EXHIBIT 4.3
1988 EMPLOYEE INCENTIVE STOCK OPTION PLAN, AS AMENDED,
AND FORM OF OPTION AGREEMENT FOR USE WITH PLAN
WARRANTECH CORPORATION
1988 EMPLOYEE INCENTIVE STOCK OPTION PLAN
(Amended as of July, 1996)
I. PURPOSE OF PLAN
---------------
The Purpose of this Plan is to enable Warrantech Corporation
(the "Company") to compete successfully in attracting, motivating
and retaining employees with outstanding abilities by making it
possible for them to purchase shares of the Company's Common
Stock on terms which will give them a direct and continuing
interest in the future success of the Company's business.
II. DEFINITIONS
-----------
"Board" means the Board of Directors of the Company.
"Code" means the United States Internal Revenue Code, as
amended.
"Effective Date" means the date the Plan is adopted by the
Board.
"Employee" means a person, including an officer, who is
regularly employed on a salary basis by the Company or its
subsidiary companies.
"Incentive Stock Option" means an option granted under this
Plan which the Board intends, at the time it is granted, to be an
incentive stock option within the meaning of Section 422A of the
Code.
"Optionee" means a person to whom an Incentive Stock Option
has been granted under this Plan which has not expired or been
fully exercised or surrendered.
"Plan" means the Company's 1988 Employee Incentive Stock
Option Plan.
"Share" means a share of common stock of the Company.
III. LIMITS ON OPTIONS
-----------------
The total number of Shares with respect to which Incentive
Stock Options may be granted under this Plan shall not exceed in
the aggregate 600,000 Shares.
No Incentive Stock Option shall be granted to any Employee
who immediately after such option is granted, owns capital stock
of the Company possessing more than 10% of the total combined
voting power or value of all classes of capital stock of the
Company unless the option price at the time such Incentive Stock
Option is granted is at least 110 percent of the fair market
value of the Shares subject to the Incentive Stock Option and
such Incentive Stock Option is not exercisable by its terms after
the expiration of 5 years from the date of its grant.
The aggregate fair market value (determined as of the date
of grant) of each Incentive Stock Option granted to an Employee
with respect to which such option is exercisable for the first
time by such Employee during any calendar year shall not exceed
$100,000.
IV. GRANTING OF OPTIONS
-------------------
The Board is authorized to grant options pursuant to this
Plan to selected Employees, including employees who are members
of the Board, beginning on the Effective Date. The number of
Shares, if any, optioned in each year, the Employees to whom
Incentive Stock Options are granted, the number of Shares
optioned to each Employee selected and the term of the Incentive
Stock Option shall be wholly within the discretion of the Board,
subject to terms and conditions set forth in this Plan.
V. TERMS OF STOCK OPTIONS
----------------------
Subject to Section 3 hereof, the terms of Incentive Stock
Options granted this Plan shall be as follows:
A. The option exercise price shall be fixed by the
Board but shall in no event be less than 100% of the
fair market value of the Shares subject to option on
the date the Incentive Stock Option is granted.
B. Incentive Stock Options shall not be transferable
other than by will or by the laws of descent and
distribution. No Incentive Stock Option shall be
subject, in whole or in part, to attachment, execution
or levy of any kind.
C. Each Incentive Stock Option shall expire and all
rights thereunder shall end at the expiration of such
period (which shall not be more than ten years) after
the date on which it was granted as shall be fixed by
the Board, subject to all cases to earlier expiration
as provided in subsections D and E of this Section 5 in
the event of termination of employment or death.
D. During the lifetime of an Optionee his Incentive
Stock Option shall be exercisable only by him and only
while continuously employed by the Company, or within
30 days of termination of employment for any reason or
one year after termination of employment if the
Optionee is disabled within the meaning of Section
22(e)(3) of the Code (but not later than the end of the
period fixed by the Board in accordance with the
provisions of subsection (c) of this Section 5), but
only if and to the extent the Incentive Stock Option
was exercisable by him on the last day of such employ-
ment and only if he has not engaged in any conduct that directly
or indirectly adversely affects the Company.
E. If an Optionee dies within a period during which
his Incentive Stock Option could have been exercised by
him, his Incentive Stock Option may be exercised within
one year after his death (but not later than the end of
the period fixed by the Board in accordance with the
provisions of subsection (c) of this Section 5) by
those entitled under his will or the laws of descent
and distribution, but only if and to the extent such
Incentive Stock Option was exercisable by him
immediately prior to his death.
F. Subject to the foregoing terms and to such
additional terms regarding the exercise of the
Incentive Stock Options as the Board may fix at the
time of grant, Incentive Stock Options may be exercised
in whole at one time or in part from time to time.
G. No Incentive Stock Option granted hereunder may be
exercised prior to the expiration of one year from the
date of grant.
H. Incentive Stock Options granted pursuant to this
Plan shall be evidenced by an agreement in writing
setting forth the material terms and conditions of the
grant, including, but not limited to, the number Shares
subject to option.
VI. RECAPITALIZATION AND REORGANIZATION OF THE COMPANY
--------------------------------------------------
A. The aggregate number of Shares subject to option
under this Plan will be appropriately adjusted if the number of
issued Shares of the Company is increased or reduced by change in
par value, combination, split-up, reclassification, distribution
of a dividend payable in stock, or the like after the Effective
Date. The number of Shares previously optioned and not
thereto-fore delivered and the option prices therefor shall
likewise be appropriately adjusted whenever the number of issued
Shares is increased or reduced by any procedure after the date or
dates on which such Shares were optioned. Shares covered by
Incentive Stock Options which have expired or which have been
surrendered or forfeited may again be optioned under this Plan.
Shares received by the Company in payment of all or of a portion
of the purchase price of Shares issued pursuant to the exercise
of any option granted hereunder may again be optioned under this
Plan.
B. In the event that the Company is succeeded by
another corporation in reorganization, merger, consolidation,
acquisition of property or stock, separation or liquidation, the
successor corporation shall assume the obligations regarding the
outstanding options granted under this Plan or shall substitute
new options for them, with such modification by the successor
corporation as may be necessary continue their status or the
status of the substituted Incentive Stock Options as incentive
stock options for purposes of the Code.
VII. DELIVERY OF PAYMENT FOR SHARES
------------------------------
No Shares shall be delivered upon the exercise of an
Incentive Stock Option until the option price has been paid in
full, and if required by the Board, no Shares will be delivered
upon the exercise of an Incentive Stock Option until the Optionee
has given the Company (a) a satisfactory written statement that
he is purchasing the Shares as an investment and not with a view
to the sale or distribution of any of such Shares, and (b) a
written agreement not to sell any Shares received upon the
exercise of the Incentive Stock Option or any other Shares of the
Company that he may then own or thereafter acquire except either
(i) in compliance with the Securities Act of 1933, as amended
(provided that the Company shall be under no obligation to
register either the Plan, or any securities obtained by the
Optionee pursuant thereto, with the Securities and Exchange
Commission), or (ii) with the prior written approval of the
Company. Payment for Shares received pursuant to the exercise of
an option may be made either in cash or certified check, or
shares, or any combination thereof at the election of the
Optionee. If payment is made in Shares at the election of the
Optionee, the value of the Shares received by the Company shall
be their fair market value.
VIII. TRANSFER OF SHARES UPON EXERCISE OF OPTIONS
-------------------------------------------
In the event that the Shares are registered under the
Securities Act of 1933, as amended, the Optionee may not sell
more than 50% of the Shares acquired upon exercise of an
Incentive Stock Option within the first year following such
exercise, and shall be permitted to sell all of such Shares
thereafter. The certificate(s) issued reflecting any such shares
shall bear a legend substantially as follows:
"No more than 50% of the shares represented by this
certificate may be sold within one year following the
date of original issue thereof. All of such shares may
be sold thereafter."
IX. CONTINUATION OF EMPLOYMENT
--------------------------
Neither this Plan nor any Incentive Stock Option
granted hereunder shall confer upon any Employee any right to
continue in the employ of the Company or limit in any respect the
right of the Company to terminate his employment at any time.
X. ADMINISTRATION
--------------
This Plan shall be administered by the Board, if each
member is disinterested, as that term is defined in Rule
16b-3(c)(2)(i) promulgated under the Securities Exchange Act of
1934, as amended, or a committee of two (2) or more of such
disinterested Board members, who will have sole discretion in
deciding the timing, pricing and amount of the grant or award.
In addition, the Board shall interpret the Plan and make all
other determinations necessary or advisable for its administration,
including such rules and regulations and procedures as it
deems applicable. In the event of a disagreement as to the
interpretation of this Plan or any amendment hereto or any rule,
regulation or procedure hereunder or as to any right or obliga
tion arising from or related to this Plan, the decision of the
Board or the committee shall be final and binding upon all
persons in interest, including the Company and its stockholders.
XI. RESERVATION OF SHARES
---------------------
Shares delivered upon the exercise of an option shall,
in the discretion of the Board, be either Shares heretofore or
hereafter authorized and then unissued, or previously issued
shares heretofore or hereafter acquired through purchase in the
open market or otherwise, or some of each. The Company shall be
under no obligation to reserve or to retain in its treasury any
particular number of Shares at any time, and no particular
Shares, whether unissued or held as treasury Shares, shall be
identified as those optioned under this Plan.
XII. AMENDMENT OF PLAN
-----------------
The Board without further action by the stockholders
may amend this Plan from time to time as it deems desirable and
shall make any amendments which may be required so that options
intended to be incentive stock options (within the meaning of
Section 422A of the Code) shall at all times continue to be
incentive stock options for purpose of the Code; provided that no
such amendment shall increase the maximum number of Shares for
which Incentive Stock Options may be granted, reduce the minimum
option price, extend the option period with respect to any
Incentive Stock Option, permit the granting of Incentive Stock
Options to anyone other than as provided in the Plan, or allow
administration of the Plan in a manner violative of Rule 16b-3.
XIII. TERMINATION OF THE PLAN
-----------------------
This Plan shall terminate ten (10) years from the date
the Plan is adopted by the Board. The Board may, in its
discretion, terminate this Plan at any time prior to such date,
but such termination shall not deprive Optionees of their rights
under their options.
XIV. EFFECTIVE DATE
This Plan shall become effective upon its adoption by
the Board and Incentive Stock Options hereunder may be granted at
any time on or after that date. However, no Incentive Stock
Option may be exercised unless this Plan is approved by a vote of
holders of a majority of the outstanding Shares of the Company's
Common Stock at a meeting of stockholders of the Company held
within twelve months after the Effective Date.
WARRANTECH CORPORATION
000 XXXXXXXX XXXXXX
XXXXXXXX, XXXXXXXXXXX 00000
Dated: ___________________
Re: Option to purchase _________
shares at $_______ per share
To: _________________, Optionee
1. Warrantech Corporation (the "Company"), deeming it
in its best interest that you remain in the employ of its organi
zation and as an incentive for you to so remain and have an
increasing interest in the Company as stockholder, hereby gives
and grants you, subject to all of the provisions, terms and
conditions contained in the Company's 1988 Employee Incentive
Stock Option Plan, as amended (the "Plan"), a copy of which is
annexed hereto and made a part hereof, and subject to the further
provisions hereof, the right and option to purchase up to the
aggregate number of shares of Common Stock of the Company, and at
the price per share, set forth above (the "Option"). Such
purchase price is not less than the fair market value of such
stock on the date above, which is the date the granting of such
option ("Date of Grant").
2. This Option may be exercised as to the first
_________ shares commencing on ___________________. This Option
may be exercised for another ________ shares commencing on
_____________. This Option on the remaining _______ shares may
be exercised on _____________.
3. This Option shall be exercisable by you only while
you are an employee of the Company or any subsidiary thereof, or
within 30 days of termination of such employment for any reason
except for termination of your employment due to disability
within the meaning of Section 22(e)(3) of the Internal Revenue
Code, in which case this Option shall be exercisable by you for a
period of one year after the date of such termination, but only
to the extent such option was exercisable by you pursuant to
paragraph 2 hereof at the time of such termination and only if
you have not engaged in any conduct that directly or indirectly
adversely affects the Company. This Option is exercisable only
by you, and is not transferrable by you, otherwise than by will,
or by the laws of descent and distribution. In the event of your
death, while you are an employee of the Company or any subsidiary
thereof, the Option may be exercised by the executors or
administrators of your estate or by a person who acquired the
right to exercise the Option by bequest or inheritance or by
reason of your death, and then only if, and to the extent that,
you were entitled to exercise the Option at the date of your
death, up to a maximum exercise period of one year.
4. The exercise of this Option shall be made by the
delivery to the Company of a written notice of intention to exer
cise the Option, specifying the number of shares then to be
purchased under the Option and the date of such purchase (which,
unless the Company otherwise consents, shall be at least five
days and not more than fifteen days after the date of mailing of
such notice), and by the tender of payment to the Company on said
date of the purchase price of the number of shares specified in
such notice. Payment shall be made in cash or by certified check
or with previously acquired common stock of the Company having a
fair market value equal to the option price, or any combination
thereof.
5. Upon payment of the purchase price of the shares
specified in the notice, the Company shall deliver to you a
certificate or certificates for the shares purchased.
6. You may be required to make an appropriate repre
sentation at the time of any exercise of this Option that it is
your intention to acquire the shares being purchased for invest
ment and not for resale or distribution. In addition, you may be
required to agree in writing not to sell any shares acquired
pursuant to this Option or any other shares of the Company that
you may now or hereafter acquire except either (i) in compliance
with the Securities Act of 1933, as amended provided that the
Company shall be under no obligation to register either the Plan
or any securities obtained pursuant to your exercise of your
rights, hereunder, with the Securities and Exchange Commission,
or (ii) with prior written approval of the Company. An appro
priate legend restricting the sale of any such shares may be
placed upon the certificates representing such shares and any
resale must be in compliance with the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
7. This agreement shall be binding upon and shall
inure to the benefit of any successors or assigns of the Company,
and, to the extent herein provided, shall be binding upon and
inure to the benefit of your legal representatives.
8. NEITHER THIS OPTION NOR THE SHARES THAT SHALL BE
RECEIVED UPON THE EXERCISE OF THIS OPTION HAVE BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
OTHER APPLICABLE STATE SECURITIES LAWS AND THE SHARES OBTAINED
PURSUANT TO THE EXERCISE OF THIS OPTION MAY BE OFFERED OR SOLD
ONLY IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS OPTION,
AND ONLY IF REGISTERED OR QUALIFIED PURSUANT TO SAID LAWS OR IF
AN EXEMPTION FROM SUCH REGISTRATION, OR QUALIFICATION IS
AVAILABLE.
9. In the event that the shares that shall be
received upon the exercise of this Option are registered under
the Securities Act of 1933, as amended, you acknowledge and agree
that you shall be permitted to sell no more than 50% of the
shares acquired upon exercise of this Option within the first
year following such exercise, and you shall be permitted to sell
all of such shares thereafter. An appropriate legend restricting
the sale of any such shares may be placed upon the certificates
representing such shares.
10. This Option is not, and should not be deemed to
be, an employment agreement between you and the Company, and
nothing contained herein shall be deemed to confer upon you any
right to remain in the employ of the Company or any subsidiary
thereof, or in any way to limit the right of the Company or any
such subsidiary to terminate your employment.
11. If the foregoing is in accordance with your under
standing and approved by you, please so confirm by signing and
returning the duplicate of this letter enclosed for that purpose.
Very truly yours,
WARRANTECH CORPORATION
By:__________________________
I hereby confirm that the foregoing is in accordance
with my understanding and is hereby agreed and accepted in its
entirety as of the date of the above letter.
___________________________
__________________, Optionee
