EXHIBIT 4.1
EVCI CAREER COLLEGES INCORPORATED
AMENDED AND RESTATED 1998 INCENTIVE PLAN
ARTICLE I.
DEFINITIONS
1.01 Administrator means the Board and any delegate of the Board that is
appointed in accordance with Article III.
1.02 Agreement means a written agreement (including any amendment or
supplement thereto) between the Corporation and a Participant specifying the
terms and conditions of a Stock Award or Option granted to such Participant.
1.03 Board means the Board of Directors of the Corporation.
1.04 Change in Control shall mean an event or series of events that would
be required to be described as a change in control of the Corporation in a proxy
or information statement distributed by the Corporation pursuant to Section 14
of the Exchange Act in response to Item 6(e) of Schedule 14A promulgated
thereunder or otherwise adopted. The determination whether and when a change in
control has occurred or is about to occur shall be made by the Board in office
immediately prior to the occurrence of the event or series of events
constituting such change in control.
1.05 Code means the Internal Revenue Code of 1986, and any amendments
thereto.
1.06 Common Stock means the common stock, $.0001 per value, of the
Corporation.
1.07 Corporation means EVCI Career Colleges Incorporated
1.08 Control Change Date means the occurrence of the event or series of
events constituting a Change in Control as determined by the Board.
1.09 Exchange Act means the Securities Exchange Act of 1934, as amended and
as in effect on the date of this Plan.
1.10 Fair Market Value means, on any given date, the closing price (or, if
there is none, the average of the closing bid and asked price) of the Common
Stock on such quotation system or principal securities exchange on which the
Common Stock is traded on such day, or, if the Common Stock is not so traded on
such day, then on the next preceding day that the Common Stock was traded, all
as reported by such source as the Administrator may select.
1.11 Forfeitable Shares shall have the meaning set forth in Section 9.04 of
this Plan.
1.12 Non-Employee Director means a member of the Board who is not an
employee of the Corporation or a Related Entity.
1.13 Option means a stock option that entitles the holder to purchase from
the Corporation a stated number of shares of Common Stock at the price set forth
in an Agreement.
1.14 Option Exchange Program shall mean a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.
1.15 Participant means an employee of and non-employee director, advisor
and independent consultant to the Corporation or a Related Entity, including an
employee who is a member of the Board, who satisfies the requirements of Article
IV and is selected by the Administrator to receive a Stock Award, an Option or a
combination thereof.
1.16 Plan means the Corporation's 1998 Incentive Plan.
1.17 Related Entity means any entity that directly or indirectly, through
one or more intermediaries, controls, or is controlled by, or is under common
control with, the Corporation.
1.18 Stock Award means Common Stock awarded to a Participant under Article
IX.
1.19 Stockholders means the stockholders of the Corporation.
ARTICLE II.
PURPOSES
The Plan is intended to assist the Corporation and Related Entities in
recruiting and retaining employees, directors, officers, consultants and
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advisors, and in compensating such individuals by enabling such individuals to
participate in the future success of the Corporation and the Related Entities
and to associate their interests with those of the Corporation and its
Stockholders. The Plan is intended to permit the grant of Stock Awards and the
grant of both Options qualifying under Section 422 of the Code ("incentive stock
options") and Options not so qualifying, as determined by the Administrator at
the time of grant. No Option that is intended to be an incentive stock option
shall be invalid for failure to qualify as an incentive stock option. The
proceeds received by the Corporation from the sale of Common Stock pursuant to
this Plan shall be used for general corporate purposes.
ARTICLE III.
ADMINISTRATION
The Plan shall be administered by the Administrator. The Administrator
shall have authority to grant Stock Awards and Options upon such terms (not
inconsistent with the provisions of this Plan) as the Administrator may consider
appropriate. Such terms may include conditions (in addition to those contained
in this Plan) on the exercisability of all or any part of an Option or on the
transferability or forfeitability of a Stock Award, including by way of example
and not limitation, conditions on which Participants may defer receipt of
benefits under the Plan, requirements that the Participant complete a specified
period of employment with or service to the Corporation or a Related Entity,
that the Corporation achieve a specified level of financial performance or that
the Corporation achieve a specified level of financial return. Notwithstanding
any such conditions, the Administrator may, in its discretion, accelerate the
time at which any Option may be exercised, or the time at which a Stock Award
may become transferable or nonforfeitable. In addition, the Administrator shall
have complete authority to determine Fair Market Value, to interpret all
provisions of this Plan, to institute an Option Exchange Program, to prescribe
the form of Agreements, to adopt, amend, and rescind rules and regulations
pertaining to the administration of the Plan and to make all other
determinations necessary or advisable for the administration of this Plan. The
express grant in the Plan of any specific power to the Administrator shall not
be construed as limiting any power or authority of the Administrator. Any
decision made, or action taken, by the Administrator or in connection with the
administration of this Plan shall be final and conclusive. Neither the
Administrator nor any member of the Board shall be liable for any act done in
good faith with respect to this Plan or any Agreement, Option or Stock Award.
All expenses of administering this Plan shall be borne by the Corporation.
The Board, in its discretion, may appoint a committee of the Board and
delegate to such committee all or part of the Board's authority and duties with
respect to the Plan. The Board may revoke or amend the terms of a delegation at
any time but such action shall not invalidate any prior actions of the Board's
delegate or delegates that were consistent with the terms of the Plan.
ARTICLE IV.
ELIGIBILITY
Section 4.01 General. Any employee, director, officer, consultant or
advisor to the Corporation or a Related Entity (including a corporation that
becomes a Related Entity after the adoption of this Plan) is eligible to
participate in this Plan if the Administrator, in its sole discretion,
determines that such person has contributed significantly or can be expected to
contribute significantly to the profits or growth of the Corporation or a
Related Entity. Directors of the Corporation who are employees of the
Corporation or a Related Entity may be selected to participate in this Plan.
Section 4.02 Grants. The Administrator will designate individuals to whom
Stock Awards and Options are to be granted and will specify the number of shares
of Common Stock subject to each award or grant. All Stock Awards and Options
granted under this Plan shall be evidenced by Agreements which shall be subject
to the applicable provisions of this Plan and to such other provisions as the
Administrator may adopt. No Participant may be granted incentive stock options
(under all incentive stock option plans of the Corporation and any Related
Entity) which are first exercisable in any calendar year for stock having an
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aggregate Fair Market Value (determined as of the date an Option is granted)
that exceed the limitation prescribed by Code section 422(d). The preceding
annual limitation shall not apply with respect to Options that are not incentive
stock options.
ARTICLE V.
STOCK SUBJECT TO PLAN
Section 5.01 Shares Issued. Upon the award of shares of Common Stock
pursuant to a Stock Award, the Corporation may issue shares of Common Stock from
its authorized but unissued Common Stock or reacquired Common Stock. Upon the
exercise of any Option, the Corporation may deliver to the Participant (or the
Participant's broker if the Participant so directs), shares of Common Stock from
its authorized but unissued Common Stock or reacquired Common Stock.
Section 5.02 Aggregate Limit. The maximum aggregate number of shares of
Common Stock that may be issued under this Plan shall not exceed 844,500 shares.
Section 5.03 Reallocation of Shares. If an Option is terminated, in whole
or in part, for any reason other than its exercise, or if a Stock Award is
forfeited in whole or in part, the number of shares of Common Stock allocated to
the Option or Stock Award or portion thereof may be reallocated to other Options
and Stock Awards to be granted under this Plan.
ARTICLE VI.
OPTION EXERCISE PRICE
The price per share for Common Stock purchased on the exercise of an Option
shall be determined by the Administrator on the date of grant; provided,
however, that the price per share for Common Stock purchased on the exercise of
an Option that is an incentive stock option shall not be less than the Fair
Market Value on the date the Option is granted.
ARTICLE VII.
EXERCISE OF OPTIONS
Section 7.01 Maximum Option Period. The maximum period in which an Option
may be exercised shall be determined by the Administrator on the date of grant,
except that no Option that is an incentive stock option shall be exercisable
after the expiration of ten years from the date such Option was granted. The
terms of any Option that is an incentive stock option may provide that it is
exercisable for a period less than such maximum period.
Section 7.02 Nontransferability. Any Option granted under this Plan shall
be nontransferable except by will or by the laws of descent and distribution. In
the event of any such transfer, the Option must be transferred to the same
person or person(s). During the lifetime of the Participant to whom the Option
is granted, the Option may be exercised only by the Participant. No right or
interest of a Participant in any Option shall be liable for, or subject to, any
lien, obligation, or liability of such Participant.
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Section 7.03 Employee Status. For purposes of determining the applicability
of Section 422 of the Code (relating to incentive stock options), or in the
event that the terms of any Option provide that it may be exercised only during
employment or within a specified period of time after termination of employment,
the Administrator may decide to what extent leaves of absence for governmental
or military service, illness, temporary disability, or other reasons shall not
be deemed interruptions of continuous employment.
Section 7.04 Change in Control. Section 7.01 to the contrary
notwithstanding, after a Control Change Date each Option shall be fully
exercisable thereafter in accordance with the terms of the applicable Agreement.
If not sooner exercisable under the terms of the applicable Agreement, a
Participant's Option shall be fully exercisable (i) as of his termination of
employment if his employment terminates after a Control Change Date and he is
terminated without cause or following his refusal to move to another location or
(ii) as of the date that there is a material reduction in the Participant's
compensation or duties if such reduction occurs after a Control Change Date. For
purposes of the preceding sentence the term "cause" means a willful neglect of
responsibilities to the Corporation or a Related Entity.
ARTICLE VIII.
METHOD OF EXERCISE
Section 8.01 Exercise. Subject to the provisions of Articles VII and XII,
an Option may be exercised in whole at any time or in part from time to time at
such times and in compliance with such requirements as the Administrator shall
determine. An Option granted under this Plan may be exercised with respect to
any number of whole shares less than the full number for which the Option could
be exercised. A partial exercise of an Option shall not affect the right to
exercise the Option from time to time in accordance with this Plan and the
applicable Agreement with respect to the remaining shares subject to the Option.
Section 8.02 Payment. Unless otherwise provided by the Agreement, payment
of the Option exercise price shall be made in cash. If the Agreement provides,
or in the discretion of the Board, payment of all or part of the Option price
may be made by surrendering shares of Common Stock to the Corporation, including
by allowing the Corporation to deduct from the number of shares of Common Stock
deliverable upon exercise of the Option, a number of such shares which has an
aggregate Fair Market Value, determined as of the day preceding the date of
exercise of the Option, equal to the aggregate Option exercise price. If Common
Stock is used to pay all or part of the Option price, the shares surrendered
must have a Fair Market Value (determined as of the day preceding the date of
exercise) that is not less than such price or part thereof.
Section 8.03 Installment Payment. If the Agreement provides, and if the
Participant is employed by the Corporation on the date the Option is exercised,
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payment of all or part of the Option price may be made in installments. In that
event the Corporation may, if so determined by the Administrator, lend the
Participant an amount equal to not more than 90% of the Option price of the
shares acquired by the exercise of the Option. This amount shall be evidenced by
the Participant's promissory note and shall be payable in not more than five
equal annual installments, unless the amount of the loan exceeds the maximum
loan value for the shares purchased, which value shall be established from time
to time by regulations of the Board of Governors of the Federal Reserve System.
In that event, the note shall be payable in equal quarterly installments over a
period of time not to exceed five years.
The Participant shall pay interest on the unpaid balance at the minimum
rate necessary to avoid imputed interest or original issue discount under the
Code. All shares acquired with cash borrowed from the Corporation shall be
pledged to the Corporation as security for the repayment thereof. In the
discretion of the Administrator, shares of stock may be released from such
pledge proportionately as payments on the note (together with interest) are
made, provided the release of such shares complies with the regulations of the
Federal Reserve System relating to securities credit transactions then
applicable. While shares are so pledged, and so long as there has been no
default in the installment payments, such shares shall remain registered in the
name of the Participant, and he shall have the right to vote such shares and to
receive all dividends thereon.
Section 8.04 Shareholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to an Option until the date of
exercise of such Option.
ARTICLE IX.
STOCK AWARDS
Section 9.01 Awards. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom a Stock Award is to be made
and will specify the number of shares of Common Stock covered by such awards.
Section 9.02 Vesting. The Administrator, on the date of the award, may
prescribe that a Participant's rights in the Stock Award shall be forfeitable or
otherwise restricted for a period of time set forth in the Agreement. By way of
example and not of limitation, the restrictions may postpone transferability of
the shares or may provide that the shares will be forfeited if the Participant
separates from the service of the Corporation and its Related Entities before
the expiration of a stated term or if the Corporation and its Related Entities
or the Participant fails to achieve stated objectives.
Section 9.03 Change in Control. Section 9.02 to the contrary
notwithstanding, after a Control Change Date each Stock Award will become
transferable and nonforfeitable in accordance with the terms of the applicable
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Agreement. If not sooner transferable and nonforfeitable under the terms of the
applicable Agreement, a Participant's interest in a Stock Award shall be
transferable and nonforfeitable (i) as of his termination of employment if his
employment terminates after a Control Change Date and he is terminated without
cause or following his refusal to move to another location or (ii) as of the
date that there is a material reduction in the Participant's compensation or
duties if such reduction occurs after a Control Change Date. For purposes of the
preceding sentence the term "cause" means a willful neglect of responsibilities
to the Corporation or a Related Entity.
Section 9.04 Stockholder Rights. If all or any portion of a Stock Award is
forfeitable pursuant to the Agreement, at all times prior to a forfeiture
thereof, a Participant will have all rights of a Stockholder with respect to
forfeitable shares of the Stock Award (the "Forfeitable Shares"), including the
right to receive dividends and vote the Forfeitable Shares; provided, however,
that (i) a Participant may not sell, transfer, pledge, exchange, hypothecate, or
otherwise dispose of the Forfeitable Shares, (ii) the Corporation shall retain
custody of the certificates evidencing the Forfeitable Shares, and (iii) the
Participant will deliver to the Corporation a stock power, endorsed in blank,
with respect to the Forfeitable Shares. The limitations set forth in the
preceding sentence shall not apply after the Forfeitable Shares are no longer
forfeitable.
ARTICLE X.
AUTOMATIC OPTION GRANTS TO NON-EMPLOYEE DIRECTORS
Section 10.01 First Option. Each Non-Employee Director shall be
automatically granted an Option to purchase 7,500 shares of Common Stock (the
"First Option") on the date on which the later of the following events occurs:
(A) the consummation of the Corporation's initial public offering of Common
Stock, or (B) the date on which such person first becomes a Non-Employee
Director, whether through election by the stockholders of the Corporation or
appointment by the Board to fill a vacancy; provided, however, that a member of
the Board who ceases to be an employee of the Corporation but who remains a
member of the Board shall not receive a First Option and, in addition, a
Non-Employee Director who has been granted stock or options by the Corporation
under a consulting or other arrangement shall be ineligible to receive any
subsequent automatic grants under this Article X unless the Administrator
determines otherwise.
Section 10.02 Subsequent Option. Each Non-Employee Director shall be
automatically granted an Option to purchase 7,500 shares of Common Stock (the
"Subsequent Option") on March 1st of each year provided he or she is then a
Non-Employee Director and if, as of such date, he or she shall have served on
the Board for at least the preceding six months.
Section 10.03 Terms of Options. The term of First Options and Subsequent
Options granted hereunder shall be as follows:
(A) the term of Options granted pursuant to this Article X shall be ten
years;
(B) the exercise price per share shall be 100% of the Fair Market Value per
share of Common Stock on the date of grant. In the event that the date of grant
is not a trading day, the exercise price per share of Common Stock shall be the
Fair Market Value on the next trading day immediately following the date of
grant;
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(C) one-third of the shares of Common Stock subject to the Option shall
vest on the date of grant and 1/3 of the shares subject to the Option shall vest
on the anniversary of the date of grant in each year thereafter so that 100% of
the shares subject to the option shall be vested two years from the grant date.
ARTICLE XI.
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The maximum number of shares as to which Options that are incentive stock
options may be granted under this Plan shall be proportionately adjusted, and
the terms of outstanding Stock Awards and Options shall be adjusted, as the
Board shall determine to be equitably required in the event that (a) the
Corporation (i) effects one or more stock dividends, stock split-ups,
subdivisions or consolidations of shares or (ii) engages in a transaction to
which Section 424 of the Code applies or (b) there occurs any other event which,
in the judgment of the Board necessitates such action. Any determination made
under this Article XI by the Board shall be final and conclusive.
The issuance by the Corporation of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Corporation convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to,
outstanding Stock Awards or Options.
The Board may make Stock Awards and may grant Options in substitution for
performance shares, phantom shares, stock awards, stock options, stock
appreciation rights, or similar awards held by an individual who becomes an
employee of the Corporation or a Related Entity in connection with a transaction
described in clause (ii) of the first paragraph of this Article XI.
Notwithstanding any provision of the Plan (other than the limitation of Article
V), the terms of such substituted Stock Award(s) or Option grant(s) shall be as
the Board, in its discretion, determines is appropriate.
ARTICLE XII.
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable federal and
state laws and regulations (including, without limitation, withholding tax
requirements), any listing agreement to which the Corporation is a party, and
the rules of all domestic stock exchanges on which the Corporation's shares may
be listed. The Corporation shall have the right to rely on an opinion of its
counsel as to such compliance. Any share certificate issued to evidence Common
Stock when a Stock Award is granted or for which an Option is exercised may bear
such legends and statements as the Administrator may deem advisable to assure
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compliance with federal and state laws and regulations. No Common Stock shall be
issued, no certificate for shares shall be delivered and no payment shall be
made under this Plan until the Corporation has obtained such consent or approval
as the Administrator may deem advisable from regulatory bodies having
jurisdiction over such matters.
ARTICLE XIII.
GENERAL PROVISIONS
Section 13.01 Effect on Employment. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any part
thereof) shall confer upon any individual any right to continue in the employ or
service of the Corporation or a Related Entity or in any way affect any right
and power of the Corporation or a Related Entity to terminate the employment or
service of any individual at any time with or without assigning a reason
therefor.
Section 13.02 Disposition of Stock. A Participant shall notify the
Administrator of any sale or other disposition of Common Stock acquired pursuant
to an Option that was an incentive stock option if such sale or disposition
occurs (i) within two years of the grant of an Option or (ii) within one year of
the issuance of the Common Stock to the Participant. Such notice shall be in
writing and directed to the Secretary of the Corporation.
Section 13.03 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
Section 13.04 Employee Status. In the event that the terms of any Stock
Award or the grant of any Option provide that shares may be issued or become
transferable and nonforfeitable thereunder only after completion of a specified
period of employment, the Administrator may decide in each case to what extent
leaves of absence for governmental or military service, illness, temporary
disability, or other reasons shall not be deemed interruptions of continuous
employment.
Section 13.05 Limitation on Awards. Notwithstanding any other provision of
the Plan, if any award under this Plan, either alone or together with payments
that a Participant has the right to receive from the Corporation or a Related
Entity, would constitute a "parachute payment" (as defined in section 280G of
the Code), all such payments shall be reduced to the largest amount that will
result in no portion being subject to the excise tax imposed by section 4999 of
the Code.
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ARTICLE XIV.
AMENDMENT
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment shall, without a Participant's consent, adversely
affect any rights of such Participant under any Stock Award or Option
outstanding at the time such amendment is made.
ARTICLE XV.
DURATION OF PLAN
No Stock Award or Option may be granted under this Plan more than ten years
after the date the Plan is adopted by the Board.
ARTICLE XVI.
EFFECTIVE DATE OF PLAN
Stock Awards and Options may be granted under this Plan upon its adoption
by the Board, provided that no incentive stock option will continue to be
effective unless this Plan is approved by a majority of the votes entitled to be
cast by the Stockholders, voting either in person or by proxy, at a duly held
Stockholders' meeting or by the consent of stockholders owning more than 50% of
shares of the Common Stock within twelve months of such adoption.
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