Document:

Exhibit 10.2 to Form 10-Q -- Q2 Fy'06

    EXHIBIT
      10.2

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    TRANSACTION
      SYSTEMS ARCHITECTS, INC.

    

    1996
      Stock Option Plan

    as
      amended by

    the
      Board of Directors on March 7, 2006

    

    

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    TRANSACTION
      SYSTEMS ARCHITECTS, INC.

    1996
      Stock Option Plan

    

    Section
      1. Purpose.
      The
      purpose of the Transaction Systems Architects, Inc. 1996 Stock Option Plan
      (the
      "Plan") is to provide long term incentives and rewards to employees and
      directors of Transaction Systems Architects, Inc. (the "Company") and any
      Subsidiary of the Company, by providing an opportunity to selected employees
      and
      directors to purchase Common Stock of the Company. By encouraging stock
      ownership, the Company seeks to attract and retain employees and directors
      and
      to encourage their best efforts to work at the success of the Company.

    

    Section
      2. Definitions. For
      purposes of this Plan, the following terms used herein shall have the following
      meanings, unless a different meaning is clearly required by the
      context.

    

    2.1. “Board
      of Directors" shall
      mean the Board of Directors of the Company.

    

    2.2. ”Code”
      shall
      mean the Internal Revenue Code of 1986, as amended.

    

    2.3. ”Committee”
      shall
      mean the committee of the Board of Directors referred to in Section 5
      hereof.

    

    2.4. ”Common
      Stock” shall
      mean the Class A Common Stock of the Company.

    

    2.5. ”Directors”
      shall
      mean those non-employee members of the Board of Directors to whom grants may
      be
      made only in accordance with Section 12.

    

    2.6. ”Employee”
      shall
      mean, with respect to an ISO or to a Non-Qualified Option, any person including
      an officer or employee-director of the Company, who, at the time an Option
      is
      granted to such person hereunder, is actively and customarily employed for
      30
      hours or more per week by the Company or any Subsidiary of the Company
      including, without limitation, employee-directors and officers.

    

    2.7. ”Fair
      Market Value”
      shall
      mean the closing price (last trade) on the date in question, as such price
      is
      reported by the National Association of Securities Dealers on the NASDAQ
      National Market or any successor system for a share of Common
      Stock.

    

    ***********************************************************

    Note: 
      Shares available in this Plan have subsequently doubled to take into account
      a
      2-for-1 stock split in June 1996.

    ***********************************************************

    

    2.8. ”ISO”
      shall
      mean an option granted under the Plan which constitutes and shall be treated
      as
      an "incentive stock option" as defined in Section 422A(b) of the
      Code.

    

    2.9. “Non-Qualified
      Option”
      shall
      mean an option granted to a Participant pursuant to the Plan which is intended
      to be, and qualifies as, a "non-qualified stock option" as described in Treasury
      Regulation Section 1.83-7 and which shall not constitute nor be treated as
      an
      ISO.

    

    2.10. ”Option”
      shall
      mean any ISO or Non-Qualified Option granted to an Employee pursuant to this
      Plan.

    

    2.11. ”Participant”
      shall
      mean any Employee or Director to whom an Option is granted under this
      Plan.

    

    2.12. ”Subsidiary
      of the Company”
      shall
      have the meaning set forth in Section 424(f) of the Code.

    

    Section
      3. Eligibility.
      Options
      may be granted to any Employee. Options may be granted to Directors only in
      accordance with Section 12. The Committee shall have the sole authority to
      select the Employees to whom Options are to be granted hereunder, and to
      determine whether an Employee is to be granted a Non-Qualified Option or an
      ISO
      or any combination thereof. No Employee shall have any right to participate
      in
      the Plan. Any Employee selected by the Committee for participation during any
      one period will not by virtue of such participation have the right to be
      selected as a Participant for any other period.

    

    Section
      4. Common
      Stock Subject to the Plan.

    

    4.1. The
      total
      number of shares of Common Stock for which Options may be granted under this
      Plan shall not exceed in the aggregate five hundred four thousand (504,000)
      shares of Common Stock. Fifty-four thousand (54,000) shares shall be made
      available to Directors in accordance with Section 12. Of the remaining 450,000
      shares, no more than one hundred fifty thousand (150,000) shares shall be
      granted in any twelve month period to Employees, plus whatever shares for which
      Options have not been granted in previous years.

    

    4.2. The
      shares of Common Stock that may be subject to Options granted under this Plan
      may be either authorized and unissued shares or shares reacquired at any time
      and now or hereafter held as treasury stock as the Committee may determine.
      In
      the event that any outstanding Option expires or is terminated for any reason,
      the shares allocable to the unexercised portion of such Option may again be
      subject to an Option granted under this Plan. If any shares of Common Stock
      acquired pursuant to the exercise of an Option shall have been repurchased
      by
      the Company, then such shares shall again become available for issuance pursuant
      to the Plan.

    

    4.3. Special
      ISO Limitations.

    

    (a) The
      aggregate Fair Market Value (determined as of the date an ISO is granted) of
      the
      shares of Common Stock with respect to which ISO’s are exercisable for the first
      time by an Employee or Director during any calendar year (under all Incentive
      Stock Option Plans of the Company or any Subsidiary of the Company) shall not
      exceed $100,000.

    

    (b) No
      ISO
      shall be granted to an Employee or Director who, at the time the ISO is granted,
      owns (actually or constructively under the provisions of Section 425(d) of
      the
      Code) stock representing more than 10% of the total combined voting power of
      all
      classes of stock of the Company or any Subsidiary of the Company, unless the
      option price is at least 110% of the Fair Market Value (determined as of the
      time the ISO is granted) of the shares of Common Stock subject to the ISO and
      the ISO by its terms is not exercisable more than five years from the date
      it is
      granted.

    

    4.4. Notwithstanding
      any other provision of the Plan, the provisions of Sections 4.3(a) and (b)
      shall
      not apply, nor shall be construed to apply, to any Non-Qualified Option granted
      under the Plan.

    

    Section
      5. Administration
      of the Plan.

    

    5.1 The
      Plan
      shall be administered by the Compensation Committee of the Board of Directors,
      or such other committee of the Board as may be directed by the Board (the
      "Committee") consisting of no less than two persons. All members of the
      committee shall be "disinterested persons" within the meaning of Rule 16b-3
      under the Securities Exchange Act of 1934. The Committee shall be appointed
      from
      time to time by, and shall serve at the pleasure of, the Board of
      Directors.

    

    5.2. The
      Committee shall have the sole authority and discretion to grant Options under
      this Plan and, subject to the limitations set forth in Sections 6 and 12 hereof,
      to determine the terms and conditions of all Options, including, without
      limitation, (i) selecting the Participants who are to be granted Options
      hereunder; (ii) designating whether any Option to be granted hereunder is to
      be
      an ISO or a Non-Qualified Option; (iii) establishing the number of shares of
      Common Stock that may be issued under each Option; (iv) determining the time
      and
      the conditions subject to which Options may be exercised in whole or in part;
      (v) determining the form of the consideration that may be used to purchase
      shares of Common Stock upon exercise of any Option (including the circumstances
      under which the Company's issued and outstanding shares of Common Stock may
      be
      used by a Participant to exercise an Option); (vi) imposing restrictions and/or
      conditions with respect to shares of Common Stock acquired upon exercise of
      an
      Option; (vii) determining the circumstances under which shares of Common Stock
      acquired upon exercise of any Option may be subject to repurchase by the
      Company; (viii) determining the circumstances and conditions subject to which
      shares acquired upon exercise of an Option may be sold or otherwise transferred,
      including without limitation, the circumstances and conditions subject to which
      a proposed sale of shares of Common Stock acquired upon exercise of an Option
      may be subject to the Company's right of first refusal (as well as the terms
      and
      conditions of any such right of first refusal); (ix) establishing a vesting
      provision for any Option relating to the time (or the circumstance) when the
      Option may be exercised by a Participant, including vesting provisions which
      may
      be contingent upon the Company meeting specified financial goals; (x) requiring
      as a minimum vesting that no option may be exercised during the first year
      from
      the date it is granted, that after one year from the date an option is granted,
      it may be exercised as to not more than 25 percent of the shares optioned,
      and
      after the expiration of the second, third and fourth years from the date the
      option is granted, it may be exercised as to no more than an additional 25
      percent of such shares plus any shares as to which the option might theretofore
      have been exercised but shall not have been exercised; (xi) accelerating the
      time when outstanding Options may be exercised, provided,
      however, that
      any
      ISO’s shall be "accelerated" within the meaning of Section 425(h) of the Code
      and (xii) establishing any other terms, restrictions and/or conditions
      applicable to any Option not inconsistent with the provisions of this
      Plan.

    

    5.3. The
      Committee shall be authorized to interpret the Plan and may, from time to time,
      adopt such rules and regulations, not inconsistent with the provisions of the
      Plan, as it may deem advisable to carry out the purpose of this
      Plan.

    

    5.4. The
      interpretation and construction by the Committee of any provision of the Plan,
      any Option granted hereunder or any agreement evidencing any such Option shall
      be final and conclusive upon all parties.

    

    5.5 Only
      members of the Committee shall vote on any matter affecting the administration
      of the Plan or the granting of Options under the Plan.

    

    5.6. All
      expenses and liabilities incurred by the Committee in the administration of
      the
      Plan shall be borne by the Company. The Committee may employ attorneys,
      consultants, accountants or other persons in connection with the administration
      of the Plan. The Company, and its officers and directors, shall be entitled
      to
      rely upon the advice, opinions or valuations of any such persons. No member
      of
      the Board of Directors (or the Committee) shall be liable for any action,
      determination or interpretation taken or made in good faith with respect to
      the
      Plan or any Option granted hereunder.

    

    Section
      6. Terms
      and Conditions of Options.

    

    6.1. ISO’s.
      The
      terms and conditions of each ISO granted under the Plan shall be specified
      by
      the Committee and shall be set forth in an ISO agreement between the Company
      and
      the Participant in such form as the Committee shall approve. The terms and
      conditions of each ISO shall be such that each ISO issued hereunder shall
      constitute and shall be treated as an "incentive stock option" as defined in
      Section 422A of the Code. The terms and conditions of any ISO granted hereunder
      need not be identical to those of any other ISO granted hereunder.

    

    The
      terms
      and conditions of each ISO shall include the following:

    

    (a) The
      option price shall be fixed by the Committee but shall in no event be less
      than
      100% (or 110% in the case of an Participant referred to in Section 4.3(b)
      hereof) of the Fair Market Value of the shares of Common Stock subject to the
      ISO on the date the ISO is granted. 

    

    (b) ISO’s,
      by
      their terms, shall not be transferable otherwise than by will or the laws of
      descent and distribution, and, during an Optionee's lifetime, an ISO shall
      be
      exercisable only by the Optionee.

    

    (c) The
      Committee shall fix the term of all ISO’s granted pursuant to the Plan
      (including the date on which such ISO shall expire and terminate) provided,
      however, that
      such
      term shall in no event exceed ten years from the date on which such ISO is
      granted (or, in the case of an ISO granted to an Employee referred to in Section
      4.3(b) hereof, such term shall in no event exceed five years from the date
      on
      which such ISO is granted). Each ISO shall be exercisable in such amount or
      amounts, under such conditions and at such times or intervals or in such
      installments as shall be determined by the Committee in its sole
      discretion.

    

    (d) In
      the
      event that the Company or any Subsidiary of the Company is required to withhold
      any Federal, state, local or foreign taxes in respect of any compensation income
      realized by the Participant as a result of any "disqualifying disposition"
      of
      any shares of Common Stock acquired upon exercise of an ISO granted hereunder,
      the Company shall deduct from any payments of any kind otherwise due to such
      Participant the aggregate amount of such Federal, state, local or foreign taxes
      required to be so withheld or, if such payments are insufficient to satisfy
      such
      Federal, state, local or foreign taxes, such Participant will be required to
      pay
      to the Company, or make other arrangements satisfactory to the Company regarding
      payment to the Company of, the aggregate amount of any such taxes. A Participant
      may use issued and outstanding Common Stock for the payment of taxes. All
      matters with respect to the total amount of taxes to be withheld in respect
      of
      any such compensation income shall be determined by the Committee in its sole
      discretion.

    

    (e) In
      the
      sole discretion of the Committee the terms and conditions of any ISO or
      Non-Qualified Option may (but need not) include any of the following
      provisions:

    

    (i) In
      the
      event a Participant shall cease to be an Employee of the Company or Subsidiary
      of the Company for any reason other than as a result of his death or
      "disability" (within the meaning of Section 22(e)(3) of the Code), the
      unexercised portion of any ISO or Non-Qualified Option held by such Participant
      at that time may only be exercised within one month after the date on which
      the
      Participant ceased to be so employed, and only to the extent that the
      Participant could have otherwise exercised such ISO or Non-Qualified Option
      as
      of the date on which he ceased to be so employed.

    

    (ii) In
      the
      event a Participant shall cease to be an Employee of the Company or Subsidiary
      of the Company by reason of his “disability” (within the meaning of Section
      22(e)(3) of the Code), the unexercised portion of any ISO or Non-Qualified
      Option held by such Participant at that time may only be exercised within one
      year after the date on which the Participant ceased to be so employed, and
      to
      the extent that the Participant could have otherwise exercised such ISO or
      Non-Qualified Option if it had been completely exercisable.

    

    (iii) In
      the
      event a Participant shall die while employed by the Company or Subsidiary of
      the
      Company (or within a period of one month after ceasing to be an Employee for
      any
      reason other than such "disability" or within a period of one year after ceasing
      to be an Employee by reason of such "disability"), the unexercised portion
      of
      any ISO or Non-Qualified Option held by such Participant at the time of his
      death may only be exercised within one year after the date of such Participant's
      death, and to the extent that the Participant could have otherwise exercised
      such ISO or Non-Qualified Option if it had been completely exercisable. In
      such
      event, such ISO or Non-Qualified Option may be exercised by the executor or
      administrator of the Participant's estate or by any person or persons who shall
      have acquired the ISO or Non-Qualified Option directly from the Participant
      by
      bequest or inheritance.

    

    6.2. Non-Qualified
      Options.
      The
      terms and conditions of each Non-Qualified Option granted under the Plan shall
      be specified by the Committee, in its sole discretion, and shall be set forth
      in
      a written option agreement between the Company and the Participant in such
      form
      as the Committee shall approve. The terms and conditions of each Non-Qualified
      Option will be such that each Non-Qualified Option issued hereunder shall not
      constitute nor be treated as an "incentive stock option" as defined in Section
      422A of the Code and will be a "non-qualified stock option" for federal income
      tax purposes. The terms and conditions of any Non-Qualified Option granted
      hereunder need not be identical to those of any other Non-Qualified Option
      granted hereunder.

    

    The
      terms
      and conditions of each Non-Qualified Option Agreement shall include the
      following:

    

    (a) The
      option (exercise) price shall be fixed by the Committee and may be equal to,
      more than or less than 100% of the fair market value of the shares of Common
      Stock subject to the Non-Qualified Option on the date such Non-Qualified Option
      is granted.

    

    (b) The
      Committee shall fix the term of all Non-Qualified Options granted pursuant
      to
      the Plan (including the date on which such Non-Qualified Option shall expire
      and
      terminate). Each Non-Qualified Option shall be exercisable in such amount or
      amounts, under such conditions, and at such times or intervals or in such
      installments as shall be determined by the Committee in its sole
      discretion.

    

    (c) Non-Qualified
      Options shall not be transferable otherwise than by will or the laws of descent
      and distribution, or pursuant to a domestic relations order (within the meaning
      of Rule 16a-12 of the Securities Exchange Act of 1934, as amended), and during
      a
      Participant's lifetime a Non-Qualified Option shall be exercisable only by
      the
      Participant or any permitted transferee.

    

    (d) In
      the
      event that the Company is required to withhold any Federal, state, local or
      foreign taxes in respect of any compensation income realized by the Participant
      in respect of a Non-Qualified Option granted hereunder or in respect of any
      shares of Common Stock acquired upon exercise of a Non-Qualified Option, the
      Company shall deduct from any payments of any kind otherwise due to such
      Participant the aggregate amount of such Federal, state, local or foreign taxes
      required to be so withheld or, if such payments are insufficient to satisfy
      such
      Federal, state, local or foreign taxes, or if no such payments are due or to
      become due to such Participant, then, such Participant will be required to
      pay
      to the Company, or make other arrangements satisfactory to the Company regarding
      payment to the Company of, the aggregate amount of any such taxes. All matters
      with respect to the total amount of taxes to be withheld in respect of any
      such
      compensation income shall be determined by the Committee in its sole
      discretion.

    

    Section
      7. Adjustments.

    

    7.1
      In
      the event that after the adoption of the Plan by the Board of Directors, the
      outstanding shares of the Company's Common Stock shall be increased or decreased
      or changed into or exchanged for a different number or kind of shares of stock
      or other securities of the Company or of another corporation through
      reorganization, merger or consolidation, recapitalization, reclassification,
      stock split, split-up, combination or exchange of shares or declaration of
      any
      dividends payable in Common Stock, the Board of Directors shall appropriately
      adjust (i) the number of shares of Common Stock (and the option price per share)
      subject to the unexercised portion of any outstanding Option (to the nearest
      possible full share), provided, however,
      that
      the
      limitations of Section 425 of the Code shall apply with respect to adjustments
      made to ISO’s and (ii) the number of shares of Common Stock for which Options
      may be granted under this Plan, as set forth in Section 4.1 hereof, and such
      adjustments shall be effective and binding for all purposes of this
      Plan.

    

    7.2
      Notwithstanding the foregoing, in the event of (i) any offer to holders of
      the
      Company's Common Stock generally relating to the acquisition of their shares,
      including, without limitation, through purchase, merger or otherwise or (ii)
      any
      transaction generally relating to the acquisition of substantially all of the
      assets or business of the Company, the Committee may make such adjustment as
      it
      deems equitable in respect of outstanding Options including, without limitation,
      the revision or cancellation of any outstanding Options including providing
      for
      full vesting for all outstanding options, except that the Committee shall have
      no authority to accelerate the exerciseability of Directors' Options as
      described in Section 12. Any such determination by the Committee shall be
      effective and binding for all purposes of this Plan.

    

    Section
      8. Effect
      of the Plan on Employment Relationship. Neither
      this Plan nor any Option granted hereunder to a Participant shall be construed
      as conferring upon such Participant any right to continue in the employ of
      the
      Company or the service of the Company or any Subsidiary of the Company as the
      case may be, or limit in any respect the right of the Company or any Subsidiary
      of the Company to terminate such Participant's employment or other relationship
      with the Company or any Subsidiary of the Company, as the case may be, at any
      time.

    

    Section
      9. Amendment
      of the Plan. The
      Board
      of Directors may amend the Plan from time to time as it deems desirable;
      provided, however,
      that,
      without the approval of the holders of a majority of the outstanding stock
      of
      the Company present or represented and entitled to vote thereon at a meeting,
      the Board of Directors may not amend the Plan (i) to increase materially the
      benefits accruing to participants under the Plan, (ii) to increase materially
      (except for increases due to adjustments in accordance with Section 7 hereof)
      the aggregate number of shares of Common Stock for which Options may be granted
      hereunder or (iii) to modify materially the requirements as to eligibility
      for
      participation in the Plan.

    

    Section
      10.
      Termination of the Plan. The
      Board
      of Directors may terminate the Plan at any time. Unless the Plan shall
      theretofore have been terminated by the Board of Directors, the Plan shall
      terminate ten years after the date of its initial approval by the stockholders
      of the Company. No Option may be granted hereunder after termination of the
      Plan. The termination or amendment of the Plan shall not alter or impair any
      rights or obligations under any Option theretofore granted under the
      Plan.

    

    

    Section
      11. Grant
      of Options and Substitution and Re-pricing of Previously Granted
      Options.
      Options
      may be granted, at the discretion of the Committee, in substitution for Options
      previously granted pursuant to the Plan, provided that any option so granted
      shall be exercisable at a new price which is not less than 100 percent of the
      Fair Market Value of the Common Stock on the date on which the replacement
      Options were granted. The Option agreement evidencing the replacement Options
      may, in the discretion of the Committee, contain the same terms and conditions,
      including, without limitation, the same vesting schedule as the agreement
      evidencing the original award. The Committee may, also, in its discretion,
      amend
      the terms of any Option agreement, with the consent of the affected Participant,
      provided that the Option price of the shares remaining subject to the original
      award shall be reestablished at a price not less than 100 percent of the Fair
      Market Value of the Common Stock on the effective date of the amendment. No
      modification of any other term or provision of any stock option agreement which
      is amended in accordance with the foregoing shall be required, although the
      Committee may, in its discretion, make such further modifications of any stock
      option agreement as are not inconsistent with or prohibited by the
      Plan.

    

    Section
      12. Directors’
      Options.
      A person
      who is not an employee of the Company or any Subsidiary of the Company and
      who
      is elected to serve on the Board of Directors of the Company commencing
      subsequent to the Effective Date of the Plan shall receive Options to purchase
      Ten Thousand (10,000) shares of Common Stock upon election to the Board of
      Directors. Each such Director shall also receive Options for two thousand
      (2,000) additional shares of Common Stock on the anniversary of his or her
      election to the Board in each of the four succeeding years so long as he or
      she
      remains a member of the Board of Directors on that next anniversary
      date.

    

    No
      options granted hereunder may be exercised during the first year from the date
      it is granted; after one year from the date an Option is granted, it may be
      exercised as to not more than twenty percent (20%) of the shares optioned and
      after the expiration of the second, third, fourth, and fifth years from the
      date
      the Option is granted, it may be exercised as to no more than an additional
      twenty percent (20%) of such shares plus any shares as to which the Option
      might
      theretofore have been exercisable but shall not have been
      exercised.

    

    12.1. Forfeiture
      of Options.
      Except
      as provided in Section 12.2 hereof, all Options granted to a Director shall
      automatically be forfeited by such person at the time such person shall cease
      to
      be a Director.

    

    12.2. Exercise
      Period After Retirement.
      Upon
      Retirement, a Director may exercise the exercisable options within 30 days
      after
      Retirement. The term "Retirement" means the termination of a Director's service
      on the Board, including resignation or not standing for election with the
      approval of the Board but shall not include any termination of service from
      an
      act of (a) fraud or intentional misrepresentation or (b) embezzlement,
      misappropriation or conversion of assets or opportunities of the Company or
      any
      direct or indirect majority-owned subsidiary of the Company, by such Director.
      The determination of whether termination results from such act shall be made
      by
      the Board of Directors, whose determination shall be conclusive.

    

    Section
      13. Effective
      Date of the Plan.
      This
      Plan shall be effective as of April 1, 1996.Exhibit 10.3 to Form 10-Q -- Q2 Fy'06

    EXHIBIT
      10.3

    TRANSACTION
      SYSTEMS ARCHITECTS, INC.

     

    1997
      Management Stock Option Plan 

    as
      amended by the Board of Directors on March 7, 2006

    

    Section
      1. Purpose.
      The
      purpose of the Transaction Systems Architects, Inc. 1997 Management Stock Option
      Plan (the "Plan") is to provide long term incentives and rewards to Management
      of Transaction Systems Architects, Inc. (the "Company") and its Subsidiaries,
      by
      providing an opportunity to selected Management Employees to purchase Common
      Stock of the Company. By encouraging stock ownership, the Company seeks to
      attract and retain Management Employees and to encourage their best efforts
      to
      work at the success of the Company.

    

    Section
      2. Definitions.
      For
      purposes of this Plan, the following terms used herein shall have the following
      meanings, unless a different meaning is clearly required by the
      context.

    

    2.1. "Board
      of Directors" shall
      mean the Board of Directors of the Company.

    

    2.2. "Code"
      shall
      mean the United States Internal Revenue Code of 1986, as amended.

    

    2.3. "Committee"
      shall
      mean the committee of the Board of Directors referred to in Section 5
      hereof.

    

    2.4. "Common
      Stock" shall
      mean the Class A Common Stock of the Company.

    

    2.5. "Management
      Employee" shall
      mean any person in Management, who, at the time an Option is granted to such
      person hereunder, is actively and customarily employed for 30 hours or more
      per
      week by the Company or any Subsidiary of the Company including, without
      limitation, employee-officers.

    

    2.6. "Fair
      Market Value"
      shall
      mean the closing bid price on the date in question, as such price is reported
      by
      the National Association of Securities Dealers on the NASDAQ National Market
      or
      any successor system for a share of Common Stock.

    

    2.7. "Option"
      shall
      mean an option granted to a Participant pursuant to the Plan which is intended
      to be, and qualifies as, a "non-qualified stock option" as described in Treasury
      Regulation Section 1.83-7 and which shall not constitute nor be treated as
      an
      "incentive stock option" as defined in Section 422A(b) of the Code.

    

    2.8. "Participant"
      shall
      mean any Management Employee to whom an Option is granted under this
      Plan.

    

    2.9. "Subsidiary
      of the Company"
      shall
      have the meaning set forth in Section 424(f) of the Code.

    

    Section
      3. Eligibility.
      Options
      may be granted to any Management Employee. The Committee shall have the sole
      authority to select the Management Employees to whom Options are to be granted
      hereunder, and to determine whether a Management Employee is to be granted
      an
      Option. No Management Employee shall have any right to participate in the
      Plan.

    

    Section
      4. Common
      Stock Subject to the Plan.

    

    4.1. The
      total
      number of shares of Common Stock for which Options may be granted under this
      Plan shall not exceed in the aggregate one-million fifty-thousand (1,050,000)
      shares of Common Stock.

    

    4.2. The
      shares of Common Stock that may be subject to Options granted under this Plan
      may be either authorized and unissued shares or shares reacquired at any time
      and now or hereafter held as treasury stock as the Committee may determine.
      In
      the event that any outstanding Option expires or is terminated for any reason,
      the shares allocable to the unexercised portion of such Option may again be
      subject to an Option granted under this Plan. If any shares of Common Stock
      acquired pursuant to the exercise of an Option shall have been repurchased
      by
      the Company, then such shares shall again become available for issuance pursuant
      to the Plan.

    

    Section
      5. Administration
      of the Plan.

    

    5.1 The
      Plan
      shall be administered by the Compensation Committee of the Board of Directors,
      or such other committee of the Board as may be directed by the Board (the
      "Committee") consisting of no less than two persons. All members of the
      committee shall be "disinterested persons" within the meaning of Rule 16b-3
      under the Securities Exchange Act of 1934. The Committee shall be appointed
      from
      time to time by, and shall serve at the pleasure of, the Board of
      Directors.

    

    5.2. The
      Committee shall have the sole authority and discretion to grant Options under
      this Plan and, subject to the limitations set forth in Section 6 hereof, to
      determine the terms and conditions of all Options, including, without
      limitation, (i) selecting the Participants who are to be granted Options
      hereunder; (ii) establishing the number of shares of Common Stock that may
      be
      issued under each Option; (iii) determining the time and the conditions subject
      to which Options may be exercised in whole or in part; (iv) determining the
      form
      of the consideration that may be used to purchase shares of Common Stock upon
      exercise of any Option (including the circumstances under which the Company's
      issued and outstanding shares of Common Stock may be used by a Participant
      to
      exercise an Option); (v) imposing restrictions and/or conditions with respect
      to
      shares of Common Stock acquired upon exercise of an Option; (vi) determining
      the
      circumstances under which shares of Common Stock acquired upon exercise of
      any
      Option may be subject to repurchase by the Company; (vii) determining the
      circumstances and conditions subject to which shares acquired upon exercise
      of
      an Option may be sold or otherwise transferred, including without limitation,
      the circumstances and conditions subject to which a proposed sale of shares
      of
      Common Stock acquired upon exercise of an Option may be subject to the Company's
      right of first refusal (as well as the terms and conditions of any such right
      of
      first refusal); (viii) establishing a vesting provision for any Option relating
      to the time (or the circumstance) when the Option may be exercised by a
      Participant, including vesting provisions which may be contingent upon the
      Company meeting specified financial goals; (ix) requiring as a minimum vesting
      that no Option may be exercised during the first year from the date it is
      granted, that after one year from the date an Option is granted, it may be
      exercised as to not more than 25 percent of the shares optioned, and after
      the
      expiration of the second, third and fourth years from the date the Option is
      granted, it may be exercised as to no more than an additional 25 percent of
      such
      shares plus any shares as to which the Option might theretofore have been
      exercised but shall not have been exercised; (x) accelerating the time when
      outstanding Options may be exercised; (xi) determining the circumstances under
      which the purchase price of the Options may be refunded to the Participant
      in
      event of death, disability, or involuntary termination; and (xii) establishing
      any other terms, restrictions and/or conditions applicable to any Option not
      inconsistent with the provisions of this Plan.

    

    5.3. The
      Committee shall be authorized to interpret the Plan and may, from time to time,
      adopt such rules and regulations, not inconsistent with the provisions of the
      Plan, as it may deem advisable to carry out the purpose of this
      Plan.

    

    5.4. The
      interpretation and construction by the Committee of any provision of the Plan,
      any Option granted hereunder or any agreement evidencing any such Option shall
      be final and conclusive upon all parties.

    

    5.5 Only
      members of the Committee shall vote on any matter affecting the administration
      of the Plan or the granting of Options under the Plan.

    

    5.6. All
      expenses and liabilities incurred by the Committee in the administration of
      the
      Plan shall be borne by the Company. The Committee may employ attorneys,
      consultants, accountants or other persons in connection with the administration
      of the Plan. The Company, and its officers and directors, shall be entitled
      to
      rely upon the advice, opinions or valuations of any such persons. No member
      of
      the Board of Directors (or the Committee) shall be liable for any action,
      determination or interpretation taken or made in good faith with respect to
      the
      Plan or any Option granted hereunder.

    

    Section
      6. Terms
      and Conditions of Options.

    

    6.1. The
      terms
      and conditions of each Option granted under the Plan shall be specified by
      the
      Committee, in its sole discretion, and shall be set forth in a written option
      agreement between the Company and the Participant in such form as the Committee
      shall approve. The terms and conditions of each Option will be such that each
      Option issued hereunder shall not constitute nor be treated as an "incentive
      stock option" as defined in Section 422A of the Code and will be a
      "non-qualified stock option" for United States Federal income tax purposes.
      The
      terms and conditions of any Option granted hereunder need not be identical
      to
      those of any other Option granted hereunder.

    

    

    The
      terms
      and conditions of each Option agreement shall include the
      following:

    

    (a) The
      Option exercise price shall be fixed by the Committee and will either be equal
      to or more than 100% of the Fair Market Value of the shares of Common Stock
      subject to the Option on the date such Option is granted. For any Options
      granted to a Participant prior to approval of this Plan by the Company's
      Stockholders, the Option exercise price will be equal to the Fair Market Value
      on the day of Stockholder approval of this Plan.

    

    (b) The
      Option purchase price which a Participant will be required to pay to the Company
      for such Option will be U.S. $3.00 per share and the option purchase price
      will
      be payable by the Participant to the Company within fourteen (14) days after
      the
      grant of such Option. For any Options granted to a Participant prior to approval
      of this Plan by the Company's Stockholders, the Option purchase price will
      be
      payable by the Participant to the Company within fourteen (14) days after the
      day of Stockholder approval of this Plan.

    

    (c) The
      Option vesting period shall be at a minimum a total of four years from the
      date
      of grant of such Options. After one year from the date an Option is granted,
      it
      may be exercised as to not more than 25 percent of the shares optioned, and
      after the expiration of the second, third, and fourth years from the date the
      Option is granted, it may be exercised as to no more than an additional 25
      percent of such shares optioned plus any shares as to which the Option might
      theretofore have been exercised but shall not have been exercised.

    

    (d) The
      Committee shall fix the exercise term of all Options granted pursuant to the
      Plan provided, however, that
      while a Participant is employed by the Company such term shall in no event
      be
      less than five years from the date on which such Option is granted.

    

    (e) Options
      shall not be transferable otherwise than by will or the laws of descent and
      distribution, or pursuant to a domestic relations order (within the meaning
      of
      Rule 16a-12 of the Securities Exchange Act of 1934, as amended), and during
      a
      Participant's lifetime an Option shall be exercisable only by the Participant
      or
      any permitted transferee.

    

    (f) In
      the
      event that the Company is required to withhold any U.S. Federal, state, local
      or
      foreign taxes in respect of any compensation income realized by the Participant
      in respect of an Option granted hereunder or in respect of any shares of Common
      Stock acquired upon exercise of an Option, the Company shall deduct from any
      payments of any kind otherwise due to such Participant the aggregate amount
      of
      such Federal, state, local or foreign taxes required to be so withheld or,
      if
      such payments are insufficient to satisfy such Federal, state, local or foreign
      taxes, or if no such payments are due or to become due to such Participant,
      then, such Participant will be required to pay to the Company, or make other
      arrangements satisfactory to the Company regarding payment to the Company of,
      the aggregate amount of any such taxes. All matters with respect to the total
      amount of taxes to be withheld in respect of any such compensation income shall
      be determined by the Committee in its sole discretion.

    

    

    

    

    (g) In
      the
      sole discretion of the Committee the terms and conditions of  any
      Option may (but need not) include any of the following provisions:

    

    (i) In
      the
      event a Participant shall cease to be a Management Employee of the Company
      or
      Subsidiary of the Company for any reason other than as a result of his death
      or
      "disability" (within the meaning of Section 22(e)(3) of the Code), the vested
      and unexercised portion of any Option held by such Participant at that time
      may
      only be exercised within one month after the date on which the Participant
      ceased to be so employed, and only to the extent that the Participant could
      have
      otherwise exercised such Option as of the date on which he ceased to be so
      employed.

    

    (ii) In
      the
      event a Participant shall cease to be a Management Employee of the Company
      or
      Subsidiary of the Company by reason of his "disability" (within the meaning
      of
      Section 22(e)(3) of the Code), the vested and unexercised portion of any Option
      held by such Participant at that time may only be exercised within one year
      after the date on which the Participant ceased to be so employed, and only
      to
      the extent that the Participant could have otherwise exercised such Option
      if it
      had been completely exercisable.

    

    (iii) In
      the
      event a Participant shall die while employed by the Company or Subsidiary of
      the
      Company, the vested and unexercised portion of any Option held by such
      Participant at the time of their death may only be exercised within one year
      after the date of such Participant's death, and only to the extent that the
      Participant could have otherwise exercised such Option if it had been completely
      exercisable. In such event, such Option may be exercised by the executor or
      administrator of the Participant's estate or by any person or persons who shall
      have acquired the Option directly from the Participant by bequest or
      inheritance.

    

      

    Section
      7. Adjustments.
      

    

    7.1 In
      the
      event that after the adoption of the Plan by the Board of Directors, the
      outstanding shares of the Company's Common Stock shall be increased or decreased
      or changed into or exchanged for a different number or kind of shares of stock
      or other securities of the Company or of another corporation through
      reorganization, merger or consolidation, recapitalization, reclassification,
      stock split, split-up, combination or exchange of shares or declaration of
      any
      dividends payable in Common Stock, the Board of Directors shall appropriately
      adjust (i) the number of shares of Common Stock (and the option price per share)
      subject to the unexercised portion of any outstanding Option (to the nearest
      possible full share), and (ii) the number of shares of Common Stock for which
      Options may be granted under this Plan, as set forth in Section 4.1 hereof,
      and
      such adjustments shall be effective and binding for all purposes of this
      Plan.

    7.2 Notwithstanding
      the foregoing, in the event of (i) any offer to holders of the Company's Common
      Stock generally relating to the acquisition of their shares, including, without
      limitation, through purchase, merger or otherwise or (ii) any transaction
      generally relating to the acquisition of substantially all of the assets or
      business of the Company, the Committee may make such adjustment as it deems
      equitable in respect of outstanding Options including, without limitation,
      the
      revision or cancellation of any outstanding Options including providing for
      full
      vesting for all outstanding options. Any such determination by the Committee
      shall be effective and binding for all purposes of this Plan.

    

    Section
      8. Effect
      of the Plan on Employment Relationship.
      Neither
      this Plan nor any Option granted hereunder to a Participant shall be construed
      as conferring upon such Participant any right to continue in the employ of
      the
      Company or the service of the Company or any Subsidiary of the Company as the
      case may be, or limit in any respect the right of the Company or any Subsidiary
      of the Company to terminate such Participant's employment or other relationship
      with the Company or any Subsidiary of the Company, as the case may be, at any
      time.

    

    Section
      9. Amendment
      of the Plan.
      The
      Board
      of Directors may amend the Plan from time to time as it deems desirable;
      provided, however,
      that,
      without the approval of the holders of a majority of the outstanding stock
      of
      the Company present or represented and entitled to vote thereon at a meeting,
      the Board of Directors may not amend the Plan (i) to increase materially the
      benefits accruing to participants under the Plan, (ii) to increase materially
      (except for increases due to adjustments in accordance with Section 7 hereof)
      the aggregate number of shares of Common Stock for which Options may be granted
      hereunder or (iii) to modify materially the requirements as to eligibility
      for
      participation in the Plan.

    

    Section
      10.
      Termination of the Plan. The
      Board
      of Directors may terminate the Plan at any time. Unless the Plan shall
      theretofore have been terminated by the Board of Directors, the Plan shall
      terminate ten years after the date of its initial approval by the stockholders
      of the Company. No Option may be granted hereunder after termination of the
      Plan. The termination

     

    or
      amendment of the Plan shall not alter or impair any rights or obligations under
      any Option theretofore granted under the Plan.

    

    Section
      11. Effective
      Date of the Plan.
      This
      Plan shall be effective as of January 1, 1997.

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