Grant No.
VIRUTAL FINANCIAL SERVICES, INC.
2000 STOCK OPTION AND INCENTIVE PLAN
STOCK OPTION AGREEMENT
Virtual Financial Services, Inc., an Indiana corporation (the
"Corporation") and the undersigned Optionee hereby enter into this Stock
Option Agreement pursuant to which the Optionee is granted an option to
purchase shares of the Corporation's common stock pursuant to the variable
terms set forth on this page ("Grant Notice") and the remaining terms and
conditions set forth in this Stock Option Agreement (in the aggregate, the
"Agreement"):
Optionee:_____________________________________________________
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Grant Date: __________________________________________________
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Vesting Commencement Date:____________________________________
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Exercise Price: $_________________________________ per share
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Number of Option Shares:__________________________________ share
-----------------------
Expiration Date: _______________________________________________
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Type of Option: ______________ Incentive Stock Option
-------------- ______________ Non-Statutory Stock Option
Exercise Schedule: The option shall become exercisable with
respect to: (i) ten percent (10%) of the Option Shares upon the
Optionee's completion of one year of Service measured from the
Vesting Commencement Date; (ii) an additional fifteen percent
(15%) of the Option Shares upon completion of the second year of
the Optionee's Service measured from the Vesting Commencement
Date; (iii) an additional twenty-five percent (25%) of the Option
Shares upon the Optionee's completion of the Optionee's third
year of Service measured from the Vesting Commencement Date; and
(iv) the remaining fifty percent (50%) of the Option Shares upon
completion of the Optionee's fourth year of Service measured from
the Vesting Commencement Date. In no event shall the option
become exercisable for any additional Option Shares after the
Expiration Date.
RECITALS
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A. The Board has adopted the Plan for the purpose of retaining the
Services of employees, directors, consultants and advisors who provide
valuable services to the Corporation (or any Parent or Subsidiary).
B. The Optionee is an individual who is to render such services to
the Corporation (or a Parent or Subsidiary), and this Agreement is executed
pursuant to, and is intended to carry out the purposes of the Plan.
C. All capitalized terms in this Agreement shall have the meanings
assigned to them in the Plan or the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to the Optionee,
as of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from
time to time during the option term specified in paragraph 2 at the Exercise
Price.
2. Option Term. This option shall have a term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
paragraph 5 or 15.
3. Limited Transferability. This option shall be neither
transferable nor assignable by the Optionee other than by will or by the laws
of descent and distribution following the Optionee's death and may be
exercised, during the Optionee's lifetime, only by the Optionee. However, if
this option is designated a Non-Statutory Option in the Grant Notice, then
this option may also be assigned in accordance with the terms of a Qualified
Domestic Relations Order. If so assigned, the assigned option shall be
exercisable only by the person or persons who acquire a proprietary interest
in the option pursuant to such Qualified Domestic Relations Order. The terms
applicable to the assigned option (or portion thereof) shall be the same as
those in effect for this option immediately prior to such assignment and
shall be set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate.
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4. Dates of Exercise.
(a) This option shall become exercisable for the Option Shares
in a series of installments as specified in the Grant Notice. As the option
becomes exercisable for one or more installments, those installments shall
accumulate, and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option
term under paragraph 5 or 15.
(b) This option shall vest in full and become immediately
exercisable upon a Change in Control and shall remain exercisable in
accordance with the terms of subparagraph 5(c) of this Agreement.
5. Cessation of Service.
(a) Except to the extent otherwise provided pursuant to
subparagraphs 5(b) and 5(c) below, the following provisions shall govern the
exercise period applicable to this option:
(i) If the Optionee is an Employee, should the Optionee
cease to remain in Service for any reason other than Disability, death
or a termination of employment for cause, then the period during which
this option is to remain exercisable shall be limited to the three
(3)-month period following the date of such cessation of Service.
(ii) If the Optionee is an Employee, should the Optionee
cease to remain in Service by reason of Disability, then the period
during which this option is to remain exercisable shall be limited to
the twelve (12)-month period following the date of such cessation of
Service.
(iii) If the Optionee is an Employee, should the Optionee
cease to remain in Service by reason of death of the Optionee, then the
period during which this option is to remain exercisable shall be
limited to the twelve (12)-month period following the date of the
Optionee's death. During such period, this option may be exercised by
the personal representative of the Optionee's estate or by the person
or persons to whom the option is transferred pursuant to the Optionee's
will or in accordance with the laws of descent and distribution.
(iv) If an Optionee ceases to remain in Service by reason
of a termination of employment for cause, then this option shall
terminate immediately and cease to be outstanding.
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(v) If the Optionee is a non-employee director,
consultant or advisor to the Corporation, should the Optionee cease to
remain in Service for any reason other than for cause, then the period
during which this option is to remain exercisable shall be limited to
the twelve (12) month period following the date of such cessation of
Service.
(vi) Under no circumstances, however, shall this option be
exercisable after the specified Expiration Date.
(vii) Subject to subparagraph 5(b), below, during the
applicable exercise period, an option may not be exercised in the
aggregate for more than the number of Option Shares for which the
option is exercisable on the date of the Optionee's cessation of
Service. Upon the expiration of the applicable exercise period or (if
earlier) upon the expiration of the option term, the option shall
terminate and cease to be exercisable for any vested shares for which
the option has not been exercised. Subject to the provisions of
subparagraph 5(b), below, an option shall, immediately upon the
Optionee's cessation of Service for any reason, terminate and cease to
be outstanding with respect to any Option Shares for which the option
is not then exercisable.
The Plan Administrator shall determine whether a termination is
for cause, and its determination shall be binding and conclusive. To the
extent the Optionee's Service with the Corporation is governed by an
agreement with the Corporation at the time of the Optionee's termination, the
Plan Administrator shall use the definition of "cause" set forth in such
agreement for purposes of making such determination.
(b) To the extent permitted by the Code, the Plan Administrator
shall have the power and discretionary authority, exercisable at any time
while the option remains outstanding,
(i) to extend the period of time for which the option is
to remain exercisable following the Optionee's cessation of Service
from the limited period in effect under subparagraph 5(a) to such
greater period of time as the Plan Administrator shall deem
appropriate; provided, that in no event shall such option be
exercisable after the specified expiration date of the option term;
and/or
(ii) to permit one or more options held by the Optionee
under this Stock Option Agreement to be exercised, during the limited
exercise period applicable under subparagraph 5(a), not only with
respect to the number of shares of Common Stock for which each such
option is vested and exercisable at the time of the Optionee's
cessation of Service but also with respect to some or all of the
additional shares of
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Common Stock for which the option would have otherwise become vested
and exercisable had such cessation of Service not occurred.
(c) In the event of a Change in Control as defined in either
subparagraph (3) or (4) of paragraph C of the Appendix to this Agreement, at
least fifteen days before the shareholder approval of the Change in Control,
the Corporation shall notify each Optionee holding outstanding options
whether any options held by the Optionee will become fully vested and
exercisable pursuant to the terms hereof and Optionee will then have 10 days
after receipt of such notice to exercise the option, in whole or in part,
such exercise to become effective upon consummation of the transaction
underlying the Change in Control.
6. Right of First Refusal.
(a) Grant. Until the Corporation's Section 12(g) Registration
Date and during any time that the Common Stock is not publicly traded, the
Corporation is hereby granted a right of first refusal (the "First Refusal
Right"), exercisable in connection with any proposed sale of any Option
Shares which were purchased ("Purchased Shares") under this option by the
Optionee (hereinafter referred to as "Owner"). While the First Refusal Right
is in effect, Owner shall not make any transfer of Purchased Shares except as
provided in this paragraph 6 and any transfer of the Purchased Shares other
than in compliance with the provisions of this paragraph 6 shall be null and
void. For purposes of this paragraph 6, "transfer" shall include any sale,
assignment, pledge, encumbrance or other disposition of the Purchased Shares
intended to be made by Owner.
(b) Notice of Intended Disposition. In the event Owner desires
to accept a bona fide third-party offer for the sale of any or all of the
Purchased Shares (the Purchased Shares subject to the offer hereinafter
referred to as "Target Shares"), Owner shall promptly, (i) deliver to the
Corporation written notice (the "Disposition Notice") of the terms of the
offer, including the purchase price and the identity of the third-party
offeror, and (ii) provide satisfactory proof that the disposition of the
Target Shares to such third-party offeror would not be in contravention of
federal or state securities laws or the provisions of this Stock Option
Agreement.
(c) Exercise of First Refusal Right. The Corporation shall,
for a period of twenty-five (25) days following receipt of the Disposition
Notice, have the right to repurchase all, but not less than all, of the
Target Shares subject to the Disposition Notice upon the same terms as those
specified therein or upon such other terms (not materially different from
those specified in the Disposition Notice) to which Owner consents. Such
right shall be exercisable by delivery of written notice ("Exercise Notice")
to Owner prior to the expiration of the twenty-five (25)-day exercise
period. If such right is exercised with respect to all the Target Shares,
then the
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Corporation shall effect the repurchase of such shares, including payment of the
purchase price, not more than five (5) business days after delivery of the
Exercise Notice. At that time the certificates representing the Target Shares
shall be delivered to the Corporation.
Should the purchase price specified in the Disposition Notice be
payable in property other than cash or evidences of indebtedness, the
Corporation shall have the right to pay the purchase price in the form of
cash equal in amount to the value of such property. If Owner and the
Corporation cannot agree on such cash value within ten (10) days after the
Corporation's receipt of the Disposition Notice, the valuation shall be made
by an appraiser of recognized standing selected by Owner and the Corporation
or, if they cannot agree on an appraiser within twenty (20) days after the
Corporation's receipt of the Disposition Notice, each shall select an
appraiser of recognized standing and the two (2) appraisers shall designate a
third appraiser of recognized standing, whose appraisal shall be
determinative of such value. The cost of such appraisal shall be shared
equally by Owner and the Corporation. The closing shall then be held on the
fifth (5th) business day after valuation of the Target Shares to be purchased
has been agreed upon or determined by appraisal as set forth herein.
(d) Non-Exercise of First Refusal Right. In the event the
Exercise Notice is not given to Owner prior to the expiration of the
twenty-five (25)-day exercise period, Owner shall have a period of thirty
(30) days thereafter in which to sell or otherwise dispose of the Target
Shares to the third-party offeror identified in the Disposition Notice upon
terms (including the purchase price) no more favorable to such third-party
offeror than those specified in the Disposition Notice; provided, however,
that any such sale or disposition must not be effected in contravention of
federal or state securities laws or the provisions of this Agreement. The
third-party offeror shall acquire the Target Shares free and clear of any
First Refusal Right of the Corporation, but the acquired shares shall remain
subject to the requirements of federal and state securities laws. In the
event Owner does not effect such sale or disposition of the Target Shares
within the specified thirty (30)-day period, the First Refusal Right shall
continue to be applicable to any subsequent disposition of the Target Shares
by Owner until such right lapses.
7. Adjustment in Option Shares. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price
in order to reflect such change and thereby preclude a dilution or
enlargement of benefits hereunder.
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8. Shareholder Rights. The holder of this option shall not have any
shareholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become the holder of
record of the purchased shares.
9. Manner of Exercising Option.
(a) In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
the Optionee (or any other person or persons exercising the option) must take
the following actions:
(i) Notify the Corporation in writing at its principal
office, presently located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, Attn: Secretary, of the Optionee's intent to exercise the
option ("Notice of Exercise"). The Notice of Exercise shall state the
election to exercise the option and the number of shares in respect of
which it is being exercised and shall be signed by the person or
persons so exercising the option.
(ii) Pay the aggregate Exercise Price for the purchased
shares in one or more of the following forms:
(A) cash or check made payable to the
Corporation; or
Should the Common Stock be registered under Section 12(g)
of the 1934 Act at the time the option is exercised, then the Exercise
Price may also be paid as follows:
(B) in shares of Common Stock held by the Optionee
(or any other person or persons exercising the option) for the
requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date; or
(C) through a special sale and remittance procedure
pursuant to which the Optionee (or any other person or persons
exercising the option) shall concurrently provide irrevocable
written instructions (i) to a Corporation-designated brokerage
firm to effect the immediate sale of all or a portion of the
purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to
cover the aggregate Exercise Price payable for all of the shares
being purchased pursuant to this special sale and remittance
procedure plus all applicable Federal, state and local income and
employment taxes required to be withheld by the Corporation by
reason of such
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exercise and sale and (ii) to the Corporation to deliver the
certificates for the shares to be sold directly to such brokerage firm
in order to complete the sale.
Payment of the Exercise Price must accompany the Notice of
Exercise delivered to the Corporation in connection with the option
exercise unless the sale and remittance procedure is used, in which
event the applicable written instructions will be provided at the time
of exercise.
(iii) Furnish to the Corporation all appropriate
documentation requested by the Corporation, including, but not limited
to,
(1) the Stock Purchase Agreement attached to this
Agreement as Exhibit A;
(2) documentation that the person or persons
exercising the option (if other than the Optionee) have the
right to exercise this option; and
(3) such written representations as may be
requested by the Corporation in order for it to comply with
the applicable requirements of Federal and state securities
laws.
(iv) Make appropriate arrangements with the Corporation
for the satisfaction of the required Federal, state and local income
and employment tax withholding requirements applicable to the option
exercise.
(b) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of the Optionee (or any other person
or persons exercising this option) a certificate for the purchased Option
Shares, with the appropriate legends affixed thereto, or, if the shares are
uncertificated, a written statement as required by law.
(c) In no event may this option be exercised for any fractional
shares.
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10. Compliance with Laws and Regulations.
(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation
and the Optionee with all applicable requirements of law relating thereto,
including but not limited to state and federal securities laws and, if the
Shares are listed on a stock exchange, with all applicable regulations of any
stock exchange (or the Nasdaq National Market if applicable) on which the
Common Stock may be listed for trading at the time of such exercise and
issuance.
(b) The inability of the Corporation to obtain approval from
any regulatory body having authority deemed by the Corporation to be
necessary to the lawful issuance and sale of any Common Stock pursuant to
this option shall relieve the Corporation of any liability with respect to
the non-issuance or sale of the Common Stock as to which such approval shall
not have been obtained. The Corporation, however, shall use its best efforts
to obtain all such approvals.
11. Successors and Assigns. Except to the extent otherwise provided
in paragraph 3, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
the Optionee, the Optionee's permitted assigns and the legal representatives,
heirs and legatees of the Optionee's estate.
12. Notices. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and
addressed to the Corporation at its principal corporate offices. Any notice
required to be given or delivered to the Optionee shall be in writing and
addressed to the Optionee at the address indicated under the Optionee's
signature line. All notices shall be deemed effective upon personal delivery
or upon deposit in the U.S. mail, postage prepaid and properly addressed to
the party to be notified.
13. Construction. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator
with respect to any question or issue arising under the Plan or this
Agreement shall be conclusive and binding on all persons having an interest
in this option. To the extent the provisions of this Agreement conflict with
the provisions of the Plan, the Plan provisions shall apply.
14. Governing Law. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of Indiana
without resort to that State's conflict-of-laws rules.
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15. Shareholder Approval.
If the Option Shares covered by this Agreement exceed, as of the
Grant Date, the number of shares of Common Stock which may without
shareholder approval be issued under the Plan, then this option shall be void
with respect to such excess shares, unless shareholder approval of an
amendment sufficiently increasing the number of shares of Common Stock
issuable under the Plan is obtained in accordance with the provisions of the
Plan.
16. Additional Terms Applicable to an Incentive Option. In the event
this option is designated an Incentive Option in the Grant Notice, the
following terms and conditions shall also apply to the grant:
(a) For purposes of this paragraph 16, parent corporation and
subsidiary corporation are defined pursuant to Code Section 424(e) and 424(f)
as follows:
(i) "parent": any corporation (other than the
Corporation) in an unbroken chain of corporations ending with the
Corporation shall be considered to be a parent of the Corporation,
provided each such corporation in the unbroken chain (other than the
Corporation) owns, at the time of the determination, securities
possessing fifty percent (50%) or more of the total combined voting
power of all classes of securities in one of the other corporations in
such chain.
(ii) "subsidiary": each corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation shall be considered to be a subsidiary of the Corporation,
provided each such corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, securities
possessing fifty percent (50%) or more of the total combined voting
power of all classes of securities in one of the other corporations in
such chain.
(b) Incentive Options shall only be granted to Employees of the
Corporation or a parent or subsidiary of the Corporation.
(c) This option shall cease to qualify for favorable tax
treatment as an Incentive Option if (and to the extent) this option is
exercised for one or more Option Shares: (i) more than three (3) months after
the date the Optionee ceases to be an Employee of the Corporation or a parent
or subsidiary for any reason other than death or Disability or (ii) more than
twelve (12) months after the date the Optionee ceases to be an Employee of
the Corporation or a parent or subsidiary by reason of Disability.
Page 10
(d) No installment under this option shall qualify for
favorable tax treatment as an Incentive Option if (and to the extent) the
aggregate Fair Market Value (determined at the Grant Date) of the Common
Stock for which such installment first becomes exercisable hereunder would,
when added to the aggregate value (determined as of the respective date or
dates of grant) of any earlier installments of Common Stock and/or other
securities for which this option or any other Incentive Options granted to
the Optionee prior to the Grant Date (whether under the Plan or any other
option plan of the Corporation or any parent or subsidiary) first become
exercisable during the same calendar year, exceed One Hundred Thousand
Dollars ($100,000) in the aggregate. Should such One Hundred Thousand Dollar
($100,000) limitation be exceeded in any calendar year, this option shall
nevertheless be exercisable for the excess shares in the same or a later
calendar year as a Non-Statutory Option.
(e) Should the Optionee hold, in addition to this option, one
or more other options to purchase Common Stock which become exercisable for
the first time in the same calendar year as this option, then the foregoing
limitations on the exercisability of such options as Incentive Options shall
be applied in the order in which such options were granted.
(f) If the Optionee sells or otherwise disposes of any of the
Option Shares acquired pursuant to the Incentive Option on or before the
later of (i) the date two years after the Date of Grant, or (ii) the date one
year after the date of exercise, the Optionee shall immediately notify the
Corporation in writing of such disposition. The Optionee agrees that the
Optionee may be subject to income tax withholding by the Corporation on the
compensation income recognized by the Optionee.
17. NO GUARANTEE OF CONTINUED SERVICE. THE OPTIONEE ACKNOWLEDGES AND
AGREES THAT THE VESTING OF OPTION SHARES PURSUANT TO THE VESTING SCHEDULE
HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE
CORPORATION (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). THE OPTIONEE FURTHER ACKNOWLEDGES AND AGREES
THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING
SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF
CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY
PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH THE OPTIONEE'S
RIGHT OR THE CORPORATION'S RIGHT TO TERMINATE THE OPTIONEE'S RELATIONSHIP AS
A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
The Optionee acknowledges prior receipt of a copy of the Plan and
hereby accepts this option subject to all of the terms and provisions
thereof. The Optionee hereby agrees to accept
Page 11
as binding, conclusive and final all decisions or interpretations of the Plan
Administrator upon any questions arising under the Plan or this Agreement. The
Optionee further agrees to notify the Corporation upon any change in the
residence address indicated below.
Page 12
In witness whereof, the Corporation has caused this Agreement to be
duly executed by its officer, thereunto duly authorized, and the Optionee has
executed this Agreement as of the day and year first written above.
"CORPORATION"
VIRTUAL FINANCIAL SERVICES, INC.
By: _________________________
Printed Name: ________________
Its: _________________________
"OPTIONEE"
____________________________
(Signature)
____________________________
(Printed Name)
____________________________
___________________________
____________________________
(Address)
Page 13
APPENDIX
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Option Agreement.
B. Board shall mean the Corporation's Board of Directors.
C. Change in Control shall mean:
(1) The acquisition by any individual, entity or group (within
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 30% or more of either (a) the then
outstanding shares of Common Stock of the Corporation (the "Outstanding
Corporation Common Stock") or (b) the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote
generally in the election of directors (the "Outstanding Corporation
Voting Securities"); provided, however, that the following acquisitions
shall not constitute a Change in Control: (w) any acquisition directly
from the Corporation (excluding an acquisition by virtue of the
exercise of a conversion privilege), (x) any acquisition by the
Corporation, (y) any acquisition by an employee benefit plan (or
related trust) sponsored or maintained either by the Corporation or any
corporation controlled by the Corporation ("Affiliate"), or (z) any
acquisition by a corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (a), (b) and (c) of
subparagraph (3) of this paragraph B are satisfied; or
(2) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason 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 Corporation'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 either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board; or
Page A-1
(3) Approval by the shareholders of the Corporation of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (a) more than
55% of, respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned directly or
indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting Securities
immediately prior to such reorganization, merger or consolidation in
substantially the same proportions as their ownership, immediately
prior to such reorganization, merger or consolidation, of the
Outstanding Corporation Common Stock and Outstanding Corporation Voting
Securities, as the case may be, (b) no Person (excluding the
Corporation, any employee benefit plan (or related trust) sponsored or
maintained by the Corporation, by an Affiliate or by such corporation
resulting from such reorganization, merger or consolidation and any
Person beneficially owning immediately prior to such reorganization,
merger or consolidation, directly or indirectly, 30% or more of the
Outstanding Corporation Common Stock or Outstanding Voting Securities,
as the case may be) beneficially owns, directly or indirectly, 30% or
more of, respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors and (c) at least a majority of the members of the
board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement providing
for such reorganization, merger or consolidation; or
(4) Approval by the shareholders of the Corporation of (a) a
complete liquidation or dissolution of the Corporation or (b) the sale
or other disposition of all or substantially all of the assets of the
Corporation, other than to a corporation, with respect to which
following such sale or other disposition, (i) more than 55% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting Securities
immediately prior to such sale or other disposition in substantially
the same proportion as their ownership immediately prior to such sale
or other disposition, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities, as the case may be, (ii) no
Person (excluding the
Page A-2
Corporation and any employee benefit plan (or related trust)
sponsored or maintained by the Corporation, by an Affiliate
or by the corporation purchasing the assets and any Person
beneficially owning, immediately prior to such sale or other
disposition directly or indirectly, 30% or more of the Outstanding
Corporation Common Stock or Outstanding Corporation Voting Securities,
as the case may be) beneficially owns, directly or indirectly, 30% or
more of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors and (iii) at least a majority of the members of
the board of directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial agreement
or action of the Board providing for such sale or other disposition of
assets of the Corporation.
C. Code shall mean the Internal Revenue Code of 1986, as amended.
D. Committee shall be a committee of two (2) or more Board members
appointed by the Board to administer the Plan. If no committee is appointed,
the Board will serve as the Committee. The composition of the Committee is
intended to satisfy Code section 162(m) and Rule 16b-3 promulgated under the
1934 Act, if applicable.
E. Common Stock shall mean the Corporation's common stock.
F. Corporation shall mean Virtual Financial Services, Inc., an Indiana
corporation.
G. Disability means the inability of an individual to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which is expected to result in death or has lasted or
can be expected to last for a continuous period of not less than twelve (12)
months. The Plan Administrator has the discretion to determine whether an
individual is disabled and that determination will be binding and conclusive.
H. Domestic Relations Order shall mean any judgment, decree or order
(including approval of a property settlement agreement) which provides or
otherwise conveys, pursuant to applicable State domestic relations laws
(including community property laws), marital property rights to any spouse or
former spouse of the Optionee.
I. Employee shall mean an individual who performs services while in the
employ of the Corporation or one or more Parent or Subsidiary corporations,
subject to the control and direction of the employer entity not only as to
the work to be performed but also as to the manner and method of
performance. An Employee will not cease to be an Employee in the case of any
Corporation-approved leave of absence.
Page A-3
J. Exercise Date shall mean the date on which the option shall have been
exercised in accordance with paragraph 9 of the Agreement.
K. Exercise Price shall mean the exercise price per share as specified in
the Grant Notice.
L. Expiration Date shall mean the date on which the option expires as
specified in the Grant Notice.
M. Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(1) If the Common Stock is not at the time listed or admitted
to trading on any national securities exchange but is traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share on the date in question, as such price is reported by the
National Association of Securities Dealers on the Nasdaq National Market. If
there is not reported closing selling price for the Common Stock on the date
in question, then the closing selling price on the last preceding date for
which such quotation exists shall be determinative of Fair Market Value.
(2) If the Common Stock is at the time listed or admitted to
trading on any national securities exchange, then the Fair Market Value shall
be the closing selling price per share on the date in question on the
exchange determined by the Plan Administrator to be the primary market for
the Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is not reported sale of Common Stock
on such exchange on the date in question, then the Fair Market Value shall be
the closing selling price on the exchange on the last preceding date for
which such quotation exists.
(3) If the Common Stock is on the date in question neither
listed nor admitted to trading on any national securities exchange nor traded
on the Nasdaq National Market, then the Fair Market Value of the Common Stock
on such date shall be determined by the Plan Administrator after taking into
account such factors as the Plan Administrator shall deem appropriate.
▇. ▇▇▇▇▇ Date shall mean the date of grant of the option as specified in
the Grant Notice.
▇. ▇▇▇▇▇ Notice shall mean the first page of this Agreement containing the
basic terms of the option evidenced hereby.
P. Incentive Option shall mean an option which satisfies the requirements
of Code Section 422.
Page A-4
Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
R. Non-Statutory Option shall mean an option that does not satisfy the
requirements of Code Section 422.
S. Option Shares shall mean the number of shares of Common Stock subject
to the option.
T. Optionee shall mean the person to whom the option is granted as
specified in the Grant Notice.
U. Parent shall mean any corporation or other legal entity (other than the
Corporation) in an unbroken chain of corporations or other legal entities
ending with the Corporation, provided each such corporation or other legal
entity in the unbroken chain (other than the Corporation) owns, at the time
of the determination, securities possessing fifty percent (50%) or more of
the total combined voting power of all classes of securities in one of the
other corporations or other legal entities in such chain.
U. Plan shall mean the Corporation's 2000 Stock Option and Incentive Plan.
V. Plan Administrator either the Board or, to the extent the Committee is
at the time responsible for the administration of the Plan in accordance with
Section 1.4 of the Plan, the Committee.
W. Section 12(g) Registration Date means any date on which the initial
registration of the Common Stock under Section 12(g) of the 1934 Act becomes
effective.
X. Subsidiary means each corporation or other legal entity (other than the
Corporation) in an unbroken chain of corporations or other legal entities
beginning with the Corporation, provided each such corporation or other legal
entity (other than the last corporation or other legal entity) in the
unbroken chain owns, at the time of the determination, securities possessing
fifty percent (50%) or more of the total combined voting power of all classes
of securities in one of the other corporations or other legal entities in
such chain.
X. Qualified Domestic Relations Order shall mean a Domestic Relations
Order which substantially complies with the requirements of Code Section
414(p). The Plan Administrator shall have the sole discretion to determine
whether a Domestic Relations Order is a Qualified Domestic Relations Order.
Page A-5
Y. Service shall mean the performance of services for the Corporation (or
any Parent or Subsidiary) on a continuous basis as an Employee or on a
periodic but consistent basis for the Corporation (or any Parent or
Subsidiary) in the capacity of a non-employee member of the Board or an
independent consultant or advisor.
