1998 Stock Option Plan - You Bet International Inc.
YOU BET INTERNATIONAL, INC.
1998 STOCK OPTION PLAN
1. ESTABLISHMENT, PURPOSE AND DEFINITIONS.
(a) The 1998 Stock Option Plan (the "Plan") of You Bet
International, Inc., a Delaware corporation (the "Company"), is hereby adopted.
The Plan shall provide for the issuance of incentive stock options ("ISOs") and
nonqualified stock options ("NSOs") to purchase the Stock (as defined at Section
3(a)) of the Company.
(b) The purpose of this Plan is to promote the long-term
success of the Company by attracting, motivating and retaining directors,
officers, employees and consultants of the Company and its Affiliates (the
"Participants") through the use of competitive long-term incentives which are
tied to shareholder value. The Plan seeks to balance Participants' and
shareholder interests by providing incentives to the Participants in the form of
stock options which offer rewards for achieving the long-term strategic and
financial objectives of the Company.
(c) The Plan is intended to provide a means whereby
Participants may be given an opportunity to purchase shares of Stock of the
Company pursuant to (i) options which may qualify as ISOs under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), or
(ii) NSOs which may not so qualify.
(d) The term "Affiliates" as used in this Plan means, in
the case of an ISO, parent or subsidiary corporations, as defined in Section
424(e) and (f) of the Code (but substituting "the Company" for "employer
corporation"), including parents or subsidiaries which become such after
adoption of the Plan, and in all other cases, any entity which is controlled by
or which controls the Company.
2. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Compensation
Committee of the Board of Directors (the "Board") or such other committee
appointed by the Board to administer the Plan (the "Committee") or the Board
acting as a whole.
(b) The Committee or the Board may from time to time
determine which Participants (each an "option holder") shall be granted options
under the Plan, the terms thereof (including without limitation determining
whether the option is an ISO and the times at which the options shall become
exercisable), and the number of shares of Common Stock for which an option or
options may be granted.
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(c) If rights of the Company to repurchase Stock are
imposed, the Board or the Committee may, in its sole discretion, accelerate, in
whole or in part, the time for lapsing of any rights of the Company to
repurchase shares of such Stock or forfeiture restrictions.
(d) If rights of the Company to repurchase Stock are
imposed, the certificates evidencing such shares of Stock awarded hereunder,
although issued in the name of the option holder concerned, shall be held by the
Company or a third party designated by the Committee in escrow subject to
delivery to the option holder or to the Company at such times and in such
amounts as shall be directed by the Board under the terms of this Plan. Share
certificates representing Stock which is subject to repurchase rights shall have
imprinted or typed thereon a legend or legends summarizing or referring to the
repurchase rights.
(e) The Board or the Committee shall have the sole
authority, in its absolute discretion, to adopt, amend and rescind such rules
and regulations, consistent with the provisions of the Plan, as, in its
opinion, may be advisable in the administration of the Plan, to construe and
interpret the Plan, the rules and regulations, and the instruments evidencing
options granted under the Plan and to make all other determinations deemed
necessary or advisable for the administration of the Plan. All decisions,
determinations and interpretations of the Committee shall be binding on all
option holders under the Plan.
3. STOCK SUBJECT TO THE PLAN.
(a) "Stock" shall mean the Common Stock of the Company or
such stock as may be changed as contemplated by Section 3(c) below. Stock shall
include shares drawn from either the Company's authorized but unissued shares of
Common Stock or from reacquired shares of Common Stock, including without
limitation shares repurchased by the Company in the open market.
(b) Options may be granted under the Plan from time to time
to eligible persons to purchase an aggregate of up to 1,000,000 shares of Stock.
Stock options awarded pursuant to the Plan which are forfeited, terminated,
surrendered or canceled for any reason prior to exercise shall again become
available for grants under the Plan (including any option canceled in accordance
with the cancellation regrant provisions of Section 6(f) herein).
(c) If there shall be any change in the Stock subject to
the Plan, including Stock subject to any option granted hereunder, through
merger, consolidation, recapitalization, reorganization, reincorporation, stock
split, reverse stock split, stock dividend, combination or reclassification of
the Company's Stock or other similar events, an appropriate adjustment shall be
made by the Committee in the number of shares and/or the option price with
respect to any unexercised shares of Stock. Consistent with the
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foregoing, in the event that the outstanding Stock is changed into another class
or series of capital stock of the Company, outstanding options to purchase Stock
granted under the Plan shall become options to purchase such other class or
series and the provisions of this Section 3(c) shall apply to such new class or
series.
(d) The Company may grant options under the Plan in
substitution for options held by employees of another company who become
employees of the Company as a result of merger or consolidation. The Company may
direct that substitute options be granted on such terms and conditions as deemed
appropriate by the Board or the Committee.
(e) The aggregate number of shares of Stock approved by the
Plan may not be exceeded without amending the Plan and obtaining shareholder
approval within twelve months of such amendment.
4. ELIGIBILITY.
Persons who shall be eligible to receive stock options granted under
the Plan shall be those Participants referred to in Section 1(b) above;
provided, however, that (i) ISOs may only be granted to employees of the Company
and its Affiliates and (ii) any person holding capital stock possessing more
than 10% of the total combined voting power of all classes of capital stock of
the Company or any Affiliate shall not be eligible to receive ISOs unless the
exercise price per share of Stock is at least 110% of the fair market value of
the Stock on the date the option is granted.
5. EXERCISE PRICE FOR OPTIONS GRANTED UNDER THE PLAN.
(a) All ISOs will have option exercise prices per option
share equal to the fair market value of a share of the Stock on the date the
option is granted, except that in the case of ISOs granted to any person
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any Affiliate the price shall be not less than 110%
of such fair market value. The option exercise prices per option for NSO's shall
be as determined by the Committee. The price of ISOs or NSOs granted under the
Plan shall be subject to adjustment to the extent provided in Section 3(c)
above.
(b) The fair market value on the date of grant shall be
determined based upon the closing price on an exchange on that day or, if the
Stock is not listed on an exchange, on the average of the closing bid and asked
prices in the Over the Counter Market on that day.
6. TERMS AND CONDITIONS OF OPTIONS.
(a) Each option granted pursuant to the Plan shall be
evidenced
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by a written stock option agreement (the "Option Agreement") executed by the
Company and the person to whom such option is granted. The Option Agreement
shall designate whether the option is an ISO or an NSO.
(b) The term of each ISO and NSO shall be no more than 10
years, except that the term of each ISO issued to any person possessing more
than 10% of the voting power of all classes of stock of the Company or any
Affiliate shall be no more than 5 years.
(c) In the case of ISOs, the aggregate fair market value
(determined as of the time such option is granted) of the Stock to which ISOs
are exercisable for the first time by any individual during any calendar year
(under this Plan and any other plans of the Company or its Affiliates if any)
shall not exceed the amount specified in Section 422(d) of the Internal Revenue
Code, or any successor provision in effect at the time an ISO becomes
exercisable.
(d) The Option Agreement may contain such other terms,
provisions and conditions regarding vesting, repurchase or other similar
provisions as may be determined by the Committee and not inconsistent with this
Plan. If an option, or any part thereof, is intended to qualify as an ISO, the
Option Agreement shall contain those terms and conditions which the Committee
determines are necessary to so qualify under Section 422 of the Internal Revenue
Code.
(e) The Committee shall have full power and authority to
extend the period of time for which any option granted under the 1998 Option
Plan is to remain exercisable following the option holder's cessation of service
as an employee or consultant, including without limitation cessation as a result
of death or disability; provided, however, that in no event shall such option be
exercisable after the specified expiration date of the option term.
(f) The Committee shall have full power and authority to
effect at any time and from time to time, with the consent of the affected
option holders, the cancellation of any or all outstanding options under the
Plan and to grant in substitution new options under the Plan covering the same
or different numbers of shares of Stock with the same or different exercise
prices.
(g) As a condition to option grants under the Plan, the
option holder agrees to grant the Company the repurchase rights as the Company
may at its option require and as may be set forth in the Option Agreement or a
separate repurchase agreement.
(h) Any option granted under the Plan may be subject to a
vesting schedule as provided in the Option Agreement and, except as provided in
this Section 6 herein, only the vested portion of such option may be exercised
at any time
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during the Option Period. All rights to exercise any option shall lapse and be
of no further effect whatsoever immediately if the option holder's service as an
employee is terminated for "Cause" (as hereinafter defined) or if the option
holder voluntarily terminates the option holder's service as an employee. The
unvested portion of the option will lapse and be of no further effect
immediately upon any termination of employment of the option holder for any
reason. In the remaining cases where the option holder's service as an employee
is terminated or due to death, permanent disability, or is terminated by the
Company (or its Affiliates) without Cause at any time, the vested portion of the
option will extend for a period of three (3) months following the termination of
employment and shall lapse and be of no further force or effect whatsoever only
if it is not exercised before the end of such three (3) month period. There
shall be "Cause" for termination as set forth in any applicable employment or
consulting agreement or, in the absence of such agreement if (i) the option
holder is convicted of a felony, (ii) the option holder engages in any
fraudulent or other dishonest act to the detriment of the Company, (iii) the
option holder fails to report for work on a regular basis, except for periods of
authorized absence or bona fide illness, (iv) the option holder misappropriates
trade secrets, customer lists or other proprietary information belonging to the
Company for the option holder's own benefit or for the benefit of a competitor,
(v) the option holder engages in any willful misconduct designed to harm the
Company or its shareholders, or (vi) the option holder fails to perform properly
assigned duties with a failure to cure after 20 days notice.
(i) No fractional shares of Stock shall be issued under the
Plan, whether by initial grants or any adjustments to the Plan.
7. USE OF PROCEEDS.
Cash proceeds realized from the sale of Stock under the Plan shall
constitute general funds of the Company.
8. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.
(a) The Board may at any time suspend or terminate the
Plan, and may amend it from time to time in such respects as the Board may deem
advisable provided that (i) such amendment, suspension or termination complies
with all applicable state and federal requirements and requirements of any stock
exchange on which the Stock is then listed, including any applicable requirement
that the Plan or an amendment to the Plan be approved by the shareholders. The
Plan shall terminate on the earlier of (i) ten (10) years from February 6, 1998
or (ii) the date on which no additional shares of stock are available for
issuance under the Plan.
(b) No option may be granted during any suspension or after
the termination of the Plan, and no amendment, suspension or termination of the
Plan shall, without the option holder's consent, alter or impair any rights or
obligations under any option granted under the Plan.
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(c) The Committee, with the consent of affected option
holders, shall have the authority to cancel any or all outstanding options under
the Plan and grant new options having an exercise price which may be higher or
lower than the exercise price of canceled options.
9. ASSIGNABILITY OF OPTIONS AND RIGHTS.
(a) Subject to Subparagraph (b), no Option issued under the
Plan shall be assignable or transferable by an option holder other than by will
or the laws of descent and distribution. An Option awarded to an option holder
during such option holder's lifetime shall be exercisable only by an option
holder or his or her guardian or legal representative.
(b) Notwithstanding Subparagraph (a), in the case of an
NSO, an option holder shall be permitted to transfer the Option to the option
holder's spouse, adult lineal descendants, adult spouses of adult lineal
descendants and trusts for the benefit of the option holder's minor or adult
lineal descendants (a "Related Transferee") if the Option Agreement under which
the Option is granted so specifies. If the Option is transferred to a Related
Transferee pursuant to the preceding sentence, the Related Transferee shall,
upon exercise of the Option, hold the Stock subject to all the provisions of the
transferor's Option Agreement in the same manner as the transferor and shall
execute and deliver to the Company such instruments as the Company shall require
to evidence the same.
10. PAYMENT UPON EXERCISE.
Payment of the purchase price upon exercise of any option or right to
purchase Stock granted under this Plan shall be made by giving the Company
written notice of such exercise, specifying the number of such shares of Stock
as to which the option is exercised. Such notice shall be accompanied by payment
of an amount equal to the Option Price of such shares of Stock. Such payment may
be (i) cash, (ii) by check drawn against sufficient funds, (iii) by delivery to
the Company of the option holder's promissory note, (iv) such other
consideration as the Committee, in its sole discretion, determines and is
consistent with the Plan's purpose and applicable law, or (v) any combination of
the foregoing. Any Stock used to exercise options to purchase Stock (including
Stock withheld upon the exercise of an option to pay the purchase price of the
shares of Stock as to which the option is exercised) shall be valued in
accordance with procedures established by the Committee. Any promissory note
used to exercise options to purchase Stock shall be a full recourse, interest-
bearing obligation secured by Stock in the Company being purchased and
containing such terms as the Committee shall determine. If a promissory note is
used to exercise options the option holder agrees to execute such further
documents as the Company may deem necessary or appropriate in connection with
issuing the promissory note, perfecting a security interest in the stock
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purchased with the promissory note and any related terms the Company may
propose. Such further documents may include, without limitation, a security
agreement and an assignment separate from certificate. If accepted by the
Committee in its discretion, such consideration also may be paid through a
broker-dealer sale and remittance procedure pursuant to which the option holder
(I) shall provide irrevocable written instructions to a designated brokerage
firm to effect the immediate sale of the purchased Stock and remit to the
Company, out of the sale proceeds available on the settlement date, sufficient
funds to cover the aggregate option price payable for the purchased Stock plus
all applicable Federal and State income and employment taxes required to be
withheld by the Company in connection with such purchase and (II) shall provide
written directives to the Company to deliver the certificates for the purchased
Stock directly to such brokerage firm in order to complete the sale transaction.
11. WITHHOLDING TAXES.
(a) Shares of Stock issued hereunder shall be delivered to
an option holder only upon payment by such person to the Company of the amount
of any withholding tax required by applicable federal, state, local or foreign
law. The Company shall not be required to issue any Stock to an option holder
until such obligations are satisfied.
(b) The Committee may, under such terms and conditions as
it deems appropriate, authorize an option holder to satisfy withholding tax
obligations under this Section 11 by surrendering a portion of any Stock
previously issued to the option holder or by electing to have the Company
withhold shares of Stock from the Stock to be issued to the option holder, in
each case having a fair market value equal to the amount of the withholding tax
required to be withheld.
12. CORPORATE TRANSACTIONS.
(a) For the purpose of this Section 12, a "Corporate
Transaction" shall include any of the following shareholder-approved
transactions to which the Company is a party:
(i) a merger or consolidation in which the Company is
not the surviving entity, except for a transaction the principal purpose of
which is to change the State of the Company's incorporation; or
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company in liquidation or dissolution of
the Company.
(b) Upon the occurrence of a Corporate Transaction, if the
surviving corporation or the purchaser, as the case may be, does not assume the
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obligations of the Company under the Plan, then irrespective of the vesting
provisions contained in individual option agreements, all outstanding options
shall become immediately exercisable in full and each option holder will be
afforded an opportunity to exercise their options prior to the consummation of
the merger or sale transaction so that they can participate on a pro rata basis
in the transaction based upon the number of shares of Stock purchased by them on
exercise of options if they so desire. To the extent that the Plan is unaffected
and assumed by the successor corporation or its parent company a Corporate
Transaction will have no effect on outstanding options and the options shall
continue in effect according to their terms.
(c) Each outstanding option under this Plan which is
assumed in connection with the Corporate Transaction or is otherwise to continue
in effect shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply and pertain to the number and class of securities which
would have been issued to the option holder in connection with the consummation
of such Corporate Transaction had such person exercised the option immediately
prior to such Corporate Transaction. Appropriate adjustments shall also be made
to the option price payable per share, provided the aggregate option price
payable for such securities shall remain the same. In addition, the class and
number of securities available for issuance under this Plan following the
consummation of the Corporate Transaction shall be appropriately adjusted.
(d) The grant of options under this Plan shall in no way
affect the right of the Company to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
13. LOANS OR GUARANTEE OF LOANS.
(a) The Committee may, in its discretion, assist any option
holder in the exercise of options granted under this Plan, including the
satisfaction of any income and employment tax obligations arising therefrom by
(i) authorizing the extension of a loan from the Company to such option holder,
(ii) permitting the option holder to pay the exercise price for the Stock in
installments over a period of years or (iii) authorizing a guarantee by the
Company of a third party loan to the option holder. The terms of any loan,
installment method of payment or guarantee (including the interest rate and
terms of repayment) will be upon such terms as the Committee specifies in the
applicable option or issuance agreement or otherwise deems appropriate under the
circumstances. Loans, installment payments and guarantees may be granted with or
without security or collateral (other than to option holders who are not
employees, in which event the loan must be adequately secured by collateral
other than the purchased Stock). However, the maximum credit available to the
option holder may not exceed the exercise or purchase price of the acquired
shares of Stock plus any Federal and State income and employment tax liability
incurred by the option holder in connection with the acquisition of such shares
of Stock.
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(b) The Committee may, in its absolute discretion,
determine that one or more loans extended under this financial assistance
program shall be subject to forgiveness by the Company in whole or in part upon
such terms and conditions as the Committee may deem appropriate.
14. REGULATORY APPROVALS.
The obligation of the Company with respect to Stock issued under the
Plan shall be subject to all applicable laws, rules and regulations and such
approvals by any governmental agencies or stock exchanges as may be required.
The Company reserves the right to restrict, in whole or in part, the delivery of
Stock under the Plan until such time as any legal requirements or regulations
have been met relating to the issuance of Stock, to their registration or
qualification under the Securities Exchange Act of 1934, if applicable, or any
applicable state securities laws, or to their listing on any stock exchange at
which time such listing may be applicable.
15. NO EMPLOYMENT/SERVICE RIGHTS.
Neither the action of the Company in establishing this Plan, nor any
action taken by the Board or the Committee hereunder, nor any provision of this
Plan shall be construed so as to grant any individual the right to remain in the
employ or service of the Company (or any parent, subsidiary or affiliated
corporation) for any period of specific duration, and the Company (or any
parent, subsidiary or affiliated corporation retaining the services of such
individual) may terminate or change the terms of such individual's employment or
service at any time and for any reason, with or without cause.
16. MISCELLANEOUS PROVISIONS.
(a) The provisions of this Plan shall be governed by the
laws of the State of California, as such laws are applied to contracts entered
into and performed in such State, without regard to its rules concerning
conflicts of law.
(b) The provisions of this Plan shall inure to the benefit
of, and be binding upon, the Company and its successors or assigns, whether by
Corporate Transaction or otherwise, and the option holders, the legal
representatives of their respective estates, their respective heirs or legatees
and their permitted assignees.
(c) The option holders shall have no dividend rights,
voting rights or any other rights as a shareholder with respect to any options
under the Plan prior to the issuance of a stock certificate for such Stock.
(d) With respect to grants to non-U.S. residents, options
may be granted hereunder which may vary from the terms of the Plan but which are
consistent
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with the purposes thereof to the extent necessary or appropriate to comply with
foreign laws including but not limited to tax laws.
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