As filed with the Securities and Exchange Commission on February 27, 2002
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
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COLLABORATIVE FINANCIAL NETWORK GROUP, INC.
(formerly E-Financial Depot.com, Inc.)
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
33-0809711
(IRS Employer Identification Number)
1875 Century Park East, Suite 2250
Century City, California 90067
(Address of principal executive offices)
Jeffrey W. Michel, President
Collaborative Financial Network Group, Inc.
1875 Century Park East, Suite 2250
Century City, California 90067
(Name and address of agent for service)
(604) 683-4691
(Telephone number, including area code of agent for service)
2002 Directors and Officers Stock Option and Stock Award Plan
2002 Employees Stock Incentive Plan
(Full title of the Plans)
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Copy to:
Robert L. Sonfield, Jr.
Sonfield and Sonfield
770 South Post Oak Lane, Suite 435
Houston, Texas 77056-1913
CALCULATION OF REGISTRATION FEE
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Proposed maximum Proposed maximum
Title of securities to Amount to be offering price per aggregate offering Amount of
be registered registered share (1) price (1) registration fee
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Common Stock,
$.001 par value 14,500,000 $.05 $725,000 $173.28
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
(1) Calculated pursuant to Rule 457(c) of the Securities Act of 1933, as
amended, as permitted by Rule 457(h)(1) of the Securities Act of 1933, as
amended, based upon the average of the bid and asked prices for the Company's
common shares as reported by the Electronic Bulletin Board on February 21, 2002.
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PART I
The documents containing the information specified in this Part I will
be sent or given to participants in the 2002 Directors and Officers Stock Option
and Stock Award Plan and the 2002 Employees Stock Incentive Plan (collectively
the "Plans") as specified by Rule 428(b)(1). Pursuant to the instructions for
Form S-8, such documents need not be filed with the Commission either as part of
the Registration Statement or as prospectuses or prospectus supplements pursuant
to Rule 424. These documents and the documents incorporated by reference in this
Registration Statement pursuant to Item 3 of Part II of this Registration
Statement, taken together, constitute a prospectus that meets the requirements
of Section 10(a) of the Securities Act of 1933, as amended. See Rule 428(a)(1).
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The documents listed in (a) and (b) below have been filed by the
Registrant, Collaborative Financial Network Group, Inc. (formerly
e-Financialdepot.com a Delaware corporation (the "Company"), with the Securities
and Exchange Commission (the "Commission") and are incorporated by reference in
this Registration Statement. All documents subsequently filed by the Registrant
pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference in the Registration Statement and to be part thereof
from the date of filing of such documents.
(a) Form 8-k filed on November 19, 2001, Quarterly Report on
Form 10-QSB for the quarter ended September 30, 2001 and filed on
November 14, 2001, Quarterly Report on Form 10-QSB for the quarter
ended June 30, 2001 and filed on August 22, 2001, Registration
Statement on Form S-8 filed on August 9, 2001, Form 8K/A filed on
February 12, 2002, Quarterly Report on Form 10-QSB for the quarter
ended December 31, 2001 and filed on February 12, 2002, Annual Report
on Form 10-KSB for the year ended March 31, 2001 and filed on August 7,
2001. The above referenced reports, which were previously filed with
the Commission, are incorporated herein by reference.
(b) All other reports filed pursuant to Section 13 or 15(d) of
the Exchange Act since the end of the fiscal year covered by the
Registrant's Form 10-KSB referred to in (a) above.
The above referenced reports, which were previously filed with the
Commission, are incorporated herein by reference.
Item 4: Description of Securities
Not Applicable
Item 5: Interests of Named Experts and Counsel.
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None
Item 6: Indemnification of Directors and Officers.
-----------------------------------------
(a) Section 145 of the Delaware General Corporation Law provides that:
ss.145. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS; INSURANCE
(1) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such actions suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contenders or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(2) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
(3) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b), or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(4) Any indemnification under subsections (a) and (b) (unless ordered
by a court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by a majority vote of the directors who are not
parties to such action, suit or proceeding, even though less than a quorum, or
(2) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (3) by the stockholders.
(5) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative, or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this Section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the board of directors deems appropriate.
(6) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(7) A corporation shall power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee of agent or the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this section.
(8) For purposes of this Section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Section with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(9) For purposes of this Section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
Section.
(10) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(11) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court
of Chancery may summarily determine a corporation's obligation to advance
expenses (including attorneys' fees). (As amended by Ch. 186, Laws of 1967,
Ch. 421, Laws of 1970, Ch. 437, Laws of 1974, Ch. 25, Laws of 198 1, Ch. 11
2, Laws of 1983, Ch. 289, Laws of 1986, Ch. 376, Laws of 1990, and Ch. 26 1,
Laws of 1994.)
(b) Section 102 of the Delaware General Corporation Law includes
the following provisions:
ss. 102. CERTIFICATE OF INCORPORATION; CONTENTS
(1) The certificate of incorporation shall set forth:
(2) In addition to the matters required to be set forth in the
certificate of incorporation by subsection (a) of this section the certificate
of incorporation may also contain any or all of the following matters:
(vii) A provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided
that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of
law, (iii) under section 174 of this Title, or (iv) for any transaction
from which the director derived an improper personal benefit. No such
provision shall eliminate or limit the liability of a director for any
act or omission occurring prior to the date when such provision becomes
effective. All references in this paragraph to a director shall also be
deemed to refer (x) to a member of the governing body of a corporation
which is not authorized to issue capital stock and (y) to such other
person or persons, if any, who, pursuant to a provision of the
certificate of incorporation in accordance with subsection (a) of ss.
141 of this title, exercise or perform any of the powers or duties
otherwise conferred or imposed upon the board of directors by this
title.
(c) Article Nine of Registrant's Certificate of Incorporation provides:
No director of this corporation shall be liable to the
corporation for monetary damages for an act or omission occurring in
the director's capacity as a director, except to the extent the
statutes of the State of Delaware expressly provided that the
director's liability may not be eliminated or limited. Any repeal or
amendment of this paragraph that increases the liability of a director
shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the corporation
existing at the time of such repeal or amendments.
Item 7. Exemption From Registration Claimed.
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Not Applicable
Item 8: Exhibits
The following documents are filed as Exhibits to this Registration
Statement:
4.1 -- 2002 Directors and Officers Stock Option
and Stock Award Plan
4.2 -- 2002 Employees Stock Incentive Plan
5 -- Opinion of Sonfield and Sonfield as to the
authorization and issuance of the shares
being registered.
24.1 -- Consent of Sonfield and Sonfield (included
in Exhibit 5)
24.2 -- Consent of Stefanou and Company, LLP,
Certified Public Accountants
Item 9: Undertakings
The undersigned registrant hereby undertakes:
(a) to file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement to include any material
information with respect to the plan of distribution
not previously disclosed in the registration
statement or any material change to such information
in the registration statement;
(b) that, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof; and
(c) to remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8, and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Century City, California, on the 22nd day of February, 2002.
COLLABORATIVE FINANCIAL NETWORK GROUP, INC.
By: /s/Jeffrey W. Michel
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Jeffrey W. Michel, Chief Executive Officer
By: /s/Christina Cepliauskas
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Christina Cepliauskas, Chief Financial Officer
EXHIBIT 4.1
Collaborative financial network group, inc.
2002 DIRECTORS AND OFFICERS
STOCK OPTION AND STOCK AWARD PLAN
SECTION 1. PURPOSE OF THE PLAN. The purpose of the Collaborative Financial
Network Group, Inc. 2002 Directors and Officers Stock Option and Stock Award
Plan ("Plan") is to maintain the ability of Collaborative Financial Network, a
Delaware corporation (the "Company") and its subsidiaries to attract and retain
highly qualified and experienced directors, employees and consultants and to
give such directors, employees and consultants a continued proprietary interest
in the success of the Company and its subsidiaries. In addition the Plan is
intended to encourage ownership of common stock, $.001 par value ("Common
Stock"), of the Company by the directors, employees and consultants of the
Company and its Affiliates (as defined below) and to provide increased incentive
for such persons to render services and to exert maximum effort for the success
of the Company business. The Plan provides eligible employees and consultants
the opportunity to participate in the enhancement of shareholder value by the
grants of options, stock appreciation rights, awards of restricted stock,
bonuses and/or fees payable in unrestricted stock, or any combination thereof.
In addition, the Company expects that the Plan will further strengthen the
identification of the directors, employees and consultants with the
stockholders. Certain options to be granted under this Plan are intended to
qualify as Incentive Stock Options ("ISOs") pursuant to Section 422 of the
Internal Revenue Code of 1986, as amended ("Code"), while other options granted
under this Plan will be nonqualified options which are not intended to qualify
as ISOs ("Nonqualified Options"), either or both as provided in the agreements
evidencing the options as provided in Section 6 hereof. Employees, consultants
and directors who participate or become eligible to participate in this Plan
from time to time are referred to collectively herein as "Participants". As used
in this Plan, the term "Affiliates" means any "parent corporation" of the
Company and any "subsidiary corporation" of the Company within the meaning of
Code Sections 424(e) and (f), respectively.
SECTION 2. ADMINISTRATION OF THE PLAN.
(a) Composition of Committee. The Plan shall be administered by the
Board of Directors of the Company (the "Board"). When acting in such capacity
the Board is herein referred to as the "Committee," which shall also designate
the Chairman of the Committee. If the Company is governed by Rule 16b-3
promulgated by the Securities and Exchange Commission ("Commission") pursuant to
the Securities Exchange Act of 1934, as amended ("Exchange Act"), no director
shall serve as a member of the Committee unless he or she is a "disinterested
person" within the meaning of such Rule 16b-3.
(b) Committee Action. The Committee shall hold its meetings at such
times and places as it may determine. A majority of its members shall constitute
a quorum, and all determinations of the Committee shall be made by not less than
a majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members shall be fully as effective as if it had
been made by a majority vote of its members at a meeting duly called and held.
The Committee may designate the Secretary of the Company or other Company
employees to assist the Committee in the administration of the Plan, and may
grant authority to such persons to execute award agreements or other documents
on behalf of the Committee and the Company. Any duly constituted committee of
the Board satisfying the qualifications of this Section 2 may be appointed as
the Committee.
(c) Committee Expenses. All expenses and liabilities incurred by
the Committee in the administration of the Plan shall be borne by the Company.
The Committee may employ attorneys, consultants, accountants or other persons.
SECTION 3. STOCK RESERVED FOR THE PLAN. Subject to adjustment as provided in
Section 6(m) hereof, the aggregate number of shares of Common Stock that may be
optioned or issued under the Plan is 4,500,000. The shares subject to the Plan
shall consist of authorized but unissued shares of Common Stock and such number
of shares shall be and is hereby reserved for sale for such purpose. Any of such
shares which may remain unsold and which are not subject to outstanding options
at the termination of the Plan shall cease to be reserved for the purpose of the
Plan, but until termination of the Plan or the termination of the last of the
options granted under the Plan, whichever last occurs, the Company shall at all
times reserve a sufficient number of shares to meet the requirements of the
Plan. Should any option expire or be cancelled prior to its exercise in full,
the shares theretofore subject to such option may again be made subject to an
option under the Plan.
Immediately upon the grant of any option or award, the number of shares of
Common Stock that may be issued or optioned under the Plan will be increased.
The number of shares of such increase shall be an amount such that immediately
after such increase the total number of shares issuable under the Plan and
reserved for issuance upon exercise of outstanding options will equal 15% of the
total number of issued and outstanding shares of Common Stock of the Company.
Such increase in the number of shares subject to the Plan shall occur without
the necessity of any further corporate action of any kind or character.
SECTION 4. ELIGIBILITY. The Participants shall include directors, employees,
including officers, of the Company and its divisions and subsidiaries, and
consultants and attorneys who provide bona fide services to the Company.
Participants are eligible to be granted options, restricted stock, unrestricted
stock and other awards under this Plan and to have their bonuses and/or
consulting fees payable in restricted stock, unrestricted stock and other
awards. A Participant who has been granted an option hereunder may be granted an
additional option or options, if the Committee shall so determine.
SECTION 5. GRANT OF OPTIONS.
(a) Committee Discretion. The Committee shall have sole and absolute
discretionary authority (i) to determine, authorize, and designate those persons
pursuant to this Plan who are to receive options, restricted stock, or Common
Stock under the Plan, (ii) to determine the number of shares of Common Stock to
be covered by such grant or such options and the terms thereof, (iii) to
determine the type of Common Stock granted: Restricted stock unrestricted Common
Stock or a combination of restricted and unrestricted Common Stock, and (iv) to
determine the type of option granted: ISO, Nonqualified Option or a combination
of ISO and Nonqualified Options. The Committee shall thereupon grant options in
accordance with such determinations as evidenced by a written option agreement.
Subject to the express provisions of the Plan, the Committee shall have
discretionary authority to prescribe, amend and rescind rules and regulations
relating to the Plan, to interpret the Plan, to prescribe and amend the terms of
the option agreements (which need not be identical) and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
(b) Stockholder Approval. All ISOs granted under this Plan are subject
to, and may not be exercised before, the approval of this Plan by the
stockholders prior to the first anniversary date of the Board meeting held to
approve the Plan, by the affirmative vote of the holders of a majority of the
outstanding shares of the Company present, or represented by proxy, and entitled
to vote thereat, or by written consent in accordance with the laws of the State
of Delaware, provided that if such approval by the stockholders of the Company
is not forthcoming, all options and stock awards previously granted under this
Plan other than ISOs shall be valid in all respects.
(c) Limitation on Incentive Stock Options. The aggregate fair market
value (determined in accordance with Section 6(b) of this Plan at the time the
option is granted) of the Common Stock with respect to which ISOs may be
exercisable for the first time by any Participant during any calendar year under
all such plans of the Company and its Affiliates shall not exceed $1,000,000.
SECTION 6. TERMS AND CONDITIONS. Each option granted under the Plan shall be
evidenced by an agreement, in a form approved by the Committee, which shall be
subject to the following express terms and conditions and to such other terms
and conditions as the Committee may deem appropriate.
(a) Option Period. The Committee shall promptly notify the Participant
of the option grant and a written agreement shall promptly be executed and
delivered by and on behalf of the Company and the Participant, provided that the
option grant shall expire if a written agreement is not signed by said
Participant (or his agent or attorney) and returned to the Company within 60
days from date of receipt by the Participant of such agreement. The date of
grant shall be the date the option is actually granted by the Committee, even
though the written agreement may be executed and delivered by the Company and
the Participant after that date. Each option agreement shall specify the period
for which the option thereunder is granted (which in no event shall exceed ten
years from the date of grant) and shall provide that the option shall expire at
the end of such period. If the original term of an option is less than ten years
from the date of grant, the option may be amended prior to its expiration, with
the approval of the Committee and the Participant, to extend the term so that
the term as amended is not more than ten years from the date of grant. However,
in the case of an ISO granted to an individual who, at the time of grant, owns
stock possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company or its Affiliate ("Ten Percent Stockholder"),
such period shall not exceed five years from the date of grant.
(b) Option Price. The purchase price of each share of Common Stock
subject to each option granted pursuant to the Plan shall be determined by the
Committee at the time the option is granted and, in the case of ISOs, shall not
be less than 100% of the fair market value of a share of Common Stock on the
date the option is granted, as determined by the Committee. In the case of an
ISO granted to a Ten Percent Stockholder, the option price shall not be less
than 110% of the fair market value of a share of Common Stock on the date the
option is granted. The purchase price of each share of Common Stock subject to a
Nonqualified Option under this Plan shall be determined by the Committee prior
to granting the option. The Committee shall set the purchase price for each
share subject to a Nonqualified Option at either the fair market value of each
share on the date the option is granted, or at such other price as the Committee
in its sole discretion shall determine.
At the time a determination of the fair market value of a share of
Common Stock is required to be made hereunder, the determination of its fair
market value shall be made by the Committee in such manner as it deems
appropriate.
(c) Exercise Period. The Committee may provide in the option agreement
that an option may be exercised in whole, immediately, or is to be exercisable
in increments. In addition, the Committee may provide that the exercise of all
or part of an option is subject to specified performance by the Participant.
However, no portion of any option may be exercisable by a Participant prior to
the approval of the Plan by the stockholders of the Company.
(d) Procedure for Exercise. Options shall be exercised by the delivery
of written notice to the Secretary of the Company setting forth the number of
shares with respect to which the option is being exercised. Such notice shall be
accompanied by cash or cashier's check, bank draft, postal or express money
order payable to the order of the Company, or at the option of the Committee, in
Common Stock theretofore owned by such Participant (or any combination of cash
and Common Stock). Notice may also be delivered by fax or telecopy provided that
the purchase price of such shares is delivered to the Company via wire transfer
on the same day the fax is received by the Company. The notice shall specify the
address to which the certificates for such shares are to be mailed. A
Participant shall be deemed to be a stockholder with respect to shares covered
by an option on the date the Company receives such written notice and such
option payment. As promptly as practicable after receipt of such written
notification and payment, the Company shall deliver to the Participant
certificates for the number of shares with respect to which such option has been
so exercised, issued in the Participant's name or such other name as Participant
directs; provided, however, that such delivery shall be deemed effected for all
purposes when a stock transfer agent of the Company shall have deposited such
certificates in the United States mail, addressed to the Participant at the
address specified pursuant to this Section 6(d).
(e) Termination of Employment. If an executive officer to whom an
option is granted ceases to be employed by the Company for any reason other than
death or disability, any option which is exercisable on the date of such
termination of employment may be exercised during a period beginning on such
date and ending at the time set forth in the option agreement; provided,
however, that if a Participant's employment is terminated because of the
Participant's theft or embezzlement from the Company, disclosure of trade
secrets of the Company or the commission of a willful, felonious act while in
the employment of the Company (such reasons shall hereinafter be collectively
referred to as "for cause"), then any option or unexercised portion thereof
granted to said Participant shall expire upon such termination of employment.
Notwithstanding the foregoing, no ISO may be exercised later than three months
after an employee's termination of employment for any reason other than death or
disability.
(f) Disability or Death of Participant. In the event of the
determination of disability or death of a Participant under the Plan while he or
she is employed by the Company, the options previously granted to him may be
exercised (to the extent he or she would have been entitled to do so at the date
of the determination of disability or death) at any time and from time to time,
within a period beginning on the date of such determination of disability or
death and ending at the time set forth in the option agreement, by the former
employee, the guardian of his estate, the executor or administrator of his
estate or by the person or persons to whom his rights under the option shall
pass by will or the laws of descent and distribution, but in no event may the
option be exercised after its expiration under the terms of the option
agreement. Notwithstanding the foregoing, no ISO may be exercised later than one
year after the determination of disability or death. A Participant shall be
deemed to be disabled if, in the opinion of a physician selected by the
Committee, he or she is incapable of performing services for the Company of the
kind he or she was performing at the time the disability occurred by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or to be of long, continued and indefinite duration. The date
of determination of disability for purposes hereof shall be the date of such
determination by such physician.
(g) Assignability. An option shall not be assignable or otherwise
transferable except by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined in the Code or Title
I of the Employee Retirement Income Security Act, as amended, or the rules
thereunder. During the lifetime of a Participant, an option shall be exercisable
only by him.
(h) Incentive Stock Options. Each option agreement may contain
such terms and provisions as the Committee may determine to be necessary or
desirable in order to qualify an option designated as an incentive stock option.
(i) Restricted Stock Awards. Awards of restricted stock under this Plan
shall be subject to all the applicable provisions of this Plan, including the
following terms and conditions, and to such other terms and conditions not
inconsistent therewith, as the Committee shall determine:
(A) Awards of restricted stock may be in addition to or in
lieu of option grants. Awards may be conditioned on the attainment of
particular performance goals based on criteria established by the
Committee at the time of each award of restricted stock. During a
period set forth in the agreement (the "Restriction Period"), the
recipient shall not be permitted to sell, transfer, pledge, or
otherwise encumber the shares of restricted stock; except that such
shares may be used, if the agreement permits, to pay the option price
pursuant to any option granted under this Plan, provided an equal
number of shares delivered to the Participant shall carry the same
restrictions as the shares so used. Shares of restricted stock shall
become free of all restrictions if during the Restriction Period, (i)
the recipient dies, (ii) the recipient's directorship, employment, or
consultancy terminates by reason of permanent disability, as determined
by the Committee, (iii) the recipient retires after attaining both 59
1/2 years of age and five years of continuous service with the Company
and/or a division or subsidiary, or (iv) if provided in the agreement,
there is a "change in control" of the Company (as defined in such
agreement). The Committee may require medical evidence of permanent
disability, including medical examinations by physicians selected by
it. Unless and to the extent otherwise provided in the agreement,
shares of restricted stock shall be forfeited and revert to the Company
upon the recipient's termination of directorship, employment or
consultancy during the Restriction Period for any reason other than
death, permanent disability, as determined by the Committee, retirement
after attaining both 59 1/2 years of age and five years of continuous
service with the Company and/or a subsidiary or division, or, to the
extent provided in the agreement, a "change in control" of the Company
(as defined in such agreement), except to the extent the Committee, in
its sole discretion, finds that such forfeiture might not be in the
best interests of the Company and, therefore, waives all or part of the
application of this provision to the restricted stock held by such
recipient. Certificates for restricted stock shall be registered in the
name of the recipient but shall be imprinted with the appropriate
legend and returned to the Company by the recipient, together with a
stock power endorsed in blank by the recipient. The recipient shall be
entitled to vote shares of restricted stock and shall be entitled to
all dividends paid thereon, except that dividends paid in Common Stock
or other property shall also be subject to the same restrictions.
(B) Restricted Stock shall become free of the foregoing
restrictions upon expiration of the applicable Restriction Period and
the Company shall then deliver to the recipient Common Stock
certificates evidencing such stock. Restricted stock and any Common
Stock received upon the expiration of the restriction period shall be
subject to such other transfer restrictions and/or legend requirements
as are specified in the applicable agreement.
(j) Bonuses and Past Salaries and Fees Payable in Unrestricted Stock.
----------------------------------------------------------------
(A) In lieu of cash bonuses otherwise payable under the
Company's or applicable division's or subsidiary's compensation
practices to employees and consultants eligible to participate in this
Plan, the Committee, in its sole discretion, may determine that such
bonuses shall be payable in unrestricted Common Stock or partly in
unrestricted Common Stock and partly in cash. Such bonuses shall be in
consideration of services previously performed and as an incentive
toward future services and shall consist of shares of unrestricted
Common Stock subject to such terms as the Committee may determine in
its sole discretion. The number of shares of unrestricted Common Stock
payable in lieu of a bonus otherwise payable shall be determined by
dividing such bonus amount by the fair market value of one share of
Common Stock on the date the bonus is payable, with fair market value
determined as of such date in accordance with Section 6(b).
(B) In lieu of salaries and fees otherwise payable by the
Company's to employees, attorneys and consultants eligible to
participate in this Plan that were incurred for services rendered
during and prior to the year of 2002, the Committee, in its sole
discretion, may determine that such unpaid salaries and fees shall be
payable in unrestricted Common Stock or partly in unrestricted Common
Stock and partly in cash. Such awards shall be in consideration of
services previously performed and as an incentive toward future
services and shall consist of shares of unrestricted Common Stock
subject to such terms as the Committee may determine in its sole
discretion. The number of shares of unrestricted Common Stock payable
in lieu of a salaries and fees otherwise payable shall be determined by
dividing each calendar month's of unpaid salary or fee amount by the
average trading value of the Common Stock for the calendar month during
which the subject services were provided.
(k) No Rights as Stockholder. No Participant shall have any rights as a
stockholder with respect to shares covered by an option until the option is
exercised by the written notice and accompanied by payment as provided in clause
(d) above.
(l) Extraordinary Corporate Transactions. The existence of outstanding
options shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations, exchanges, or other changes in the Company's capital structure
or its business, or any merger or consolidation of the Company, or any issuance
of Common Stock or other securities or subscription rights thereto, or any
issuance of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, 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, whether of a
similar character or otherwise. If the Company recapitalizes or otherwise
changes its capital structure, or merges, consolidates, sells all of its assets
or dissolves (each of the foregoing a "Fundamental Change"), then thereafter
upon any exercise of an option theretofore granted the Participant shall be
entitled to purchase under such option, in lieu of the number of shares of
Common Stock as to which option shall then be exercisable, the number and class
of shares of stock and securities to which the Participant would have been
entitled pursuant to the terms of the Fundamental Change if, immediately prior
to such Fundamental Change, the Participant had been the holder of record of the
number of shares of Common Stock as to which such option is then exercisable. If
(i) the Company shall not be the surviving entity in any merger or consolidation
(or survives only as a subsidiary of another entity), (ii) the Company sells all
or substantially all of its assets to any other person or entity (other than a
wholly-owned subsidiary), (iii) any person or entity (including a "group" as
contemplated by Section 13(d)(3) of the Exchange Act) acquires or gains
ownership or control of (including, without limitation, power to vote) more than
50% of the outstanding shares of Common Stock, (iv) the Company is to be
dissolved and liquidated, or (v) as a result of or in connection with a
contested election of directors, the persons who were directors of the Company
before such election shall cease to constitute a majority of the Board (each
such event in clauses (i) through (v) above is referred to herein as a
"Corporate Change"), the Committee, in its sole discretion, may accelerate the
time at which all or a portion of a Participant's options may be exercised for a
limited period of time before or after a specified date.
(m) Changes in Company's Capital Structure. If the outstanding shares
of Common Stock or other securities of the Company, or both, for which the
option is then exercisable shall at any time be changed or exchanged by
declaration of a stock dividend, stock split, combination of shares,
recapitalization, or reorganization, the number and kind of shares of Common
Stock or other securities which are subject to the Plan or subject to any
options theretofore granted, and the option prices, shall be appropriately and
equitably adjusted so as to maintain the proportionate number of shares or other
securities without changing the aggregate option price.
(n) Acceleration of Options. Except as hereinbefore expressly provided,
(i) the issuance by the Company of shares of stock or any class of securities
convertible into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, (ii) the payment of a dividend in property
other than Common Stock or (iii) the occurrence of any similar transaction, and
in any case whether or not for fair value, shall not affect, and no adjustment
by reason thereof shall be made with respect to, the number of shares of Common
Stock subject to options theretofore granted or the purchase price per share,
unless the Committee shall determine, in its sole discretion, that an adjustment
is necessary to provide equitable treatment to Participant. Notwithstanding
anything to the contrary contained in this Plan, the Committee may, in its sole
discretion, accelerate the time at which any option may be exercised, including,
but not limited to, upon the occurrence of the events specified in this Section
6, and is authorized at any time (with the consent of the Participant) to
purchase options pursuant to Section 7.
SECTION 7. RELINQUISHMENT OF OPTIONS.
(a) The Committee, in granting options hereunder, shall have discretion
to determine whether or not options shall include a right of relinquishment as
hereinafter provided by this Section 7. The Committee shall also have discretion
to determine whether an option agreement evidencing an option initially granted
by the Committee without a right of relinquishment shall be amended or
supplemented to include such a right of relinquishment. Neither the Committee
nor the Company shall be under any obligation or incur any liability to any
person by reason of the Committee's refusal to grant or include a right of
relinquishment in any option granted hereunder or in any option agreement
evidencing the same. Subject to the Committee's determination in any case that
the grant by it of a right of relinquishment is consistent with Section 1
hereof, any option granted under this Plan, and the option agreement evidencing
such option, may provide:
(i) That the Participant, or his or her heirs or other legal
representatives to the extent entitled to exercise the option under the
terms thereof, in lieu of purchasing the entire number of shares
subject to purchase thereunder, shall have the right to relinquish all
or any part of the then unexercised portion of the option (to the
extent then exercisable) for a number of shares of Common Stock to be
determined in accordance with the following provisions of this clause
(i):
(A) The written notice of exercise of such right of
relinquishment shall state the percentage of the total number
of shares of Common Stock issuable pursuant to such
relinquishment (as defined below) that the Participant elects
to receive;
(B) The number of shares of Common Stock, if any,
issuable pursuant to such relinquishment shall be the number
of such shares, rounded to the next greater number of full
shares, as shall be equal to the quotient obtained by dividing
(i) the Appreciated Value by (ii) the purchase price for each
of such shares specified in such option;
(C) For the purpose of this clause (C), "Appreciated
Value" means the excess, if any, of (x) the total current
market value of the shares of Common Stock covered by the
option or the portion thereof to be relinquished over (y) the
total purchase price for such shares specified in such option;
(ii) That such right of relinquishment may be exercised only
upon receipt by the Company of a written notice of such relinquishment
which shall be dated the date of election to make such relinquishment;
and that, for the purposes of this Plan, such date of election shall be
deemed to be the date when such notice is sent by registered or
certified mail, or when receipt is acknowledged by the Company, if
mailed by other than registered or certified mail or if delivered by
hand or by any telegraphic communications equipment of the sender or
otherwise delivered; provided, that, in the event the method just
described for determining such date of election shall not be or remain
consistent with the provisions of Section 16(b) of the Exchange Act or
the rules and regulations adopted by the Commission thereunder, as
presently existing or as may be hereafter amended, which regulations
exempt from the operation of Section 16(b) of the Exchange Act in whole
or in part any such relinquishment transaction, then such date of
election shall be determined by such other method consistent with
Section 16(b) of the Exchange Act or the rules and regulations
thereunder as the Committee shall in its discretion select and apply;
(iii) That the "current market value" of a share of Common
Stock on a particular date shall be deemed to be its fair market value
on that date as determined in accordance with Paragraph 6(b); and
(iv) That the option, or any portion thereof, may be
relinquished only to the extent that (A) it is exercisable on the date
written notice of relinquishment is received by the Company, and (B)
the holder of such option pays, or makes provision satisfactory to the
Company for the payment of, any taxes which the Company is obligated to
collect with respect to such relinquishment.
(b) The Committee shall have sole discretion to consent to or
disapprove, and neither the Committee nor the Company shall be under any
liability by reason of the Committee's disapproval of, any election by a holder
of an option to relinquish such option in whole or in part as provided in
Paragraph 7(a), except that no such consent to or approval of a relinquishment
shall be required under the following circumstances. Each Participant who is
subject to the short-swing profits recapture provisions of Section 16(b) of the
Exchange Act ("Covered Participant") shall not be entitled to receive shares of
Common Stock when options are relinquished during any window period commencing
on the third business day following the Company's release of a quarterly or
annual summary statement of sales and earnings and ending on the twelfth
business day following such release ("Window Period"). A Covered Participant
shall be entitled to receive shares of Common Stock upon the relinquishment of
options outside a Window Period.
(c) The Committee, in granting options hereunder, shall have discretion
to determine the terms upon which such options shall be relinquishable, subject
to the applicable provisions of this Plan, and including such provisions as are
deemed advisable to permit the exemption from the operation from Section 16(b)
of the Exchange Act of any such relinquishment transaction, and options
outstanding, and option agreements evidencing such options, may be amended, if
necessary, to permit such exemption. If an option is relinquished, such option
shall be deemed to have been exercised to the extent of the number of shares of
Common Stock covered by the option or part thereof which is relinquished, and no
further options may be granted covering such shares of Common Stock.
(d) Neither any option nor any right to relinquish the same to the
Company as contemplated by this Paragraph 7 shall be assignable or otherwise
transferable except by will or the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined in the Code or Title I of the
Employee Retirement Income Security Act, as amended, or the rules thereunder.
(e) Except as provided in Section 7(f) below, no right of
relinquishment may be exercised within the first six months after the initial
award of any Option containing, or the amendment or supplementation of any
existing option agreement adding, the right of relinquishment.
(f) No right of relinquishment may be exercised after the initial award
of any option containing, or the amendment or supplementation of any existing
option agreement adding the right of relinquishment, unless such right of
relinquishment is effective upon the Participant's death, disability or
termination of his relationship with the Company for a reason other than "for
cause."
SECTION 8. AMENDMENTS OR TERMINATION. The Board may amend, alter or discontinue
the Plan, but no amendment or alteration shall be made which would impair the
rights of any Participant, without his consent, under any option theretofore
granted, or which, without the approval of the stockholders, would: (i) except
as is provided in Section 6(k) of the Plan, increase the total number of shares
reserved for the purposes of the Plan, (ii) change the class of persons eligible
to participate in the Plan as provided in Section 4 of the Plan, (iii) extend
the applicable maximum option period provided for in Section 6(a) of the Plan,
(iv) extend the expiration date of this Plan set forth in Section 15 of the
Plan, (v) except as provided in Section 6(k) of the Plan, decrease to any extent
the option price of any option granted under the Plan or (vi) withdraw the
administration of the Plan from the Committee.
SECTION 9. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant and
exercise of options thereunder, and the obligation of the Company to sell and
deliver shares under such options, shall be subject to all applicable federal
and state laws, rules and regulations and to such approvals by any governmental
or regulatory agency as may be required. The Company shall not be required to
issue or deliver any certificates for shares of Common Stock prior to the
completion of any registration or qualification of such shares under any federal
or state law or issuance of any ruling or regulation of any government body
which the Company shall, in its sole discretion, determine to be necessary or
advisable. Any adjustments provided for in subparagraphs 6(j), (k) and (i) shall
be subject to any shareholder action required by Delaware corporate law.
SECTION 10. PURCHASE FOR INVESTMENT. Unless the options and shares of Common
Stock covered by this Plan have been registered under the Securities Act of
1933, as amended, and the Company has determined that such registration is
unnecessary, each person acquiring or exercising an option under this Plan may
be required by the Company to give a representation in writing that he or she is
acquiring such option or such shares for his own account for investment and not
with a view to, or for sale in connection with, the distribution of any part
thereof.
SECTION 11. TAXES.
(a) The Company may make such provisions as it may deem appropriate for
the withholding of any taxes which it determines is required in connection with
any options granted under this Plan.
(b) Notwithstanding the terms of Paragraph 11 (a), any Participant may
pay all or any portion of the taxes required to be withheld by the Company or
paid by him or her in connection with the exercise of a nonqualified option by
electing to have the Company withhold shares of Common Stock, or by delivering
previously owned shares of Common Stock, having a fair market value, determined
in accordance with Paragraph 6(b), equal to the amount required to be withheld
or paid. A Participant must make the foregoing election on or before the date
that the amount of tax to be withheld is determined ("Tax Date"). All such
elections are irrevocable and subject to disapproval by the Committee. Elections
by Covered Participants are subject to the following additional restrictions:
(i) such election may not be made within six months of the grant of an option,
provided that this limitation shall not apply in the event of death or
disability, and (ii) such election must be made either six months or more prior
to the Tax Date or in a Window Period. Where the Tax Date in respect of an
option is deferred until six months after exercise and the Covered Participant
elects share withholding, the full amount of shares of Common Stock will be
issued or transferred to him upon exercise of the option, but he or she shall be
unconditionally obligated to tender back to the Company the number of shares
necessary to discharge the Company's withholding obligation or his estimated tax
obligation on the Tax Date.
SECTION 12. REPLACEMENT OF OPTIONS. The Committee from time to time may permit a
Participant under the Plan to surrender for cancellation any unexercised
outstanding option and receive from the Company in exchange an option for such
number of shares of Common Stock as may be designated by the Committee. The
Committee may, with the consent of the person entitled to exercise any
outstanding option, amend such option, including reducing the exercise price of
any option to not less than the fair market value of the Common Stock at the
time of the amendment and extending the term thereof.
SECTION 13. NO RIGHT TO COMPANY EMPLOYMENT. Nothing in this Plan or as a result
of any option granted pursuant to this Plan shall confer on any individual any
right to continue in the employ of the Company or interfere in any way with the
right of the Company to terminate an individual's employment at any time. The
option agreements may contain such provisions as the Committee may approve with
reference to the effect of approved leaves of absence.
SECTION 14. LIABILITY OF COMPANY. The Company and any Affiliate which is in
existence or hereafter comes into existence shall not be liable to a
Participant or other persons as to:
(a) The Non-Issuance of Shares. The non-issuance or sale of shares as
to which the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company's counsel to be necessary to
the lawful issuance and sale of any shares hereunder; and
(b) Tax Consequences. Any tax consequence expected, but not
realized, by any Participant or other person due to the exercise of any
option granted hereunder.
SECTION 15. EFFECTIVENESS AND EXPIRATION OF PLAN. The Plan shall be effective on
the date the Board adopts the Plan. If the stockholders of the Company fail to
approve the Plan within twelve months of the date the Board approved the Plan,
the Plan shall terminate and all options previously granted under the Plan shall
become void and of no effect. The Plan shall expire ten years after the date the
Board approves the Plan and thereafter no option shall be granted pursuant to
the Plan.
SECTION 16. NON-EXCLUSIVITY OF THE PLAN. Neither the adoption by the Board nor
the submission of the Plan to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including without
limitation, the granting of restricted stock or stock options otherwise than
under the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.
SECTION 17. GOVERNING LAW. This Plan and any agreements hereunder shall be
interpreted and construed in accordance with the laws of the State of Delaware
and applicable federal law.
SECTION 18. CASHLESS EXERCISE. The Committee also may allow cashless exercises
as permitted under Federal Reserve Board's Regulation T, subject to applicable
securities law restrictions. or by any other means which the Committee
determines to be consistent with the Plan's purpose and applicable law. The
proceeds from such a payment shall be added to the general funds of the Company
and shall be used for general corporate purposes.
EXHIBIT 4.2
COLLABORATIVE FINANCIAL NETWORK GROUP, INC.
2002 Employees Stock Incentive Plan
SECTION 1. Purpose; Definitions.
The purpose of the Plan is to give the Company a competitive advantage
in attracting, retaining and motivating employees and to provide the Company and
its Subsidiaries and Affiliated Companies with an incentive compensation plan
providing incentives directly linked to the profitability of the Company's
businesses and/or increases in shareholder value.
For purposes of the Plan, the following terms are defined as set forth
below:
a. "Affiliated Company" means any corporation (or partnership,
joint venture, or other enterprise), of which the Company owns or
controls, directly or indirectly, 10% or more, but less than 50%, of
the outstanding shares of stock normally entitled to vote for the
election of directors (or comparable equity participation and voting
power).
b. "Award" means a Stock Appreciation Right, Stock Option,
Restricted Stock, unrestricted share of Common Stock, dividend
equivalent, interest equivalent, Bonus Award or other award granted
under this Plan.
c. "Board" means the Board of Directors of the Company.
d. "Bonus Award" means an annual cash bonus award under
Section 10 of this Plan.
e. "Cause" means (except as otherwise provided by the
Committee in the agreement relating to any Award) (1) conviction of a
participant for committing a felony under federal law or the law of the
state in which such action occurred, (2) dishonesty in the course of
fulfilling a participant's employment duties or (3) willful and
deliberate failure on the part of a participant to perform his
employment duties in any material respect. Notwithstanding the
foregoing, if a participant is a party to an employment agreement with
the Corporation or any Subsidiary or Affiliated Company that contains a
definition of "Cause," such definition shall apply to such participant
for purposes of the Plan except to the extent otherwise provided by the
Committee in the agreement relating to any Award.
f. "Change in Control" and "Change in Control Price"
have the meanings set forth in Sections 11(b) and (c), respectively.
g. "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
h. "Committee" means a committee of two or more non-employee
directors selected by the Board provided, however, that with respect to
any grants or other determinations to be made in connection with Bonus
Awards (including without limitation the allocation of the Bonus Pool
under Section 10(b)), "Committee" shall mean the Board or the Executive
Committee of the Board (unless the Board specifically designates
another committee of directors to grant and administer Bonus Awards).
i. "Common Stock" means the Class A common stock, par
value $0.01 per share, of the Company.
j. "Company" means Collaborative Financial Network
Group, Inc., a Delaware corporation.
k. "Disability" means permanent and total disability as
determined by the Committee for purposes of the Plan.
l. "Exchange Act" means the Securities Exchange Act
of 1934, as amended from time to time, and any successor thereto.
m. "Fair Market Value" means, as of any given date, the
average of the highest and lowest sales prices of the Common Stock
reported on the New York Stock Exchange Composite Tape for such date,
or if the Common Stock was not traded on the New York Stock Exchange on
such date, then on the last preceding date on which the Common Stock
was traded (or, if not listed on such exchange, the average of the
highest and lowest sales prices on any other national securities
exchange on which the Common Stock is listed or on NASDAQ). If there is
no regular public trading market for the Common Stock, Fair Market
Value shall be determined by such other source as the Committee may
select.
n. "Incentive Stock Option" means any Stock Option
designated as, and qualified as, an "incentive stock
option" within the meaning of Section 422 of the Code.
o. "NonQualified Stock Option" means any Stock Option
that is not an Incentive Stock Option.
p. "Performance Goals" means the performance goals
established by the Committee in connection with the grant
of Restricted Stock or Performance Units.
q. "Performance Units" means an Award granted under
Section 8.
r. "Plan" means the Collaborative Financial Network 2002
Employees Stock Incentive Plan, as set forth herein and as hereinafter
amended from time to time.
s. "Restricted Stock" means an Award granted under
Section 7.
t. "Retirement" means retirement from employment with
the Company, a Subsidiary or an Affiliated Company as
determined by the Committee for purposes of an Award under the Plan.
u. "Stock Appreciation Right" means an Award granted
under Section 6.
v. "Stock Option" means an Award granted under Section 5.
w. "Subsidiary" means: (i) for the purpose of an Incentive
Stock Option, 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 Incentive Stock 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; and (ii) for the
purposes of any other Award, any corporation (or partnership, joint
venture, or other enterprise) of which the Company owns or controls,
directly or indirectly, 50% or more of the outstanding shares of stock
normally entitled to vote for the election of directors (or comparable
equity participation and voting power).
x. "Termination of Employment" means the termination of the
participant's employment with the Company and any Subsidiary or
Affiliated Company. A participant employed by a Subsidiary or an
Affiliated Company shall also be deemed to incur a Termination of
Employment if the Subsidiary or Affiliated Company ceases to be such a
Subsidiary or Affiliated Company, as the case may be, and the
participant does not immediately thereafter become an employee of the
Company or another Subsidiary or Affiliated Company. Temporary absences
from employment because of illness, vacation or leave of absence and
transfers among the Company and its Subsidiaries, or, if the Committee
so determines, among the group consisting of the Company, its
Subsidiaries and Affiliated Companies, shall not be considered
Terminations of Employment.
In addition, certain other terms used in the Plan have
definitions provided to them in the first place in which they are used
herein.
SECTION 2. Administration.
The Plan shall be administered by the Committee; provided, that any
authority granted to the Committee under the Plan may also be exercised by the
full Board.
The Committee shall have plenary authority to grant Awards pursuant to
the terms of the Plan or, in the Committee's discretion, in connection with
awards under other bonus plans or programs of the Company, to officers and
employees of the Company and its Subsidiaries and Affiliated Companies.
Among other things, the Committee shall have the authority, subject to
the terms of the Plan:
(a) To select the officers and employees to whom Awards
may from time to time be granted;
(b) To determine whether and to what extent Awards are
to be granted hereunder;
(c) To determine the number of shares of Common Stock to
be covered by each Stock Option granted hereunder;
(d) To determine the terms and conditions of any Award granted
hereunder (including, but not limited to, the option price (subject to
Section 5(a)), any vesting condition, restriction or limitation (which
may be related to the performance of the participant, the Company or
any Subsidiary or Affiliated Company) and any vesting acceleration or
forfeiture or waiver regarding any Award and the shares of Common Stock
relating thereto, based on such factors as the Committee shall
determine; and
(e) To determine under what circumstances an Award may be
settled in cash or Common Stock under Section 5(g) or Section 6(d)(ii).
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any award certificate relating
thereto) and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in office,
except that the members thereof may delegate all or a portion of the
administration of the Plan to one or more senior managers of the Company.
Any determination made by the Committee or pursuant to delegated
authority pursuant to the provisions of the Plan with respect to any Award shall
be made in the sole discretion of the Committee or such delegate at the time of
the grant of the Award or, unless in contravention of any express term of the
Plan, at any time thereafter. All decisions made by the Committee or any
appropriate delegate pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Company and Plan participants.
SECTION 3. Common Stock Subject to Plan.
Subject to adjustment as described below, the total number of shares of
Common Stock reserved and available for grant pursuant to Awards under the Plan
shall not exceed 10,000,000 shares. Shares subject to Awards under the Plan may
be authorized and unissued shares or may be treasury shares, or both.
If any shares of Restricted Stock are forfeited, or if any Stock Option
or Stock Appreciation Right terminates without being exercised, or if any Stock
Appreciation Right (whether granted alone or in conjunction with a Stock Option)
is exercised for cash, shares subject to such Awards shall again be available
for distribution in connection with Awards under the Plan.
In the event of any change in corporate capitalization, such as a stock
split or a corporate transaction, such as any merger, consolidation, separation,
including a spin-off, or other distribution of stock or property (without regard
to the payment of any cash dividends by the Company in the ordinary course) of
the Company, any reorganization (whether or not such reorganization comes within
the definition of such term in Section 368 of the Code) or any partial or
complete liquidation of the Company, the Committee or Board may make such
substitution or adjustments in the aggregate number and kind of shares reserved
for issuance under the Plan, in the number, kind and option price, as
applicable, of shares subject to outstanding Stock Options, and in the number
and kind of shares subject to other outstanding Awards granted under the Plan,
and/or such other equitable substitution or adjustments as it may determine to
be appropriate in its sole discretion; provided, however, that the number of
shares subject to any Award shall always be a whole number. Such adjusted option
price shall also be used to determine the amount payable by the Company upon the
exercise of any Stock Appreciation Right associated with any Stock Option.
SECTION 4. Eligibility.
Officers and employees of the Company, a Subsidiary or an Affiliated
Company who are responsible for or contribute to the growth and profitability of
the business of the Company, a Subsidiary or an Affiliated Company are eligible
to be granted Awards under the Plan.
SECTION 5. Stock Options.
Stock Options may be granted alone or in addition to other Awards
granted under the Plan and may be of two types: Incentive Stock Options and
NonQualified Stock Options. Any Stock Option granted under the Plan shall be in
such form as the Committee may from time to time approve.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, NonQualified Stock Options or both types of Stock Options (in
each case with or without Stock Appreciation Rights). Incentive Stock Options
may be granted only to employees of the Company and its Subsidiaries. To the
extent that any Stock Option is not designated as an Incentive Stock Option or,
even if so designated, does not qualify as an Incentive Stock Option, it shall
constitute a NonQualified Stock Option.
Stock Options shall be evidenced by option award certificates, the
terms and provisions of which may differ. An option award certificate shall
indicate on its face whether it is intended to be an award certificate for an
Incentive Stock Option or a NonQualified Stock Option. The grant of a Stock
Option shall occur on the date the Committee by resolution selects an individual
to be a participant in any grant of a Stock Option, determines the number of
shares of Common Stock to be subject to such Stock Option to be granted to such
individual and specifies the terms and provisions of the Stock Option, or on
such later date as is specified by the Committee
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions as
the Committee shall deem desirable:
(a) Option Price. The option price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee
and, unless otherwise determined by the Committee, shall not be less
than the Fair Market Value of the Common Stock subject to the Stock
Option on the date of grant. The option price per share shall not be
decreased thereafter except pursuant to Section 3 of this Plan.
(b) Option Term. The term of each Stock Option shall
be fixed by the Committee, but no Stock Option shall be exercisable
more than 10 years after the date the Stock Option is granted.
(c) Exercisability. Except as otherwise provided herein, Stock
Options shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Committee. Unless
otherwise determined by the Committee, Stock Options shall become
exercisable ratably on each of the first five anniversaries of the date
of grant. In addition, the Committee may at any time accelerate the
exercisability of any Stock Option.
(d) Method of Exercise. Subject to the provisions of this
Section 5, Stock Options may be exercised, in whole or in part, at any
time during the option term by giving written notice of exercise, or
notice in accordance with such other procedures as may be established
from time to time, to the Company or its designated agent specifying
the number of shares of Common Stock subject to the Stock Option to be
purchased.
Such notice shall be accompanied by payment in full of the
purchase price in cash or by certified or cashier's check or such other
instrument as the Company may accept. If approved by the Committee,
payment, in full or in part, may also be made in the form of
unrestricted Common Stock already owned by the optionee of the same
class as the Common Stock subject to the Stock Option (based on the
Fair Market Value of the Common Stock on the date the Stock Option is
exercised); provided, however, that such already owned shares have been
held by the optionee for at least six months at the time of exercise
unless otherwise determined by the Committee; provided, further, that,
in the case of an Incentive Stock Option, the right to make a payment
in the form of already owned shares of Common Stock of the same class
as the Common Stock subject to the Stock Option may be authorized only
at the time the Stock Option is granted.
In the discretion of the Committee, payment for any shares
subject to a Stock Option may also be made by delivering a properly
executed exercise notice to the Company, together with a copy of
irrevocable instructions to a broker to deliver promptly to the Company
the amount of sale or loan proceeds necessary to pay the purchase
price, and, if requested, by the amount of any federal, state, local or
foreign withholding taxes. To facilitate the foregoing, the Company may
enter into agreements for coordinated procedures with one or more
brokerage firms.
In addition, in the discretion of the Committee, payment for
any shares subject to a Stock Option may also be made by instructing
the Company or its designated agent to withhold a number of such shares
having a Fair Market Value on the date of exercise equal to the
aggregate exercise price of such Stock Option.
No shares of Common Stock shall be issued until full payment
therefor has been made. An optionee shall have all of the rights of a
shareholder of the Company holding the class or series of Common Stock
that is subject to such Stock Option (including, if applicable, the
right to vote the shares and the right to receive dividends), when the
optionee has given written notice of exercise, has paid in full for
such shares and, if requested, has given the representation described
in Section 3(a).
(e) Transferability of Stock Options. No Stock Option shall be
transferable by the optionee other than (i) by will or by the laws of
descent and distribution, or, in the Committee's discretion, pursuant
to a written beneficiary designation, (ii) pursuant to a qualified
domestic relations order, as defined in the Code or (iii) in the
Committee's discretion, pursuant to a gift to such optionee's
"immediate family" members directly, or indirectly or by means of a
trust, partnership or limited liability company. All Stock Options
shall be exercisable, subject to the terms of this Plan, only by the
optionee, guardian, legal representative or beneficiary of the optionee
or permitted transferee, it being understood that the terms "holder"
and "optionee" include any such guardian, legal representative or
beneficiary or transferee. For purposes of this Section 5(e),
"immediate family" shall mean, except as otherwise defined by the
Committee, the optionee's spouse, children, siblings, stepchildren,
grandchildren, parents, stepparents, grandparents, in-laws and persons
related by legal adoption. Such transferees may transfer a Stock Option
only by will or by the laws of descent and distribution.
(f) Termination by Death or Disability. Unless otherwise
determined by the Committee, if an optionee's Termination Employment is
by reason of death or Disability, any Stock Option held by such
optionee may thereafter be exercised, to the extent exercisable at the
time of such termination, for a period of twelve (12) months (or such
other period as the Committee may specify in the option agreement) from
the date of such termination or until the expiration of the stated term
of such Stock Option, whichever period is the shorter.
(g) Termination by Reason of Retirement. Unless otherwise
determined by the Committee, if an optionee's Termination of Employment
is by reason of Retirement, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it was
exercisable at the time of such Retirement, or on such accelerated
basis as the Committee may determine, for a period of five (5) years
(or such other period as the Committee may specify in the option
agreement) from the date of such Termination of Employment or until the
expiration of the stated term of such Stock Option, whichever period is
the shorter; provided, however, that if the optionee dies within such
period any unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such period, continue to be
exercisable to the extent to which it was exercisable at the time of
death for a period of twelve (12) months from the date of such death or
until the expiration of the stated term of such Stock Option, whichever
period is the shorter.
(h) Other Termination. Unless otherwise determined by the
Committee, if an optionee's Termination of Employment is for any reason
other than death, Disability or Retirement, any Stock Option held by
such optionee, to the extent then exercisable, or on such accelerated
basis as the Committee may determine, may be exercised for the lesser
of three (3) months from the date of such Termination of Employment or
the balance of such Stock Option's term; provided, however, that if the
optionee dies within such three (3) month period, any unexercised Stock
Option held by such optionee shall, notwithstanding the expiration of
such three (3) month period, continue to be exercisable to the extent
to which it was exercisable at the time of death for a period of twelve
(12) months from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the shorter.
(i) Cashing Out of Stock Option. On receipt of written notice
of exercise, the Committee may elect to cash out all or part of the
portion of the shares of Common Stock for which a Stock Option is being
exercised by paying the optionee an amount, in cash or Common Stock,
equal to the excess of the Fair Market Value of the Common Stock over
the option price times the number of shares of Common Stock for which
the Option is being exercised on the effective date of such cash-out.
(j) Change in Control Cash-out. Notwithstanding any other
provision of the Plan, during the 60-day period from and after a Change
in Control (the "Exercise Period"), unless the Committee shall
determine otherwise at the time of grant, an optionee shall have the
right, whether or not the Stock Option is fully exercisable and in lieu
of the payment of the exercise price for the shares of Common Stock
being purchased under the Stock Option and by giving notice to the
Company, to elect (within the Exercise Period) to surrender all or part
of the Stock Option to the Company and to receive cash, within 30 days
of such notice, in an amount equal to the amount by which the Change in
Control Price per share of Common Stock on the date of such election
shall exceed the exercise price per share of Common Stock under the
Stock Option (the "Spread") multiplied by the number of shares of
Common Stock granted under the Stock Option as to which the right
granted under this Section 5(j) shall have been exercised.
Notwithstanding the foregoing, if any right granted pursuant to this
Section 5(j) would make a Change in Control transaction ineligible for
pooling- of-interests accounting under APB No. 16 that but for the
nature of such grant would otherwise be eligible for such accounting
treatment, the Committee shall have the ability to substitute for the
cash payable pursuant to such right Common Stock with a Fair Market
Value equal to the cash that would otherwise be payable hereunder.
(k) Deferral of Option Shares. The Committee may from time to
time establish procedures pursuant to which an optionee may elect to
defer, until a time or times later than the exercise of an Option,
receipt of all or a portion of the shares subject to such Option and/or
to receive cash at such later time or times in lieu of such deferred
shares, all on such terms and conditions as the Committee shall
determine. If any such deferrals are permitted, then notwithstanding
Section 5(d) above, an optionee who elects such deferral shall not have
any rights as a stockholder with respect to such deferred shares unless
and until certificates representing such shares are actually delivered
to the optionee with respect thereto, except to the extent otherwise
determined by the Committee.
SECTION 6. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a NonQualified Stock Option, such rights may be granted either at or
after the time of grant of such Stock Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of grant of such Stock
Option. In addition, Stock Appreciation Rights may be granted without
relationship to a Stock Option to employees residing in foreign jurisdictions,
where the grant of a Stock Option is impossible or impracticable because of
securities or tax laws or other governmental regulations.
(b) Freestanding Stock Appreciation Rights. A Stock Appreciation Right
granted without relationship to a Stock Option, pursuant to Section 6(a), shall
be exercisable as determined by the Committee, but in no event after ten years
from the date of grant. The base price of a Stock Appreciation Right granted
without relationship to a Stock Option shall be the Fair Market Value of a share
of Common Stock on the date of grant. A Stock Appreciation Right granted without
relationship to a Stock Option shall entitle the holder, upon receipt of such
right, to a cash payment determined by multiplying (i) the difference between
the base price of the Stock Appreciation Right and the Fair Market Value of a
share of Common Stock on the date of exercise of the Stock Appreciation Right,
by (ii) the number of shares of Common Stock as to which such Stock Appreciation
Right shall have been exercised. A freestanding Stock Appreciation Right may be
exercised by giving written notice of exercise to the Company or its designated
agent specifying the number of shares of Common Stock as to which such Stock
Appreciation Right is being exercised.
(c) Tandem Stock Appreciation Rights. A Stock Appreciation Right
granted in conjunction with a Stock Option may be exercised by an optionee in
accordance with Section 6(d) by surrendering the applicable portion of the
related Stock Option in accordance with procedures established by the Committee.
Upon such exercise and surrender, the optionee shall be entitled to receive an
amount determined in the manner prescribed in Section 6(d). Stock Options which
have been so surrendered shall no longer be exercisable to the extent the
related Stock Appreciation Rights have been exercised. A Stock Appreciation
Right shall terminate and no longer be exercisable upon the termination or
exercise of the related Stock Option.
(d) Tandem Stock Appreciation Right Terms and Conditions. Stock
Appreciation Rights granted in conjunction with a Stock Option shall be
subject to such terms and conditions as shall be determined by the Committee,
including the following:
(i) Stock Appreciation Rights shall be exercisable only at
such time or times and to the extent that the Stock Options to which
they relate are exercisable in accordance with the provisions of
Section 5 and this Section 6.
(ii) Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive an amount in cash, equal to the
excess of the Fair Market Value of one share of Common Stock over the
option price per share specified in the related Stock Option multiplied
by the number of shares in respect of which the Stock Appreciation
Right shall have been exercised.
(iii) Stock Appreciation Rights shall be transferable only to
permitted transferees of the underlying Stock Option in accordance with
Section 5(e).
(iv) Upon the exercise of a Stock Appreciation Right, the
Stock Option or part thereof to which such Stock Appreciation Right is
related shall be deemed to have been exercised for the purpose of the
limitation set forth in Section 3 on the number of shares of Common
Stock to be issued under the Plan, but only to the extent of the number
of shares covered by the Stock Appreciation Right at the time of
exercise based on the value of the Stock Appreciation Right at such
time.
SECTION 7. Bonus Shares and Restricted Stock.
(a) Administration. Awards of shares of Common Stock or Restricted
Stock may be made either alone or in addition to other Awards granted under the
Plan. In addition, a participant may receive unrestricted shares of Common Stock
or Restricted Stock in lieu of certain cash payments awarded under other plans
or programs of the Company. The Committee shall determine the officers and
employees to whom and the time or times at which grants of unrestricted shares
of Common Stock and Restricted Stock will be awarded, the number of shares to be
awarded to any participant, the conditions for vesting, the time or times within
which such Awards may be subject to forfeiture and any other terms and
conditions of the Awards, in addition to those contained in Section 7(c).
(b) Awards and Certificates. Awards of unrestricted shares of Common
Stock and Restricted Stock shall be evidenced in such manner as the Committee
may deem appropriate, including book-entry registration or delivery of one or
more stock certificates to the participant, or, in the case of Restricted Stock,
a custodian or escrow agent. Any stock certificate issued in respect of
unrestricted shares or shares of Restricted Stock shall be registered in the
name of such participant. The Committee may require that the stock certificates
evidencing shares of Restricted Stock be held in custody or escrow by the
Company or its designated agent until the restrictions thereon shall have lapsed
and that, as a condition of any Award of Restricted Stock, the participant shall
have delivered a stock power, endorsed in blank, relating to the Common Stock
covered by such Award.
(c) Terms and Conditions. Shares of Restricted Stock shall be
subject to the following terms and conditions:
(i) The Committee may, prior to or at the time of grant,
condition the grant or vesting, as applicable, of an award of
Restricted Stock upon the attainment of Performance Goals. The
Committee may also condition the grant or vesting of Restricted Stock
upon the continued service of the participant. The conditions for grant
or vesting and the other provisions of Restricted Stock Awards
(including without limitation any applicable Performance Goals) need
not be the same with respect to each recipient. The Committee may at
any time, in its sole discretion, accelerate or waive, in whole or in
part, any of the foregoing restrictions.
(ii) Subject to the provisions of the Plan and the terms of
the Restricted Stock Award, during the period, if any, set by the
Committee, commencing with the date of such Award for which such
participant's continued service is required (the "Restriction Period"),
and until the later of (A) the expiration of the Restriction Period and
(B) the date the applicable Performance Goals (if any) are satisfied,
the participant shall not be permitted to sell, assign, transfer,
pledge or otherwise encumber shares of Restricted Stock; provided that
the foregoing shall not prevent a participant from pledging Restricted
Stock as security for a loan, the sole purpose of which is to provide
funds to pay the option price for Stock Options.
(iii) Except as provided in this paragraph (iii) and Sections
7(c)(i) and 7(c)(ii) or the terms of the Restricted Stock Award, the
participant shall have, with respect to the shares of Restricted Stock,
all of the rights of a shareholder of the Company holding the class or
series of Common Stock that is the subject of the Restricted Stock,
including, if applicable, the right to vote the shares and the right to
receive any cash dividends. If so determined by the Committee under the
applicable terms of the Restricted Stock Award and subject to Section
15(e) of the Plan, (A) cash dividends on the class or series of Common
Stock that is the subject of the Restricted Stock Award shall be
automatically deferred and reinvested in additional Restricted Stock,
held subject to the vesting of the underlying Restricted Stock, or held
subject to meeting Performance Goals applicable only to dividends, (B)
dividends payable in Common Stock shall be paid in the form of
Restricted Stock of the same class as the Common Stock with which such
dividend was paid, held subject to the vesting of the underlying
Restricted Stock, or held subject to meeting Performance Goals
applicable only to dividends and (C) dividends paid in other property
shall be held subject to the vesting of the underlying Restricted
Stock.
(iv) Except to the extent otherwise provided under the
applicable terms of the Restricted Stock Award and Sections 7(c)(i),
7(c)(ii), 7(c)(v) and 11(a)(ii), upon a participant's Termination of
Employment for any reason during the Restriction Period or before the
applicable Performance Goals are satisfied, all shares still subject to
restriction shall be forfeited by the participant.
(v) Except to the extent otherwise provided in Section
11(a)(ii), in the event of a participant's Termination of Employment by
reason of Retirement, the Committee shall have the discretion to waive,
in whole or in part, any or all remaining restrictions (other than, in
the case of Restricted Stock with respect to which a participant is a
Covered Employee, satisfaction of the applicable Performance Goals
unless the participant's employment is terminated by reason of death or
Disability) with respect to any or all of such participant's shares of
Restricted Stock.
(vi) If and when any applicable Performance Goals are
satisfied and the Restriction Period expires without a prior forfeiture
of the Restricted Stock, unlegended certificates for such shares shall
be delivered to the participant upon surrender of the legended
certificates, or the restrictions on such shares shall be removed from
the book-entry registration.
SECTION 8. Performance Units.
(a) Administration. Performance Units may be awarded either alone or in
addition to other Awards granted under the Plan. The Committee shall determine
the officers and employees to whom, and the time or times at which, Performance
Units shall be awarded, the number of Performance Units to be awarded to any
participant, the duration of the Award cycle and any other terms and conditions
of the Award, in addition to those contained in Section 8(b).
(b) Terms and Conditions. Performance Units Awards shall be
subject to the following terms and conditions.
(i) The Committee may, prior to or at the time of the grant,
designate Performance Units, in which event it shall condition the
settlement thereof upon the attainment of Performance Goals. The
Committee may also condition the settlement thereof upon the continued
service of the participant. The provisions of such Awards (including
without limitation any applicable Performance Goals) need not be the
same with respect to each recipient. Subject to the provisions of the
Plan and the Performance Units Agreement referred to in Section
8(b)(vi), Performance Units may not be sold, assigned, transferred,
pledged or otherwise encumbered during the Award cycle.
(ii) Except to the extent otherwise provided in the applicable
Performance Unit Agreement and Sections 8(b)(ii) and 11(a)(iii), upon a
participant's Termination of Employment for any reason during the Award
cycle or before any applicable Performance Goals are satisfied, all
rights to receive cash or stock in settlement of the Performance Units
shall be forfeited by the participant.
(iii) Except to the extent otherwise provided in Section
11(a)(iii), in the event that a participant's employment is terminated
(other than for Cause), or in the event of a participant's Retirement,
the Committee shall have the discretion to waive, in whole or in part,
any or all remaining payment limitations with respect to any or all of
such participant's Performance Units.
(iv) A participant may elect to further defer receipt of cash
or shares in settlement of Performance Units for a specified period or
until a specified event, subject in each case to the Committee's
approval and to such terms as are determined by the Committee (the
"Elective Deferral Period"). Subject to any exceptions adopted by the
Committee, such election must generally be made prior to commencement
of the Award cycle for the Performance Units in question.
(v) At the expiration of the Award cycle, the Committee shall
evaluate the Company's performance in light of any Performance Goals
for such Award, and shall determine the number of Performance Units
granted to the participant which have been earned, and the Committee
shall then cause to be delivered (A) a number of shares of Common Stock
equal to the number of Performance Units determined by the Committee to
have been earned, or (B) cash equal to the Fair Market Value of such
number of shares of Common Stock to the participant as determined by
the Committee in its discretion (subject to any deferral pursuant to
Section 8(b)(iv)).
(vi) Each Award shall be confirmed by, and be subject to,
the terms of a Performance Unit Agreement.
SECTION 9. Dividend Equivalents and Interest Equivalents.
(a) The Committee may provide that a participant to whom a Stock Option
has been awarded, which is exercisable in whole or in part at a future time for
shares of Common Stock (such shares, the "Option Shares") shall be entitled to
receive an amount per Option Share, equal in value to the cash dividends, if
any, paid per share of Common Stock on issued and outstanding shares, as of the
dividend record dates occurring during the period between the date of the Award
and the time each such Option Share is delivered pursuant to the exercise of
such Stock Option. Such amounts (herein called "dividend equivalents") may, in
the discretion of the Committee, be:
(i) paid in cash or shares of Common Stock from time to time
prior to or at the time of the delivery of such shares of Common Stock
or upon expiration of the Stock Option if it shall not have been fully
exercised (except that payment of the dividend equivalents on an
Incentive Stock Option may not be made prior to exercise); or
(ii) converted into contingently credited shares of Common
Stock (with respect to which dividend equivalents shall accrue) in such
manner, at such value, and deliverable at such time or times, as may be
determined by the Committee.
Such shares of Common Stock (whether delivered or contingently
credited) shall be charged against the limitations set forth in Section 3.
(b) The Committee, in its discretion, may authorize payment of interest
equivalents on any portion of any Award payable at a future time in cash, and
interest equivalents on dividend equivalents which are payable in cash at a
future time.
SECTION 10. Annual Cash Bonus Awards.
(a) Bonus Pool. For each fiscal year of the Company, a bonus pool (the
"Bonus Pool") equal to up to 30% of the Company's adjusted pre-tax net income
for such fiscal year (prior to taking into account any payments under this
Section 10 for such fiscal year) will be established by the Committee.
Notwithstanding the foregoing, if the Company's aggregate compensation and
benefits expenses with respect to the fiscal year (including payments under this
Section 10) would otherwise exceed 55% of the Company's revenues for such fiscal
year (the "Maximum Expense"), the Committee shall reduce the Bonus Pool to the
greatest amount which would cause compensation and benefits expense for such
fiscal year not to exceed the Maximum Expense; provided, that, if such reduction
would cause the Bonus Pool to be reduced below an amount equal to 90% of the
Bonus Pool for the immediately preceding fiscal year of the Company (the
"Minimum Pool"), the reduction shall be limited to such amount which would
result in the Bonus Pool being equal to the Minimum Pool.
(b) Allocation of Bonus Pool. The Committee shall determine the
allocation of the Bonus Pool for each fiscal year. Such allocation may be made
at any time prior to payment of Bonus Awards. In the event the Bonus Pool is
reduced pursuant to paragraph (a) above, the Committee shall determine the
required reductions in Bonus Awards. Such reduction need not be on a pro rata
basis among the participants.
(c) Payment of Awards. Bonus Awards under the Plan shall be paid in
cash as soon as practicable following the end of the applicable fiscal year, but
in any event within 90 days following the end of such fiscal year.
(d) Termination of Employment. A participant shall not be entitled to
receive payment of a Bonus Award, unless the Committee determines otherwise, if
at any time prior to the end of the fiscal year the participant's Termination of
Employment occurs or, if at any time, following the end of the fiscal year the
participant's employment is terminated for Cause. In the event that a
participant's Termination of Employment (other than for Cause) occurs following
the end of the applicable fiscal year, such participant shall be entitled to
receive payment of his or her Bonus Award for such fiscal year.
SECTION 11. Change in Control Provisions.
(a) Impact of Event. Notwithstanding any other provision of
the Plan to the contrary, in the event of a Change in Control:
(i) Any Stock Options outstanding as of the date such Change
in Control is determined to have occurred, and which are not then
exercisable and vested, shall become fully exercisable and vested to
the full extent of the original grant.
(ii) The restrictions and deferral limitations applicable to
any Restricted Stock shall lapse, and such Restricted Stock shall
become free of all restrictions and become fully vested and
transferable to the full extent of the original grant.
(iii) All Performance Units shall be considered to be earned
and payable in full, and any other deferred or other restrictions shall
lapse and such Performance Units shall be settled in cash or Common
Stock (as determined by the Committee) as promptly as is practicable.
(iv) Unless the Board determines to continue the Bonus Pool
for the remainder of the fiscal year, Bonus Awards for the fiscal year
in which the Change of Control occurs shall be paid out based upon
calculations of adjusted pre-tax net income and Maximum Expense under
Section 10 through the Change in Control as if the fiscal year had
ended on the Change in Control date.
(b) For purposes of the Plan, a "Change in Control" shall mean
the happening of any of the following events:
(i) acquisition by any individual, entity or group (with the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of either (A) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common Stock")
or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided,
however, that, for purposes of this subsection (i), the following
acquisitions shall not constitute a Change of Control: (1) any
acquisition directly from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (4) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A), (B) and (C)
of subsection (iii) of this Section 11(b); or
(ii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease to constitute at least a majority
of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;
or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company or the
acquisition of assets or stock of another corporation (a "Business
Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation 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 Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding any
corporation resulting from such Business Combination or any employee
benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly
or indirectly, 50% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (C) at least a majority
of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of
the Board, providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(c) Change in Control Price. For purposes of the Plan, "Change
in Control Price" means the higher of (i) the highest reported sales
price, regular way, of a share of Common Stock in any transaction
reported on the New York Stock Exchange Composite Tape or other
national exchange on which such shares are listed or on NASDAQ during
the 60-day period prior to and including the date of a Change in
Control or (ii) if the Change in Control is the result of a tender or
exchange offer or a Corporate Transaction, the highest price per share
of Common Stock paid in such tender or exchange offer or Corporate
Transaction; provided, however, that in the case of Incentive Stock
Options and Stock Appreciation Rights relating to Incentive Stock
Options, the Change in Control Price shall be in all cases the Fair
Market Value of the Common Stock on the date such right under Section
5(j) is exercised. To the extent that the consideration paid in any
such transaction described above consists all or in part of securities
or other non-cash consideration, the value of such securities or other
non-cash consideration shall be determined in the sole discretion of
the Board.
SECTION 12. Tax Offset Bonuses.
At the time an Award is made hereunder or at any time thereafter, the
Committee may grant to the participant receiving such Award the right to receive
a cash payment in an amount specified by the Committee, to be paid at such time
or times (if ever) as the Award results in compensation income to the
participant, for the purpose of assisting the participant to pay the resulting
taxes, all as determined by the Committee and on such other terms and conditions
as the Committee shall determine.
SECTION 13. Amendment and Termination.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would impair the rights of
participants under any Award theretofore granted without the participants'
consent. In addition, no such amendment shall be made without the approval of
the Company's shareholders to the extent such approval is required by law or
agreement.
The Committee may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, but no such amendment shall
impair the rights of any holder without the holder's consent.
Subject to the above provisions, the Board shall have authority to
amend the Plan to take into account changes in law and tax and accounting rules
as well as other developments, and to grant Awards which qualify for beneficial
treatment under such rules without stockholder approval.
SECTION 14. Unfunded Status of Plan.
It is presently intended that the Plan constitute an "unfunded" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or make payments; provided, however, that
unless the Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
SECTION 15. General Provisions.
(a) The Committee may require each person purchasing or receiving
shares pursuant to an Award to represent to and agree with the Company in
writing that such person is acquiring the shares without a view to the
distribution thereof. The certificates for such shares may include any legend,
or, in the case of book-entry registration any notation, which the Committee
deems appropriate to reflect any restrictions on transfer.
Notwithstanding any other provision of the Plan or certificates made
pursuant thereto, the Company shall not be required to issue or deliver any
stock certificate or certificates for shares of Common Stock, or account for
such shares by book-entry registration, under the Plan prior to fulfillment of
all of the following conditions:
(1) Listing or approval for listing upon notice of
issuance, of such shares on the New York Stock Exchange,
Inc., or such other securities exchange as may at the time be the
principal market for the Common Stock;
(2) Any registration or other qualification of such shares of
the Company under any state, federal or foreign law or regulation, or
the maintaining in effect of any such registration or other
qualification which the Committee shall, in its absolute discretion
upon the advice of counsel, deem necessary or advisable; and
(3) Obtaining any other consent, approval, or permit from any
state or federal governmental agency or foreign governmental body which
the Committee shall, in its absolute discretion after receiving the
advice of counsel, determine to be necessary or advisable.
(b) Nothing contained in the Plan shall prevent the Company or
any Subsidiary or Affiliated Company from adopting other or additional
compensation arrangements for its employees.
(c) Adoption of the Plan shall not confer upon any employee any right
to continued employment, nor shall it interfere in any way with the right of the
Company or a Subsidiary or an Affiliated Company to terminate the employment of
any employee at any time.
(d) No later than the date as of which an amount first becomes
includible in the gross income of the participant for federal income tax
purposes with respect to any Award under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Company regarding the
payment of, any federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Company, withholding obligations may be settled with Common Stock, including
Common Stock that is part of the Award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be conditional
on such payment or arrangements, and the Company and its Subsidiaries or
Affiliated Companies shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment otherwise due to the participant. The
Committee may establish such procedures as it deems appropriate, including
making irrevocable elections, for the settlement of withholding obligations with
Common Stock.
(e) Reinvestment of dividends in additional Restricted Stock at the
time of any dividend payment shall only be permissible if sufficient shares of
Common Stock are available under Section 3 for such reinvestment (taking into
account then outstanding Stock Options and other Awards).
(f) The Committee, in its sole discretion, may establish such
procedures as it deems appropriate for a participant to designate a beneficiary
to whom any amounts payable in the event of the participant's death are to be
paid or by whom any rights of the participant, after the participant's death,
may be exercised.
(g) In the case of a grant of an Award to any employee of a Subsidiary
or Affiliated Company, the Company may, if the Committee so directs, issue or
transfer the shares of Common Stock, if any, covered by the Award to the
Subsidiary or Affiliated Company, for such lawful consideration as the Committee
may specify, upon the condition or understanding that the Subsidiary or
Affiliated Company will transfer the shares of Common Stock to the employee in
accordance with the terms of the Award specified by the Committee pursuant to
the provisions of the Plan.
(h) The Plan and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware,
without reference to principles of conflict of laws.
SECTION 16. Effective Date of Plan.
The Plan shall be effective on the date the Board adopts the Plan. If
the stockholders of the Company fail to approve the Plan within twelve months of
the date the Board approved the Plan, the Plan shall terminate and all options
previously granted under the Plan shall become void and of no effect. The Plan
shall expire ten years after the date the Board approves the Plan and thereafter
no option shall be granted pursuant to the Plan.
EXHIBIT 5 and 24.1
LETTERHEAD OF SONFIELD AND SONFIELD
February 22, 2002
Board of Directors
Collaborative Financial Network Group, Inc.
1875 Century Park East, Suite 2250
Century City, California 90067
Ladies and Gentlemen:
In our capacity as counsel for Collaborative Financial Network Group,
Inc., a Delaware corporation (the "Company"), we have participated in the
corporate proceedings relative to the authorization and issuance by the Company
of a maximum of 14,500,000 shares of common stock pursuant to the Plan as set
out and described in the Company's Registration Statement on Form S-8 (File No.
000-26899) under the Securities Act of 1933 (the "Registration Statement"). We
have also participated in the preparation and filing of the Registration
Statement.
Based upon the foregoing and upon our examination of originals (or
copies certified to our satisfaction) of such corporate records of the Company
and other documents as we have deemed necessary as a basis for the opinions
hereinafter expressed, and assuming the accuracy and completeness of all
information supplied us by the Company, having regard for the legal
considerations which we deem relevant, we are of the opinion that:
(1) The Company is a corporation duly organized and
validly existing under the laws of the State of Delaware;
(2) The Company has taken all requisite corporate action and
all action required by the laws of the State of Delaware with respect
to the authorization, issuance and sale of common stock to be issued
pursuant to the Registration Statement;
(3) The 14,500,000 shares of common stock, when issued and
distributed pursuant to the Registration Statement, will be validly
issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the references to our firm in the Registration
Statement.
Yours very truly,
/s/SONFIELD and SONFIELD
SONFIELD and SONFIELD
EXHIBIT 24.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO: Collaborative Financial Network Group, Inc.
As independent certified public accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-8, of our
report dated June 28, 2001, except as to Notes M and O, which is dated as of
August 7, 2001 included in the Collaborative Financial Network Group, Inc.'s
Annual Report on Form 10-KSB, as amended for the year ended March 31, 2001, and
to all references to our Firm included in this Registration Statement
/s/ STEFANOU and COMPANY, LLP
Stefanou and Company , LLP
McLean, Virginia
February 22, 2002