MICHAEL HOLDINGS, INC.
1998 STOCK OPTION PLAN
1. OBJECTIVES. This 1998 Stock Option Plan (the "Plan") is intended
as an incentive to attract and retain selected employees of Michael Holdings,
Inc. (the "Company") or its Affiliates, to retain and attract persons of
training, experience and ability to serve as independent Directors on the
Board of Directors of the Company and to provide consideration for services
rendered by consultants and independent contractors for the Company and its
Affiliates, to encourage the sense of proprietorship of such persons and to
stimulate the active interest of such persons in the development and
financial success of the Company. It is further intended that the options
granted pursuant to this Plan (the "Options") will be either incentive stock
options or nonqualified stock options.
2. DEFINITIONS. As used herein, the terms set forth below shall have
the following respective meanings:
"AFFILIATES" means any Parent Corporation or Subsidiary.
"BOARD" means the Board of Directors of the Company.
"CODE" means the United States Internal Revenue Code of 1986, as
amended from time to time.
"COMMITTEE" means the Board or such committee of the Board as is
designated by the Board to administer the Plan. At all times after the date,
if any, on which the Company first registers the Common Stock under Section
12 of the Exchange Act, the membership of the Committee shall comply with
Rule 16b-3. With respect to any grant hereunder which is intended to comply
with the requirements of Section 162(m) of the Code, the Committee shall
consist of only "outside directors," as such term is described in Section
162(m) of the Code and the accompanying regulations.
"COMMON STOCK" means the Common Stock, par value $0.01 per share, of
the Company.
"DIRECTOR" means any individual serving as a member of the Board of
Directors of the Company.
"EFFECTIVE DATE" means the date the Plan is approved by the Board of
Directors of the Company.
"EXCHANGE ACT" means the United States Securities Exchange Act of
1934, as amended from time to time.
"FAIR MARKET VALUE" means, as of a particular date, (a) if the
shares of Common Stock are listed on a national securities exchange, the
closing sales price per share of Common Stock on the consolidated transaction
reporting system for the principal such securities exchange on that date, or,
if there shall have been no such sale so reported on that date, on the
last preceding date on which such a sale was so reported, (b) if the shares
of Common Stock are not so listed but are quoted on the Nasdaq National
Market System, the closing sales price per share of Common Stock on the
Nasdaq National Market System on that date, or, if there shall have been no
such sale so reported on that date, on the last preceding date on which such
a sale was so reported, (c) if the Common Stock is not so listed or quoted,
the mean between the closing bid and asked price on that date, or, if there
are no quotations available for such date, on the last preceding date on
which such quotations shall be available, as reported by Nasdaq, or, if not
reported by Nasdaq, by the National Quotation Bureau, Inc. or (d) if none of
the above is applicable, such amount as may be determined by the Board (or an
Independent Third Party, should the Board elect in its sole discretion to
instead utilize an Independent Third Party for this purpose), in good faith,
to be the fair market value per share of Common Stock.
"INDEPENDENT THIRD PARTY" means an individual or entity
independent of the Company (and any transferor or transferee of Common Stock
acquired upon the exercise of an Option under the Plan, if applicable) having
experience in providing investment banking appraisal or valuation services
and with expertise generally in the valuation of securities or other property
for purposes of this Plan. The Company's independent accountants shall be
deemed to satisfy the criteria for an Independent Third Party if selected by
the Board for that purpose. The Board may utilize one or more Independent
Third Parties.
"ISO" means an incentive stock option within the meaning of Code
Section 422.
"NONEMPLOYEE DIRECTOR" means any Director who is not an employee of
the Company or any Affiliate.
"NONQUALIFIED OPTION" means a nonqualified stock option within the
meaning of Code Section 83.
"OPTION AGREEMENT" means a written agreement between the Company and
an Optionee that sets forth the terms, conditions and limitations applicable
to an Option.
"OPTIONEE" means an employee of the Company or any of its
Affiliates, a consultant, independent contractor or a Nonemployee Director to
whom an Option has been granted under this Plan.
"PARENT CORPORATION" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if, at the
time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
"RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act, or
any successor rule.
"SUBSIDIARY" means (i) with respect to grants of Nonqualified
Options, any corporation, limited liability company or similar entity of
which the Company directly or indirectly owns shares representing more than
50% of the voting power of all classes or series of equity securities of such
entity, which have the right to vote generally on matters submitted
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to a vote of the holders of equity interests in such entity, and (ii) with
respect to grants of ISOs, any subsidiary within the meaning of Section
424(f) of the Code or any successor provision.
3. ELIGIBILITY. All employees of the Company and its Affiliates and
all Nonemployee Directors are eligible for Options under this Plan. The
Committee shall select the Optionees in the Plan from time to time by the
grant of Options under the Plan. The Committee may select, by the grant of
options under this Plan, certain consultants and independent contractors to
be Optionees. The granting of Options under this Plan shall be entirely
discretionary and nothing in this Plan shall be deemed to give any employee,
consultant or independent contractor of the Company or its Affiliates or any
Nonemployee Director any right to participate in this Plan or to be granted
an Option.
4. OPTION AGREEMENT.
(a) The Committee shall determine the type or types of Options to
be granted to each Optionee under this Plan. Each Option granted hereunder
shall be embodied in an Option Agreement, which shall contain such terms,
conditions and limitations as shall be determined by the Committee in its
sole discretion and shall be signed by the Optionee and by the Chief
Executive Officer or any other authorized officer of the Company for and on
behalf of the Company. An Option Agreement may include provisions for the
repurchase by the Company of Common Stock acquired pursuant to the Plan and
the repurchase of an Optionee's option rights under the Plan. Options may be
granted in combination or in tandem with, in replacement of, or as
alternatives to grants or rights under this Plan or any other employee plan
of the Company or any of its Affiliates, including the plan of any acquired
entity. An Option may provide for the granting or issuance of additional,
replacement or alternative Options upon the occurrence of specified events,
including the exercise of the original Option.
(b) Notwithstanding anything herein to the contrary, no Optionee
may be granted Options during any three-year period exercisable for more than
60,000 shares of Common Stock under this Plan, subject to adjustment as
provided in Section 14.
5. COMMON STOCK RESERVED FOR THE PLAN. The maximum number of shares
of Common Stock issuable pursuant to the exercise of Options granted under
the Plan shall be 194,000 shares of Common Stock. The Board and the
appropriate officers of the Company shall from time to time take whatever
actions are necessary to execute, acknowledge, file and deliver any documents
required to be filed with or delivered to any governmental authority or any
stock exchange or transaction reporting system on which shares of Common
Stock are listed or quoted in order to make shares of Common Stock available
for issuance pursuant to this Plan. Shares of Common Stock subject to Options
that (i) are forfeited or terminated, (ii) expire unexercised, (iii) are
settled in cash in lieu of Common Stock, or (iv) are exchanged for Common
Stock owned by the Optionee upon exercise of an Option, shall immediately
become available for the granting of Options. The Committee may from time to
time adopt and observe such procedures concerning the counting of shares
against the Plan maximum as it may deem appropriate under Rule 16b-3.
6. ADMINISTRATION. This Plan shall be administered by the Committee,
which shall have full and exclusive power to interpret this Plan and to adopt
such rules, regulations and guidelines for carrying out this Plan as it may
deem necessary or proper, all of which powers shall be exercised in the best
interests of the Company and in keeping with the
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objectives of this Plan. The Committee may, in its discretion but subject to
any necessary approvals of any stock exchange or regulatory body having
jurisdiction over the securities of the Company, provide for the extension of
the exercisability of an Option, accelerate the vesting or exercisability of
an Option, eliminate or make less restrictive any restrictions contained in
an Option, waive any restriction or other provision of this Plan or an Option
or otherwise amend or modify an Option in any manner that is either (a) not
adverse to the Optionee holding such Option or (b) consented to by such
Optionee, including (in either case) an amendment or modification that may
result in an ISO's losing its status as an ISO. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in this Plan or
in any Option in the manner and to the extent the Committee deems necessary
or desirable to carry it into effect. Any decision of the Committee in the
interpretation and administration of this Plan shall lie within its sole and
absolute discretion and shall be final, conclusive and binding on all parties
concerned. No member of the Committee or officer of the Company to whom it
has delegated authority in accordance with the provisions of Section 7 of
this Plan shall be liable for anything done or omitted to be done by him or
her, by any member of the Committee or by any officer of the Company in
connection with the performance of any duties under this Plan, except for his
or her own willful misconduct or as expressly provided by statute.
7. DELEGATION OF AUTHORITY. The Committee may delegate to the Chief
Executive Officer and to other senior officers of the Company its duties
under this Plan pursuant to such conditions or limitations as the Committee
may establish, except that the Committee may not delegate to any person the
authority to grant Options to, or take other action with respect to,
Optionees who are subject to Section 16 of the Exchange Act or who are
"covered employees," as that term is defined under Section 162(m) of the Code.
8. STOCK OPTIONS. Only employees of the Company or an Affiliate may
receive grants of ISOs. Employees, consultants, independent contractors and
Nonemployee Directors may receive grants of Nonqualified Options.
(a) INCENTIVE STOCK OPTIONS. An ISO shall consist of a right to
purchase a specified number of shares of Common Stock at an exercise price
specified by the Committee in the Option Agreement or otherwise, which shall
not be less than the Fair Market Value of the Common Stock on the grant date;
provided, however, that the exercise price of an ISO may not be less than
110% of such Fair Market Value if the ISO is awarded to any person who, at
the time of grant, owns stock representing more than 10% of the combined
voting power of all classes of stock of the Company or any Affiliate. Each
ISO shall expire not later than ten years after the grant date (or not later
than five years after the grant date if the ISO is awarded to any person who,
at the time of grant, owns stock representing more than 10% of the combined
voting power of all classes of stock of the Company or any Affiliate), with
the expiration date to be specified by the Committee in the Option Agreement.
Any ISO granted must, in addition to being subject to applicable terms,
conditions and limitations established by the Committee, comply with Section
422 of the Code. Pursuant to the ISO requirements of Code Section 422,
notwithstanding anything herein to the contrary, (a) no ISO can be granted
under the Plan on or after the tenth anniversary of the Effective Date of the
Plan, and (b) no Optionee may be granted an ISO to the extent that, upon the
grant of the ISO, the aggregate Fair Market Value (determined as of the date
the Option is granted) of the Common Stock with respect to which ISOs
(including Options hereunder) are exercisable for the first time by the
Optionee during any calendar year (under all plans of the Company and any
Affiliate) would exceed $100,000.
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(b) NONQUALIFIED OPTIONS. A Nonqualified Option shall consist of
a right to purchase a specified number of shares of Common Stock at an
exercise price specified by the Committee in the Option Agreement or
otherwise. Each Option shall expire not later than ten years after the grant
date, with the expiration date to be specified by the Committee in the Option
Agreement.
9. EXERCISE OF OPTIONS.
(a) Options granted to employees, consultants, independent
contractors and Nonemployee Directors shall be exercisable in accordance with
the terms of the applicable Option Agreement.
(b) Except as otherwise provided in Section 13, an Option may be
exercised solely by the Optionee during his lifetime or after his death by
the person or persons entitled thereto under his will or the laws of descent
and distribution.
(c) The purchase price of the shares as to which an Option is
exercised shall be paid in full at the time of the exercise. Such purchase
price shall be payable (i) in cash, (ii) if permitted by the Committee, by
means of tendering Common Stock or surrendering all or part of that or any
other Option, valued at Fair Market Value on the date of exercise, or (iii)
any combination thereof. The Committee may provide for procedures to permit
the exercise or purchase of Options by (a) loans from the Company or (b) use
of the proceeds to be received from the sale of Common Stock issuable
pursuant to an Option. No holder of an Option shall be, or have any of the
rights or privileges of, a shareholder of the Company in respect of any
shares subject to any Option unless and until certificates evidencing such
shares shall have been issued by the Company to such holder.
10. SHAREHOLDERS' AGREEMENT. As a condition to receiving shares of
Common Stock upon exercise of an Option, the Optionee must execute the
Shareholders' Agreement then in effect, if any, among the shareholders of the
Company.
11. TAX WITHHOLDING. The Company shall have the right to deduct
applicable taxes with respect to each Option and withhold, at the time of
delivery of cash or shares of Common Stock under this Plan, an appropriate
amount of cash or number of shares of Common Stock or a combination thereof
for payment of taxes required by law or to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes. The Committee may also permit withholding to be
satisfied by the transfer to the Company of shares of Common Stock
theretofore owned by the holder of the Option with respect to which
withholding is required. If shares of Common Stock are used to satisfy tax
withholding, such shares shall be valued based on the Fair Market Value when
the Committee determines that tax withholding is required to be made.
12. TERMINATION OF EMPLOYMENT OR TERMINATION OF DIRECTOR STATUS. Upon
the termination of employment for any reason of an Optionee who is an
employee of the Company or any Affiliate, the termination of service for any
reason of an Optionee who is a consultant or independent contractor of the
Company or any Affiliates, or in the event any Optionee who is a Nonemployee
Director ceases to be a Director, any unexercised Options shall be treated as
provided in the specific Option Agreement evidencing the Option. In the event
of such a termination, the Committee may, in its discretion, provide for the
extension of the exercisability
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of an Option for any period that is not beyond the applicable expiration date
thereof, accelerate the vesting or exercisability of an Option, eliminate or
make less restrictive any restrictions contained in an Option, waive any
restriction or other provision of this Plan or an Option or otherwise amend
or modify the Option in any manner that is either (a) not adverse to such
Optionee or (b) consented to by such Optionee.
13. ASSIGNABILITY. Except as otherwise provided herein or as provided
in the Option Agreement, no Option granted under this Plan shall be
assignable or otherwise transferable by the Optionee (or his or her
authorized legal representative) during the Optionee's lifetime and, after
the death of the Optionee, other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order (as defined
in Section 401(a)(13) of the Code or Section 206(d)(3) of the United States
Employee Retirement Income Security Act of 1974, as amended); and any
attempted assignment or transfer in violation of this Section 13(b) shall be
null and void. Upon the Optionee's death, the personal representative or
other person entitled to succeed to the rights of the Optionee (the
"Successor Optionee") may exercise such rights. A Successor Optionee must
furnish proof satisfactory to the Company of his or her right to exercise the
Option under the Optionee's will or under the applicable laws of descent and
distribution.
Subject to approval by the Committee in its sole discretion, all
or a portion of the Nonqualified Options granted to an Optionee under the
Plan may be transferable by the Optionee to (i) the spouse, ex-spouse,
children, step-children or grandchildren of the Optionee ("Immediate Family
Members"), (ii) a trust or trusts for the exclusive benefit of such Immediate
Family Members ("Immediate Family Member Trusts"), (iii) a partnership or
partnerships, or limited liability company, in which such Immediate Family
Members or Immediate Family Member Trusts have at least 99% of the equity,
profit and loss interests ("Immediate Family Member Partnerships"), (iv) an
entity exempt from federal income tax pursuant to Section 501(c)(3) of the
Code, (v) a split interest trust or pooled income fund described in Section
2522(c)(2) of the Code, and/or (vi) upon approval by the Committee, any other
persons or entities, including an individual, corporation, partnership,
limited partnership, limited liability partnership, limited liability
company, professional corporation, trust, estate, custodian, trustee,
executor, administrator, nominee, charity or other entity in its own or a
representative capacity; provided that the Option Agreement pursuant to which
such Options are granted (or an amendment thereto) must expressly provide for
transferability in a manner consistent with this Section. Subsequent
transfers of transferred Options shall be prohibited except by will or the
laws of descent and distribution or pursuant to a qualified domestic
relations order (as described above), unless such transfers are made to the
original Optionee or a person to whom the original Optionee could have made a
transfer in the manner described herein. No transfer shall be effective
unless and until written notice of such transfer is provided to the Company,
in the form and manner prescribed by the Company. Following transfer, any
such Options shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer, and, except as otherwise
provided herein, the term "Optionee" shall be deemed to refer to the
transferee. The events of termination of service in Section 12 shall continue
to be applied with respect to the original Optionee, following which the
Options shall be exercisable by the transferee only to the extent and for the
periods specified in Section 12 or the Option Agreement. The Committee and
the Company shall have no obligation to inform any transferee of an Option of
any expiration, termination, lapse or acceleration of such Option. The
designation by an Optionee of a beneficiary will not constitute a transfer of
the Option.
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14. ADJUSTMENTS; CHANGE IN CONTROL.
(a) The existence of outstanding Options shall not affect in any
manner the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the share capital of the Company or its business or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference shares (whether or not such issue is prior to, on a parity
with or junior to the shares of Common Stock) or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding of any kind,
whether or not of a character similar to that of the acts or proceedings
enumerated above.
(b) In the event of any subdivision or consolidation of
outstanding shares of Common Stock (including by way of stock split or
reverse split) or declaration of a dividend payable in shares of Common Stock
or capital reorganization or reclassification or other transaction involving
an increase or reduction in the number of outstanding shares of Common Stock,
the Committee shall adjust proportionally: (i) the number of shares of Common
Stock reserved under this Plan and covered by outstanding Options; (ii) the
exercise price of such Options; (iii) the number of shares to be subject to
future Options; (iv) the appropriate Fair Market Value and other price
determinations for such Options; and (v) the maximum number of shares that
may be granted to an Optionee under Section 4(b). In the event of any other
recapitalization or capital reorganization of the Company, consolidation or
merger of the Company with another corporation or entity or the adoption by
the Company of a plan of exchange affecting the shares of Common Stock or any
distribution to holders of shares of Common Stock of securities or property
(other than normal cash dividends or dividends payable in shares of Common
Stock), the Committee shall make such adjustments or other provisions to
outstanding Options as it may deem equitable, including adjustments to avoid
fractional shares, to give proper effect to such event; provided that such
adjustments shall only be such as are necessary to maintain the proportionate
interest of the Optionees and preserve, without exceeding, the value of the
Options.
In the event of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation, the Committee
shall be authorized (i) to issue or assume stock options, regardless of
whether in a transaction to which Section 424(a) of the Code applies, by
means of substitution of new Options for previously issued Options or an
assumption of previously issued Options as a part of such adjustment; (ii) to
make provision, prior to the transaction, for the acceleration of the vesting
and exercisability of, or lapse of restrictions with respect to, Options and
the termination of Options that remain unexercised at the time of such
transaction; or (iii) to provide for the acceleration of the vesting and
exercisability of the Options and the cancellation thereof in exchange for
such payment as shall be mutually agreeable to the Optionee and the Committee.
(c) If so provided in the Option Agreement, an Option shall
become fully exercisable upon a Change in Control (as hereinafter defined) of
the Company. For purposes of this Plan, a "Change in Control" shall be
conclusively deemed to have occurred if (and only if) any of the following
events shall have occurred:
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(i) prior to the closing of an initial public offering (an
"IPO") of shares of capital stock of the Company, (A) a complete sale of the
Company's assets or a complete liquidation of the Company, or (B) any other
event that the Committee determines to be a Change in Control; and
(ii) subsequent to the closing of an IPO of the Company, (A)
there shall be consummated any merger or consolidation pursuant to which
shares of the Company's Common Stock would be converted into cash, securities
or other property, or any sale, lease, exchange or other disposition
(excluding disposition by way of mortgage, pledge or hypothecation), in one
transaction or a series of related transactions, of all or substantially all
of the assets of the Company (a "Business Combination"), in each case unless,
following such Business Combination, the holders of the outstanding Common
Stock immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 51% of the outstanding common stock or
equivalent equity interests of the corporation or entity resulting from such
Business Combination (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Business Combination, of the outstanding Common Stock, (B) the
shareholders of the Company approve any plan or proposal for the complete
liquidation or dissolution of the Company, (C) any "person" (as such term is
defined in Section 3(a)(9) or Section 13(d)(3) under the Exchange Act or any
"group" (as such term is used in Rule 13d-5 promulgated under the Exchange
Act), other than the Company, any successor of the Company or any Subsidiary
or any employee benefit plan of the Company or any Subsidiary (including such
plan's trustee), becomes a beneficial owner for purposes of Rule 13d-3
promulgated under the Exchange Act, directly or indirectly, of securities of
the Company representing 30% or more of the Company's then outstanding
securities having the right to vote in the election of directors, (D) during
any period of two consecutive years, individuals who, at the beginning of
such period constituted the entire Board, cease for any reason (other than
death) to constitute a majority of the directors, unless the election, or the
nomination for election by the Company's shareholders, of each new director
was approved by a vote of at least a majority of the directors then still in
office who were directors at the beginning of the period, or (E) there shall
occur any other event which the Committee determines to be a Change in
Control.
15. RESTRICTIONS. This Plan, and the granting and exercise of
Options hereunder, and the obligation of the Company to sell and deliver
Common Stock under such Options, shall be subject to all applicable foreign
and United States laws, rules and regulations, and to such approvals on the
part of any governmental agencies or stock exchanges or transaction reporting
systems as may be required. No Common Stock or other form of payment shall be
issued with respect to any Option unless the Company shall be satisfied based
on the advice of its counsel that such issuance will be in compliance with
applicable federal and state securities laws and the requirements of any
regulatory authority having jurisdiction over the securities of the Company.
Unless the Options and Common Stock covered by this Plan have been registered
under the Securities Act of 1933, as amended, each person exercising an
Option under this Plan may be required by the Company to give a
representation in writing in form and substance satisfactory to the Company
to the effect that he is acquiring such shares for his own account for
investment and not with a view to, or for sale in connection with, the
distribution of such shares or any part thereof. If any provision of this
Plan is found not to be in compliance with such rules, such provision shall
be null and void to the extent required to permit this Plan to comply with
such rules. Certificates evidencing shares of Common Stock delivered under
this
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Plan may be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any securities
exchange or transaction reporting system upon which the Common Stock is then
listed and any applicable federal, foreign and state securities law. The
Committee may cause a legend or legends to be placed upon any such
certificates to make appropriate reference to such restrictions.
16. AMENDMENTS OR TERMINATION. Subject to the limitations set forth
in this Section 16, the Board may at any time and from time to time, without
the consent of the Optionees, alter, amend, revise, suspend, or terminate the
Plan in whole or in part. In the event of any such amendment to the Plan, the
holder of any Option outstanding under the Plan shall, upon request of the
Committee and as a condition to the exercisability thereof, execute a
conforming amendment in the form prescribed by the Committee to any Option
Agreement relating thereto within such reasonable time as the Committee shall
specify in such request. Notwithstanding anything contained in this Plan to
the contrary, unless required by law, no action contemplated or permitted by
this Section 16 shall adversely affect any rights of Optionees or obligations
of the Company to Optionees with respect to any Options theretofore granted
under the Plan without the consent of the affected Optionee.
Notwithstanding the foregoing, no amendment or modification shall be
made, without the approval of the shareholders of the Company:
(i) Which would increase the total number of shares reserved
for the purposes of the Plan under Section 5, except as provided in
Section 14; or
(ii) To the extent shareholder approval is otherwise required
by applicable legal requirements or applicable stock exchange
regulations.
Any amendment or modification to the Plan shall also be subject to any
necessary approvals of any stock exchange or regulatory body having
jurisdiction over the securities of the Company.
17. UNFUNDED PLAN. Insofar as it provides for awards of Common Stock
or rights thereto, this Plan shall be unfunded. Although bookkeeping accounts
may be established with respect to Optionees who are entitled to Common Stock
or rights thereto under this Plan, any such accounts shall be used merely as
a bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by Common Stock or rights thereto,
nor shall this Plan be construed as providing for such segregation, nor shall
the Company, the Board or the Committee be deemed to be a trustee of any
Common Stock or rights thereto to be granted under this Plan. Any liability
or obligation of the Company to any Optionee with respect to a grant of
Common Stock or rights thereto under this Plan shall be based solely upon any
contractual obligations that may be created by this Plan and any Option
Agreement, and no such liability or obligation of the Company shall be deemed
to be secured by any pledge or other encumbrance on any property of the
Company. None of the Company, the Board or the Committee shall be required to
give any security or bond for the performance of any obligation that may be
created by this Plan.
18. NO EMPLOYMENT GUARANTEED; NO ELECTION AS DIRECTOR GUARANTEED. No
provision of this Plan or any Option Agreement hereunder shall confer any
right upon any employee, consultant or independent contractor to continued
employment or service with the
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Company or any Affiliate. In addition, the granting of any Option shall not
impose upon the Company, the Board or any other Directors of the Company any
obligation to nominate any Nonemployee Director for election as a director
and the right of the shareholders of the Company to remove any person as a
director of the Company shall not be diminished or affected by reason of the
fact that an Option has been granted to such person.
19. GOVERNING LAW. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or applicable securities laws, shall be governed by
and construed in accordance with the laws of the State of Texas.
20. EFFECTIVE DATE OF PLAN. This Plan shall be effective as of the
Effective Date. Notwithstanding the foregoing, the adoption of this Plan is
expressly conditioned upon the approval of the holders of a majority of
shares of Common Stock present, or represented, and entitled to vote at a
meeting of the Company's shareholders held on or before the date one year
after the Effective Date. If the shareholders of the Company should fail so
to approve this Plan prior to such date, this Plan shall terminate and cease
to be of any further force or effect and all grants of Options hereunder
shall be null and void.
Attested to by the Secretary of Michael Holdings, Inc. as
adopted by the Board of Directors of Michael Holdings, Inc. effective
as of the 27th day of March, 1998 (the "Effective Date"), and
approved by shareholders of Michael Holdings, Inc. on the 16th day of
July, 1998.
/s/ SCOTT SAMPSELL
-------------------------
Scott Sampsell, Secretary
Michael Holdings, Inc.
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