERAL RESTRICTIONS
8.1 INVESTMENT REPRESENTATIONS. The Company may require any person to
whom an Option is granted, as a condition of exercising such Option or receiving
Stock under the Option, to give written assurances, in the substance and form
satisfactory to the Company and its counsel, to the effect that such person is
acquiring the Stock subject to the Option for his own account for investment and
not with any present intention of selling or otherwise distributing the same,
and to such other effects as the Company deems necessary or appropriate in order
to comply with U.S. and Canadian federal and applicable state and provincial
securities laws. Legends evidencing such restrictions may be placed on the
certificates evidencing the Stock.
8.2 COMPLIANCE WITH SECURITIES LAWS. Each Option will be subject to the
requirement that, if at any time counsel to the Company determines that the
listing, registration or qualification of the Shares subject to such Option upon
any securities exchange or under any U.S. or Canadian provincial, state or
federal law, or the consent or approval of any governmental or regulatory body,
is necessary as a condition of, or in connection with, the issuance or purchase
of Shares thereunder, such Option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval will have
been effected or obtained on conditions acceptable to the Stock Option
Committee. Nothing herein will be deemed to require the Company to apply for or
to obtain such listing, registration or qualification.
SECTION 9
OTHER EMPLOYEE BENEFITS
The amount of any compensation deemed to be received by an Option
Holder as a result of the exercise of an Option will not constitute "earnings"
with respect to which any other employee benefits of such Option Holder are
determined, including without limitation benefits under any pension, profit
sharing, life insurance or salary continuation plan. Any taxable consequences of
any Option are entirely the responsibility of the Option Holder and no
contribution shall be required of the Company and , further, if the Company
should suffer liability for unpaid taxes of an Option Holder then the full
amount of such shall be a debt of the Option Holder to the Company payable
immediately and for which the Company may seek judgment and , before judgment or
process, may set-off against any amounts due to the Option Holder or may
recover, again before judgment or process, by exercise of any Options of the
Holder on the Option Holder's behalf, at the discretion of the Stock Option
Committee.
SECTION 10
PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may at any time terminate, and from time to time may amend or
modify, the Plan; provided, however, that no amendment or modification may
become effective without approval of the amendment or modification by the
stockholders if stockholder approval is required to enable the Plan to satisfy
any applicable statutory or regulatory requirements, or if the Company, on the
advice of counsel, determines that stockholder approval otherwise is necessary
or desirable.
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No amendment, modification or termination of the Plan will in any
manner adversely affect any Options theretofore granted under the Plan, without
the consent of the Option Holder holding such Options.
SECTION 11
WITHHOLDING
11.1 WITHHOLDING REQUIREMENT. The Company's obligations to deliver
Shares upon the exercise of an Option will be subject to the Option Holder's
satisfaction of all applicable federal, state and local income and other tax
withholding requirements.
11.2 WITHHOLDING WITH STOCK. At the time an Option is granted, the
Stock Option Committee, in its sole discretion, may permit the Option Holder to
pay all such amounts of tax withholding, or any part thereof that is due upon
exercise of the Option, by such adjustments as the Stock Option Committee
determines, including adjustment to a net exercise price or adjustment to the
Option Price.
SECTION 12
BROKERAGE ARRANGEMENTS
The Stock Option Committee, in its discretion, may enter into
arrangements with one or more banks, brokers or other financial institutions to
facilitate the disposition of shares acquired upon exercise of Stock Options,
including, without limitation, arrangements for the simultaneous exercise of
Stock Options and sale of the Shares acquired upon such exercise.
SECTION 13
NONEXCLUSIVITY OF THE PLAN
The adoption of the Plan by the Board will not be construed as creating
any limitations on the power or authority of the Board to adopt such other or
additional incentive or other compensation arrangements of whatever nature as
the Board may deem necessary or desirable or preclude or limit the continuation
of any other plan, practice or arrangement for the payment of compensation or
fringe benefits to employees generally, or to any class or group of employees,
that the Company or any Affiliated Corporation now has lawfully put into effect,
including, without limitation, any retirement, pension, savings and stock
purchase plan, insurance, death and disability benefits and executive short-term
incentive plans.
SECTION 14
REQUIREMENTS OF LAW
14.1 REQUIREMENTS OF LAW. The issuance of Stock and the payment of cash
pursuant to the Plan will be subject to all applicable laws, rules and
regulations.
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14.2 GOVERNING LAW. The Plan and all agreements hereunder will be
construed in accordance with and governed by the laws of the State of Colorado.
SECTION 15
DURATION OF THE PLAN
The Plan will terminate at such time as may be determined by the Board,
and no Option will be granted after such termination. If not sooner terminated
under the preceding sentence, the Plan will fully cease and expire at midnight
on December 31, 2009. Options outstanding at the time of the Plan termination
may continue to be exercised in accordance with their terms.
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