-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VfIUcyassl//wytoq+gMlF9BGje6OboCEAaWptWPbOjD09jKAFv3zq9f0PT8omUK BuLKhcwUWApJSpC8hUMw3Q== 0000950144-95-002862.txt : 19951023 0000950144-95-002862.hdr.sgml : 19951023 ACCESSION NUMBER: 0000950144-95-002862 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19951019 EFFECTIVENESS DATE: 19951107 SROS: CSX SROS: NYSE SROS: PHLX FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST FINANCIAL MANAGEMENT CORP CENTRAL INDEX KEY: 0000036326 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-CONSUMER CREDIT REPORTING, COLLECTION AGENCIES [7320] IRS NUMBER: 581107864 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 033-63549 FILM NUMBER: 95582506 BUSINESS ADDRESS: STREET 1: 3 CORPORATE SQ STE 700 CITY: ATLANTA STATE: GA ZIP: 30329 BUSINESS PHONE: 4043210120 MAIL ADDRESS: STREET 1: 3 CORPORATE SQ STE 700 CITY: ATLANTA STATE: GA ZIP: 30329 S-8 1 FIRST FINANCIAL MANAGEMENT'S S-8 1 As filed with the Securities and Exchange Commission on October 19, 1995 Registration No. 33-_____ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ____________________ FIRST FINANCIAL MANAGEMENT CORPORATION (Exact Name of Registrant as specified in its Charter) ____________________ Georgia 58-1107864 (State of Incorporation) (I.R.S. Employer Identification No.) 5660 New Northside Drive, Suite 1400 Atlanta, Georgia 30328 (Address of Principal Executive Offices) (Zip Code) EMPLOYEE BENEFIT PLANS, INC. 1986 STOCK OPTION PLAN, EMPLOYEE BENEFIT PLANS, INC. 1990 STOCK OPTION PLAN, EMPLOYEE BENEFIT PLANS, INC. 1991 LONG-TERM INCENTIVE PERFORMANCE PLAN, AND EMPLOYEE BENEFIT PLANS, INC. 1993 OUTSIDE DIRECTORS STOCK OPTION PLAN (Full Title of the Plans) Randolph L.M. Hutto with copies to: Senior Executive Vice George L. Cohen President and General Counsel Sutherland, Asbill & Brennan First Financial Management Corporation 999 Peachtree Street, N. E. 5660 New Northside Drive, Suite 1400 Atlanta, Georgia 30309-3996 Atlanta, Georgia 30328 (404) 853-8000 (Name and Address of Agent for Service) (770) 857-0001 (Telephone Number, including Area Code, of Agent for Service) 2 CALCULATION OF REGISTRATION FEE
Proposed maximum Proposed maximum Title of securities Amount to be offering price aggregate offering Amount of to be registered registered per share(1) price(1) registration fee ------------------- ------------ ---------------- ------------------ ---------------- Common Stock, Prices ranging from $.10 par value 7,820 shares(2) $12.23 to $201.27 $ 877,799 $ 303 Common Stock, Prices ranging from $.10 par value 15,817 shares(3) $44.31 to $197.47 $1,482,391 $ 512 Common Stock, Prices ranging from $.10 par value 22,130 shares(4) $41.78 to $221.52 $1,827,605 $ 631 Common Stock, $.10 par value 10,868 shares(5) $37.98 to $73.42 $ 552,826 $ 191 Total Registration Fee: $1,637
(1) The price is estimated in accordance with Rule 457(h) under the Securities Act of 1933, solely for the purpose of calculating the registration fee, and represents the prices per share at which outstanding options may be exercised multiplied by the number of shares that may be acquired (known to be $877,799 for the Employee Benefit Plans, Inc. ("EBP") 1986 Stock Option Plan, $1,482,391 for the EBP 1990 Stock Option Plan, $1,827,605 for the EBP 1991 Long-Term Incentive Performance Plan and $552,826 for the EBP 1993 Outside Directors Stock Option Plan). No additional options will be granted under these plans. (2) This represents the maximum number of shares of the Registrant's Common Stock, $.10 par value per share, that could be acquired upon exercise of all outstanding options under the EBP 1986 Stock Option Plan. (3) This represents the maximum number of shares of the Registrant's Common Stock, $.10 par value per share, that could be acquired upon exercise of all outstanding options under the EBP 1990 Stock Option Plan. (4) This represents the maximum number of shares of the Registrant's Common Stock, $.10 par value per share, that could be acquired upon exercise of all outstanding options under the EBP 1991 Long-Term Incentive Performance Plan. (5) This represents the maximum number of shares of the Registrant's Common Stock, $.10 par value per share, that could be acquired upon exercise of all outstanding options under the EBP 1993 Outside Directors Stock Option Plan. ================================================================================ -2- 3 PART I INFORMATION REQUIRED IN THE SECTION 10 PROSPECTUS Item 1. Plan Information* Item 2. Registrant Information and Employee Plan Annual Information* *Information required by Part I to be contained in the Section 10(a) prospectuses is omitted from this Registration Statement in accordance with Rule 428 under the Securities Act of 1933, as amended, and the Note to Part I of Form S-8. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference The following documents filed by First Financial Management Corporation ("FFMC") with the SEC (File No. 1-10442) pursuant to the Exchange Act are incorporated herein by reference: (1) FFMC's Annual Report on Form 10-K for the year ended December 31, 1994; (2) FFMC's Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 1995; (3) FFMC's Current Reports on Form 8-K dated November 4, 1994 (reporting the proposed acquisition of Western Union Financial Services, Inc. and related assets ("Western Union")), November 15, 1994 (confirming consummation of the acquisition of Western Union and reflecting various adjustments in the Stock Purchase Agreement with respect to the acquisition of Western Union), March 28, 1995 (providing updated pro forma financial information regarding FFMC's acquisition of Western Union), June 9, 1995 (filing certain additional material contracts), June 12, 1995 (reporting FFMC's agreement to merge with a subsidiary of First Data Corporation ("First Data")), July 25, 1995 (providing historical financial data for First Data and CESI Holdings, Inc.), and September 11, 1995 (providing updated pro forma financial information with respect to the proposed merger of FFMC with a subsidiary of First Data); and (4) the description of FFMC's Common Stock contained in its Registration Statement on Form 8-A, filed on January 16, 1990, as updated by Item 2, Part II to FFMC's Quarterly Report on Form 10-Q for the quarter ended March 31, 1990 and information contained in Note I to the financial statements included in FFMC's Annual Report on Form 10-K for the year ended December 31, 1993. All documents filed by FFMC pursuant to Sections 13(a) and (c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference and to be a part of this Registration Statement from the date of the filing of such document. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. -3- 4 Item 4. Description of Securities Not applicable. Item 5. Interests of Named Experts and Counsel The legality of the shares of the Registrant's $.10 par value common stock ("Common Stock") has been passed upon for the Registrant by Sutherland, Asbill & Brennan, Atlanta, Georgia. George L. Cohen, a partner in Sutherland, Asbill & Brennan, is a director of the Registrant. Attorneys at Sutherland, Asbill & Brennan participating in matters relating to the offering beneficially own 18,794 shares of Common Stock. Item 6. Indemnification of Directors and Officers Georgia Business Corporation Code Section 14-2-851 of the Georgia Business Corporation Code (the "GBCC") authorizes a Georgia corporation to indemnify a director against loss or expense if it is determined that the director acted in a manner he believed in good faith to be in or not opposed to the best interests of the corporation and, in the case of any criminal proceeding, had no reasonable cause to believe his conduct was unlawful, except that in proceedings to obtain a judgment in favor of the corporation, indemnification would be limited to reasonable expenses incurred in connection with the proceeding, and, in the case of adjudicated liability, only if the director did not derive an improper personal benefit. This indemnification under the GBCC may be made by a Georgia corporation only upon (1) a determination by the majority vote of a quorum of non-party directors or if such a quorum cannot be obtained, by majority vote of a committee consisting of two or more non-party directors, by special legal counsel, or by the affirmative vote of stockholders excluding shares owned or the voting of which is controlled by directors who are parties to the proceeding, that indemnification is proper because the statutory standard of conduct has been met and (2) authorization by majority vote of a quorum of non-party directors or a special committee consisting of two or more non-party directors, or if such a quorum or committee cannot be obtained, by majority vote of the full board of directors, or by the stockholders as described above. Section 14-2-852 of the GBCC also provides for the mandatory indemnification of a director to the extent the director has been successful (whether or not on the merits) in the defense of any proceeding to which he was a party, unless provided otherwise by the articles of incorporation. In addition, Section 14-2-854 of the GBCC authorizes indemnification of a director by court order if the court determines that the director is entitled to mandatory indemnification or is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director met the statutory standard of conduct, or was adjudged liable to the corporation or improperly derived a personal benefit, but in that event court-ordered indemnification is limited to reasonable expenses incurred in connection with the proceeding. Furthermore, Section 14-2-856 of the GBCC permits broader indemnification, including indemnification against liability to the corporation, if authorized by the articles of incorporation or by a bylaw, resolution or contract authorized by majority vote of the stockholders entitled to vote thereon; however, such indemnification may not be provided to a director against liability for appropriation of a business opportunity of the corporation in violation of the director's duties, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, authorization of any dividend, redemption or distribution of assets in violation of the GBCC, or any transaction from which the director derived an improper personal benefit. Section 14-2-857 of the GBCC permits a Georgia corporation to indemnify an officer, employee or agent who is not a director to the extent not inconsistent with public policy. An officer who is not a director is also entitled to the mandatory indemnification and court-ordered indemnification available to a director. -4- 5 The GBCC provides that a Georgia corporation has the power to purchase and maintain insurance on behalf of any director, officer, employee or agent of the corporation, or one serving as such for another entity or enterprise at the request of the corporation against liability whether or not the corporation would have the power to indemnify him against such liability under the GBCC. Bylaws Article Seven of the Registrant's Bylaws implements the power granted by the 1989 revision of the GBCC regarding indemnification of directors and officers. Under Article Seven, the Registrant is required to indemnify each person who is or was a director or officer of the Registrant (including the heirs, executors, administrators or estate of such person) or is or was serving at the request of the Registrant as a director, officer, partner, trustee or employee of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise who is made a party to a proceeding because he is or was a director or officer of the Registrant or was serving any such other entity at the Registrant's request against liability incurred in the proceeding if he acted in a manner he believed in good faith to be in or not opposed to the best interests of the Registrant and, in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. Indemnification required by Article Seven also covers reasonable expenses of any such proceeding, including payment or reimbursement of such expenses in advance of final disposition of the proceeding, if the person affirms in writing his good faith belief that he is entitled to such indemnification and agrees to repay any advances if it is ultimately determined that he is not entitled to such indemnification. Unless ordered by a court based on a determination that the person is entitled to such indemnification because he was successful on the merits or otherwise in defending against a claim or a determination that he is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, indemnification is required under Article Seven only if there is a determination pursuant to Section 14-2-855 of the GBCC that the person to be indemnified has met the standard of conduct required for indemnification and the determination is made by: (1) a majority vote of a quorum of directors not parties to the proceeding or, in the absence of such quorum, by a majority vote of a committee of two or more directors not parties to the proceeding; (2) special legal counsel; or (3) the stockholders (excluding the votes of shares owned by or voted under the control of directors who are parties to the proceeding). As expressly authorized by Section 14-2-856 of the GBCC, the Board of Directors approved and submitted to the Registrant's stockholders, who also approved at their May 2, 1990 annual meeting, the addition of a new Section 7.2 of the Bylaws. Section 7.2 grants to directors and officers of the Registrant and its subsidiaries additional rights to indemnification with respect to proceedings brought by the Registrant or stockholders' derivative actions brought on its behalf, except where the person is adjudged liable to the Registrant or is subjected to injunctive relief in its favor for any of the following: (1) appropriation of any business opportunity of the Registrant; (2) intentional misconduct or knowing violations of law; (3) unlawful distributions; or (4) any transaction from which he received an improper personal benefit. Section 7.2 also requires advances or reimbursements of expenses of the director or officer in connection with any such proceeding if he affirms his good faith belief that his conduct does not fall within the enumerated exceptions to such indemnification and he agrees to repay any expense advances or reimbursements if it is ultimately determined that he is not entitled to indemnification under Section 7.2. Any indemnification under Section 7.2 (other than advances or reimbursements of expenses) shall be made only if there has been a determination that the director or officer is entitled to such indemnification under Section 7.2 of the Bylaws and Section 14-2-856 of the GBCC and such determination is made by: (1) a majority vote of a quorum of directors not parties to the proceeding or, in the absence of such quorum, a majority vote of a committee of two or more directors not parties to the proceeding; (2) special legal counsel; or (3) the stockholders (excluding the votes owned by or voted under the control of directors who are parties to the proceeding). -5- 6 Article VIII of the Registrant's Restated Articles of Incorporation, adopted by its stockholders in 1987, exculpates directors of the Registrant as to personal liabilities to the Registrant or its stockholders for monetary damages for breaches of the director's duties, with the same enumerated exceptions as applicable to indemnification under the newly adopted Section 7.2. Accordingly, Section 7.2 as to the Registrant's directors coordinates the indemnification rights with the liability exculpation exceptions under the Registrant's Restated Articles of Incorporation. Indemnification authorized by Section 7.2, however, also extends to liabilities incurred by the Registrant's officers and by persons serving, at the Registrant's request, in various capacities with other entities, such as the Registrant's subsidiaries, subject to the exceptions and conditions set forth in Section 7.2. Indemnification Agreements The Registrant has entered into indemnification agreements with its directors and executive officers providing for indemnification to the fullest extent permitted by applicable law, the Registrant's bylaws and resolutions of the board of directors and shareholders of the Registrant as in effect on the date of execution of each such indemnification agreement and to such greater extent as applicable law may thereafter from time to time permit. The terms of these indemnification agreements are consistent with the terms of Article 7 of the Registrant's Bylaws. Insurance Policies The Registrant currently maintains an insurance policy providing reimbursement of indemnification payments to officers and directors of the Registrant and its subsidiaries and reimbursement of certain liabilities incurred by directors and officers of the Registrant and its subsidiaries in their capacities as such, to the extent that they are not indemnified by the Registrant. Item 7. Exemption from Registration Claimed Not applicable. Item 8. Exhibits 4.1 Employee Benefit Plans, Inc. 1986 Stock Option Plan (and form of option agreement). 4.2 Employee Benefit Plans, Inc. 1990 Stock Option Plan (and form of option agreement). 4.3 Employee Benefit Plans, Inc. 1991 Long-Term Incentive Performance Plan (and form of option agreement). 4.4 Employee Benefit Plans, Inc. 1993 Outside Directors Stock Option Plan (and form of option agreement). 4.5 See Articles V, VI and VIII of the Registrant's Restated Articles of Incorporation (filed May 13, 1994 as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994 and incorporated herein by reference) and Articles 1, 2, 5 and 9 of the Registrant's Bylaws, as amended through March 15, 1995 (filed as an exhibit to Registrant's Form 10-K for the fiscal year ended December 31, 1994 and incorporated herein by reference). 5 Opinion of Sutherland, Asbill & Brennan. 23.1 Consent of Sutherland, Asbill & Brennan is contained in its legal opinion filed as Exhibit 5. -6- 7 23.2 Consent of Deloitte & Touche LLP. 23.3 Consent of Ernst & Young LLP. 23.4 Consent of Ernst & Young LLP. 23.5 Letter of Ernst & Young LLP. 23.6 Consent of Price Waterhouse LLP. 24 Power of Attorney authorizing Patrick H. Thomas and M. Tarlton Pittard to sign on behalf of the other directors is contained on Page 9 of this Registration Statement. Item 9. Undertakings (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a) (3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) (Section 230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. -7- 8 (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. -8- 9 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia on October 19, 1995. FIRST FINANCIAL MANAGEMENT CORPORATION By: /s/ Patrick H. Thomas -------------------------------- Patrick H. Thomas Chairman of the Board, President and Chief Executive Officer KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Patrick H. Thomas and M. Tarlton Pittard, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this Registration Statement and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ Patrick H. Thomas Chairman of the Board, October 19, 1995 - --------------------------------------- President, Chief Executive Patrick H. Thomas Officer and Director /s/ M. Tarlton Pittard Vice Chairman, Chief Financial October 19, 1995 - --------------------------------------- Officer, Treasurer and Director M. Tarlton Pittard /s/ Richard Macchia Executive Vice President, Finance October 19, 1995 - --------------------------------------- and Principal Accounting Officer Richard Macchia /s/ George L. Cohen Director October 19, 1995 - --------------------------------------- George L. Cohen
(Signatures continued on next page) 10 /s/ Jack R. Kelly, Jr. Director October 19, 1995 - --------------------------------------- Jack R. Kelly, Jr. /s/ Henry A. Leslie Director October 19, 1995 - --------------------------------------- Henry A. Leslie /s/ Charles B. Presley Director October 19, 1995 - --------------------------------------- Charles B. Presley /s/ Virgil R. Williams Director October 19, 1995 - --------------------------------------- Virgil R. Williams
EX-4.1 2 1986 STOCK OPTION PLAN 1 EXHIBIT 4.1 EMPLOYEE BENEFIT PLANS, INC. 1986 STOCK OPTION PLAN Restated effective August 24, 1989 Section 1: Purpose. The purpose of the 1986 Stock Option Plan is to induce certain designated key persons to remain in the employ of Employee Benefit Plans, Inc., a Delaware corporation (the "Corporation") and to encourage such persons to secure or increase on reasonable terms their stock ownership in the Corporation. The Board of Directors of the Corporation believes the Plan is in the best interest of the Corporation and will promote the success of the Corporation. This success will be achieved by encouraging continuity of management and increased incentive and personal interest in the welfare of the Corporation by those who are primarily responsible for shaping and implementing the long-range plans of the Corporation. The Plan was originally adopted effective October 6, 1986. Pursuant to Section 16 of the Plan, the Corporation hereby amends and restates the Plan in its entirety. Options granted under this Plan may either be Incentive Stock Options qualified under Section 422A of the Code or Non-Qualified Options. Section 2: Definitions. For purposes of this Plan, the following terms shall have the meanings indicated below: (a) "Capital Stock": any of the Corporation's authorized but unissued shares of voting common stock, par value $.01 per share. (b) "Code": the Internal Revenue Code of 1986, as amended from time to time. (c) "Fair Market Value": the price per share determined by the Board of Directors in the manner provided by the Code and Regulations, at the time any Option is granted. (d) "Incentive Stock Option": an option defined in Section 422A of the Code to purchase shares of the common stock of the Corporation. (e) "Non-Qualified Stock Option": an option, not intended to qualify as an Incentive Stock Option as defined in Section 422A of the Code, to purchase common stock of the Corporation. (f) "Option": the term shall refer to either an Incentive Stock Option or a Non-Qualified Stock Option. 2 (g) "Option Agreement": a written agreement pursuant to which the Corporation grants an option to an Optionee and sets the terms and conditions of the option. (h) "Option Date": the date upon which an Option Agreement for an option granted pursuant to this Plan is duly executed by or on behalf of the Corporation. (i) "Option Stock": the voting common stock of the Corporation, par value $.01 per share (subject to adjustment as described in Section 8) reserved for options pursuant to this Plan, or any other class of stock of the Corporation which may be substituted therefore by exchange, stock split or otherwise. (j) "Optionee": an officer, management level employee and other employee of the Corporation or one of its Subsidiaries to whom an option has been granted under the Plan. (k) "Plan": this 1986 Stock Option Plan, dated this even date, as amended hereafter from time to time. (l) A "Subsidiary": any corporation in an unbroken chain of corporations beginning with the Corporation, if, at the time of granting the option, each of the corporations other than the last corporation in the chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporation in such chain. The term shall include any subsidiaries which become such after adoption of this Plan. Section 3: Options Available Under Plan. An aggregate of 666,667 shares of the Corporation's authorized but unissued shares of voting common stock, par value $.01 per share, is hereby made available, and shall be reserved for issuance, under this Plan. The aggregate number of shares available under this Plan shall be subject to adjustment on the occurrence of any of the events and in the manner set forth in Section 8. If an Option shall expire or terminate for any reason without having been exercised in full, the unpurchased shares, shall (unless the Plan shall have been terminated) become available for other Options under the Plan. The total number of shares reserved under this Plan, or any portion thereof, may be granted pursuant to either the Incentive Stock Option Section or the Non-Qualified Section provided that the total number of shares subject to Options under both sections cannot, in the aggregate, exceed 666,667, subject to adjustment as described in Section 8. Section 4: Administration. The Plan shall be administered by the Board of Directors of the Corporation. At all times subject to the authority of the Board of Directors, the Board of Directors may from time to time delegate some or all of its authority under the Plan to a committee consisting of three (3) or more Directors (the "Committee"), and/or obtain assistance or recommendations from such Committee. If no separate committee is -2- 3 appointed, the Board shall constitute the Committee, and references to the Committee shall include the entire Board of Directors. The Corporation shall grant Options pursuant to the Plan upon determinations of the Committee as to which of the eligible persons shall be granted Options, the number of shares to be Optioned and the term during which any such Options may be exercised. At all times, a majority of the members of the Committee making determinations about the grant of Options to employee-directors must be disinterested in the grant being made. The Committee may from time to time adopt rules and regulations for carrying out the Plan and interpretations and constructions of any provision of the Plan, which shall be final and conclusive. Section 5: Eligibility for Incentive Stock Options. Incentive Stock Options may only be granted to an officer, management level employee or other employee of the Corporation or any of its Subsidiaries. A director of the Corporation who is not also an employee shall not be eligible to receive an Incentive Stock Option. In selecting the employees to whom Incentive Stock Options shall be granted, as well as determining the number of shares subject to each Option, the Committee shall take into consideration such factors as it deems relevant in connection with accomplishing the purpose of the Plan. For any calendar year, the aggregate Fair Market Value (determined at the Option Date) of the stock with respect to which any Incentive Stock Options are exercisable for the first time by any individual employee (under all Incentive Stock Option plans of the Corporation and all Subsidiary corporations) shall not exceed $100,000. Subject to the provisions of Section 3, an employee who has been granted an Option may, if he or she is otherwise eligible, be granted an additional Option or Options if the Committee shall so determine. No Incentive Stock Option may be granted under this Plan later than the expiration of ten (10) years from the effective date. Section 6: Eligibility for Non-Qualified Options. Non-Qualified Options may be granted only to an officer, management level employee, other employee of the Corporation or a subsidiary. No further restrictions are placed on the Committee in determining eligibility for granting Non-Qualified Options. Section 7: Terms and Conditions of Options. Whenever the Committee shall designate an Optionee, it shall communicate to the Secretary of the Corporation the name of the Optionee, the number of shares to be Optioned and such other terms and conditions as it shall determine, not inconsistent with the provisions of this Plan. The President or other officer of the Corporation shall then enter into an Option Agreement with the Optionee, complying with and subject to the following terms and conditions and setting forth such other terms and conditions of the Option as determined by the Committee: -3- 4 (a) Number of shares and option price. The Option Agreement shall state the total number of shares to which it pertains. The price of Option Stock for an Incentive Stock Option, shall be not less than one hundred percent (100%) of the Fair Market Value of the Option Stock at the Option Date. The price of Option Stock for a Non-Qualified Stock Option shall be determined by the Committee and may be less than the Fair Market Value at the Option Date. In the event an Incentive Stock Option is granted to an employee, who, at the Option Date, owns more than ten percent (10%) of the voting power of all classes of the Corporation's stock then outstanding, the price of the shares of common stock which will be covered by such Option shall be not less than one hundred ten percent (110%) of the Fair Market Value of the common stock at the Option Date. The Option price shall be subject to adjustment as provided in Section 8 hereof. (b) Time and Manner of Exercise of Option. Except as otherwise determined from time to time by the Board, Incentive Stock Options granted under the Plan shall be exercisable as follows: (i) Upon grant, the option may be exercised as to twenty percent (20%) of the shares covered thereby; (ii) During each twelve (12) month period thereafter from the date on which the option was granted, on such date designated by the Board, the option shall become exercisable as to an additional twenty percent (20%) of the shares covered thereby; and (iii) No option may be exercised after ten (10) years from the date on which the option was granted; provided that no incentive stock option granted to a 10% Holder may be exercised after five (5) years from the date on which it was granted. (c) Termination of Employment, Except Death or Disability. In the event that an Optionee shall cease to be employed by the Corporation for any reason other than his death, disability or "for cause", subject to the condition that no Incentive Stock Option shall be exercisable after the expiration of ten (10) years from the date it is granted, such Optionee shall have the right to exercise any outstanding Options at any time within three (3) months after the termination of the employee. In the event that Optionee shall be terminated "for cause" including but not limited to (i) his willful breach of any agreement entered into with the Corporation, (ii) misappropriation of the Corporation's property, fraud, embezzlement, other acts of dishonesty against the Corporation, or (iii) conviction of any felony or crime involving moral turpitude, the Option may be terminated as of the date of the Optionee's termination of employment. (d) Leaves of Absence. The Optionee may not exercise any part of any Incentive Stock Option while the Optionee is on leave of absence. -4- 5 (e) Death or Disability of Optionee. If the Optionee shall die or become disabled within the definition of Section 105(d)(4) of the Code, (i) while in the employ of the Corporation or any Subsidiary, or (ii) within a period of three (3) months after the termination of his or her employment with the Corporation or any Subsidiary as provided in paragraph (c) of this section, and in either case shall not have fully exercised his or her Options, any Options granted pursuant to the Plan shall be exercisable only within six (6) months following his death or date of disability or until the earlier originally stated expiration thereof. In the case of death, such Option shall be exercised pursuant to subparagraph (h) of this Section by the person or persons to whom the Optionee's rights under the Option shall pass by the Optionee's will or by the laws of descent and distribution, and only to the extent that such Options were exercisable at the time of his death. (f) Tender Offers. In the event of the purchase of in excess of fifty percent (50%) of the Corporation's outstanding common stock pursuant to a tender offer approved by the Corporation's Board of Directors and made in accordance with the provisions of the Securities Exchange Act of 1934 (a "Tender"), all options granted hereunder and not yet exercised on the date of the close of such Tender shall automatically terminate on such date, and all options, which are exercisable as of sale date must be exercised within thirty (30) days after such date and shall automatically be converted into the right to receive in lieu of Common Stock an amount equal to the amount per share of Common Stock paid pursuant to the Tender. (g) Transfer of Option. Each Option granted hereunder shall, by its terms, be not transferable by the Optionee other than by will or by the laws of descent and distribution, and shall be, during the Optionee's lifetime, exercisable only by the Optionee. Except as permitted by the preceding sentence, each Option granted under the Plan and the rights and privileges thereby conferred shall not be transferred, assigned or pledged in any way (whether by operation of law or otherwise), and shall not be subject to execution, attachment or similar process. Upon any attempt to so transfer, assign, pledge, or otherwise dispose of the Option, or of any right or privilege conferred thereby, contrary to the provisions of the Option or the Plan, or upon levy of any attachment or similar process upon such rights and privileges, the Option, and such rights and privileges, shall immediately become null and void. (h) Manner of Exercise of Options. An Option may be exercised, in whole or in part, at such time or times and rights with respect to such shares which have accrued and are in effect. Such Option shall be exercisable only within the Option period and only by (i) written notice to the Corporation of intent to exercise the Option with respect to a specified number of shares of stock; (ii) tendering the original Option Agreement to the Corporation; and (iii) payment to the Corporation of the amount of the Option purchase price for the number of shares of stock with respect to which the Option is then exercised. Payment of the Option purchase price may be made in cash (including certified check, bank draft or postal or express -5- 6 money order), by delivery of shares of common stock of the Corporation with a Fair Market Value equal to the Option purchase price, by a combination of cash and such shares, whose value together with such cash shall equal the Option purchase price or by any other method of payment which the Board shall approve and, in the case of an Incentive Stock Option, which shall not be inconsistent with the provisions of Section 422A of the Code, provided, however, that there shall be no such exercise at any one time as to fewer than ten (10) shares or all of the remaining shares then purchasable by the Optionee or person exercising the Option. No Incentive Stock Option granted before January 1, 1987 may be exercised until all Incentive Stock Options previously granted to Optionee have been exercised or have lapsed. When shares of stock are issued to the Optionee pursuant to the exercise of an Option, the fact of such issuance shall be noted on the Option Agreement by the Corporation before the Agreement is returned to the Optionee. When all shares of Optioned stock covered by the Option Agreement have been issued to the Optionee, or the Option shall expire, the Option Agreement shall be cancelled and retained by the Corporation. (i) Delivery of Certificate. Between fifteen (15) and thirty (30) days after receipt of the written notice and payment specified above, the Corporation shall deliver to the Optionee certificates for the number of shares with respect to which the Option has been exercised, issued in the Optionee's name; provided, however, that such delivery shall be deemed effected for all purposes when the Corporation, or the stock transfer agent for the Corporation, shall have deposited such certificates in the United States mail, postage prepaid, addressed to the Optionee and the address specified in the written notice of exercise. (j) Other Provisions. The Option Agreements authorized under this Section shall contain such other provisions as the Committee shall deem advisable. Section 8: Adjustments. In the event that the outstanding shares of the common stock of the Corporation are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reasons of any reorganization, merger, consolidation, recapitalization, reclassification, stock split-up; combination of shares or dividends payable in capital stock, appropriate adjustment shall be made in the number and kind of shares as to which Options may be granted under the Plan and as to which outstanding Options or portions thereof then unexercised shall be exercisable, to the end that the proportionate interest of the participant shall be maintained as before the occurrence of such event; such adjustment in outstanding Options shall be made without change in the total price applicable to the unexercised portion of such Options and with a corresponding adjustment in the Option Price per share. No such adjustment shall be made which shall, within the meaning of any applicable sections of the Code, constitute a modification, extension or renewal of an Option or a grant of additional benefits to a participant. -6- 7 If the Corporation is a party to a merger, consolidation, reorganization or similar corporate transaction and if, as a result of that transaction, its shares of common stock are exchanged for (i) other securities of the Company or (ii) securities of another corporation which has assumed the outstanding Options under the Plan or has substituted for such Options its own Options, then each Optionee shall be entitled (subject to the conditions stated herein or in such substituted Options, if any), in respect of that Optionee's Options, to purchase that amount of such other securities of the Corporation or of such other corporation as is sufficient to ensure that the value of the Optionee's Options immediately before the corporate transaction is equivalent to the value of such Options immediately after the transaction, taking into account the Option Price of the Option before such transaction, the fair market value per share of the common stock immediately before such transaction and the fair market value immediately after the transaction, of the securities then subject to that Option (or to the Option substituted for that Option, if any). Upon the happening of any such corporate transaction, the class and aggregate number of shares subject to the Plan which have been heretofore or may be hereafter granted under the Plan shall be appropriately adjusted to reflect the events specified in this clause. Section 9: Rights as Stockholder. An Optionee shall not, by reason of any Option granted hereunder, have any right of a stockholder of the Corporation with respect to the shares covered by his Option until such shares shall have been issued to the Optionee. Section 10: No Obligation to Exercise Option. The granting of an Option shall impose no obligation upon the Optionee to exercise such Option. Neither shall the Plan confer upon the Optionee any rights respecting continued employment nor limit the Optionee's rights or the employer corporation's rights to terminate such employment. Section 11: Withholding Taxes. Whenever under the Plan shares of Option Stock are to be issued upon exercise of the Options granted hereunder and prior to the delivery of any certificates or certificates for said shares by the Corporation, the Corporation shall have the right to require the employee to remit to the Corporation an amount sufficient to satisfy any federal and state withholding or other employment taxes resulting from such exercise. Section 12: Purchase for Investment; Rights of Holder on Subsequent Registration. Unless the shares to be issued upon exercise of an Option granted under the Plan have been effectively registered under the Securities Act of 1933 as now in force or hereafter amended (the "1933 Act"), the Corporation shall be under no obligation to issue any shares covered by any Option unless the person who exercises such Option, whether such exercise is in whole or in part, shall give a written representation and undertaking to the Corporation which is satisfactory in form and scope to counsel for the Corporation and upon which, in the opinion of such counsel, the Corporation may reasonably rely, that he or she is acquiring the shares issued to him or her pursuant to such exercise of the Option for his or her own account as an investment and not with a view to, or for sale in connection with, the distribution of any such shares, and that he or she will make no transfer of the same except in compliance with any rules and regulations in force at the time of such transfer under the -7- 8 1933 Act, or any other applicable law, and that if shares are issued without such registration a legend to this effect may be endorsed on the securities so issued. In the event that the Company shall, nevertheless, deem it necessary or desirable to register under the 1933 Act or other applicable statutes any shares with respect to which an Option shall have been exercised, or to qualify any such shares for exemption from the 1933 Act or other applicable statutes, then the Corporation shall take such action at its own expense and may require from each participant such information in writing for use in any registration statement, prospectus, preliminary prospectus or offering circular as is reasonably necessary for such purpose and may require reasonable indemnity to the Company and its officers and Directors from such holder against all losses, claims, damage and liabilities arising from such use of the information so furnished and caused by any untrue statement of any material fact required to be stated therein or necessary to make the statement therein not misleading in light of the circumstances under which they were made. Section 13: Modification of Outstanding Options. The Board may accelerate the exercisability of an outstanding Option and may authorize the modification of any outstanding Option with the consent of the participant when and subject to such conditions as are deemed to be in the best interests of the Corporation and in accordance with the purposes of the Plan. Section 14: Loans Prohibited. The Corporation shall not, directly or indirectly, lend money to a participant or to any person or persons entitled to exercise an Option by reason of the death of a participant for the purpose of assisting him, her or them in the acquisition of shares covered by an Option granted under the Plan. Section 15: Effective Date. Except as specified herein, this amended Plan is effective (the "Effective Date"), upon approval by the Board of Directors and Shareholders holding a majority of the voting Stock of the Corporation. Section 16: Liquidation. Upon the complete liquidation of the Corporation, any unexercised Options theretofore granted under this Plan shall be deemed cancelled, except as otherwise provided in Section 8 in connection with a merger, consolidation or reorganization of the Corporation. Section 17: Restrictions on Issuance of Shares. Notwithstanding the provisions of Section 7, the Corporation may delay the issuance of shares covered by the exercise of any Option and the delivery of a certificate for such shares until one of the following conditions shall be satisfied: (a) The shares with respect to which the Option has been exercised are at the time of the issue of such shares effectively registered under applicable Federal and state securities acts as now in force or hereafter amended; or -8- 9 (b) A no-action letter in respect of the issuance of such shares shall have been obtained by the Corporation from the Securities and Exchange Commission and any applicable state securities commissioner; or (c) Counsel for the Corporation shall have given an opinion, which opinion shall not be unreasonably conditioned or withheld, that such shares are exempt from registration under applicable federal and state securities acts as now in force or hereafter amended. It is intended that all exercise of Options shall be effective, and the Corporation shall use its best efforts to bring about compliance with the above conditions within a reasonable time, except that the Company shall be under no obligation to cause a registration statement or a post-effective amendment to any registration statement to be prepared at its expense solely for the purpose of covering the issue of shares in respect of which any option may be exercised. Section 18: Termination and Amendment of the Plan. This Plan shall terminate ten (10) years after October 6, 1986 the original effective date of the Plan or at such earlier time as the Board of Directors shall determine. Any termination shall not affect any Options then outstanding under the Plan. The Board may make such modifications of the Plan as it shall deem advisable, but may not, without further approval of the stockholders of the Corporation, except as provided in Section 8 hereof, (a) increase the number of shares reserved for Options under this Plan, (b) change the manner of determining the Option price for Incentive Stock Options, (c) increase the maximum term of the Options provided for herein, or (d) change the class of persons eligible to receive Options under the Plan. -9- 10 AMENDMENT NO. 1 TO THE RESTATED 1986 STOCK OPTION PLAN EMPLOYEE BENEFIT PLANS, INC. Effective August 24, 1989 Section 7(a) of the Restated 1986 Stock Option Plan of Employee Benefit Plans, Inc. is hereby amended to include the following additional provision: Notwithstanding anything herein to the contrary, the price of Option Stock for a Non-Qualified Stock Option shall be determined by the Committee and, for Non-Qualified Stock Options granted after August 24, 1989, shall not be less than eighty-five percent (85%) of the Fair Market Value of the Option Stock at the Option Date. 11 EMPLOYEE BENEFIT PLANS, INC. 1986 RESTATED STOCK OPTION PLAN Stock Option Agreement with _______________________ ________________, 199__ 12 EMPLOYEE BENEFIT PLANS, INC. STOCK OPTION AGREEMENT This AGREEMENT is made effective as of the _________ day of _____________, 199__, by and between Employee Benefit Plans, Inc., a Delaware corporation (the "Company"), and the undersigned employee of the Company (or one of its subsidiaries) (the "Employee"). Recitals 1. The Company desires to afford the Employee an opportunity to purchase shares of its common stock, par value $.01 per share (the "Shares"), to carry out the purposes of its 1986 Restated Stock Option Plan, as amended (the "Plan"). 2. Section 7 of the Plan provides that each option is to be evidenced by an Option Agreement, setting forth the terms and conditions of the Option. ACCORDINGLY, in consideration of the premises and of the mutual covenants and agreements contained herein, the Company and the Employee hereby agree as follows: 1. Grant of Option. The Company hereby irrevocably grants to the Employee a ____________ Stock Option (the "Option") to purchase all or any part of an aggregate of _________________________ (_______) Shares on the terms and conditions hereinafter set forth. 2. Purchase Price. The purchase price for the Shares covered by the Option (the "Purchase Price") shall be $________ per Share. 3. Time and Manner of Exercise of Option. (a) The Option shall be exercisable as to 20% of the Shares as of the date hereof unless accelerated pursuant to Section 7 hereof, and shall become exercisable as to the remainder of the Shares in equal annual installments as follows:
Percentage of Shares Becoming Cumulative Available for Percentage On or After Exercise Available ----------- ---------------- ----------- 20% 40% 20% 60% 20% 80% 20% 100%
-1- 13 (b) To the extent that the right to exercise the Option has accrued and is in effect, the Option may be exercised in full at one time or in part from time to time, by giving written notice, signed by the person or persons exercising the Option, to the Company, stating the number of Shares with respect to which the Option is being exercised, accompanied by payment in full of the Purchase Price for such Shares, which payment may be in whole or in part in shares of the common stock of the Company already owned by the person or persons exercising the Option with a fair market value equal to the exercise price; provided, however, that there shall be no such exercise at any one time as to fewer than ten (10) Shares or all of the remaining Shares then purchasable by the person or persons exercising the Option, if fewer than ten (10) Shares. Upon such exercise, delivery of a Certificate for Paid-up, non-assessable Shares shall be made at the Principal office of the Company to the Person or Persons exercising the Option at such time, during ordinary business hours, not more than thirty (30) days from the date of receipt of the notice by the Company, as shall be designated in such notice, or at such time, place and manner as may be agreed upon by the Company and the person or persons exercising the Option. (c) The Company shall at all times during the term of the Option reserve and keep available such number of shares of its common stock as will be sufficient to satisfy the requirements of the Option and shall pay all original issue and transfer taxes (if any) with respect to the issue and transfer of Shares pursuant hereto, and all other fees and expenses necessarily incurred by the Company in connection therewith. The holder of this Option shall not have any of the rights of a Stockholder of the Company in respect of the Shares until one or more Certificates for such Shares shall be delivered to him or her upon the due exercise of the Option. 4. Term of Option. (a) The Option shall terminate ten (10) years from the date hereof, but shall be subject to earlier termination as hereinafter Provided. (b) Except as otherwise Provided in this Section 4, in the event that the Employee ceases to be an employee of the Company or one of its subsidiaries, the Option may be exercised, to the extent then exercisable under Section 3(a) hereof, within three (3) months after the date the Employee ceases to be an employee of the Company or one of its subsidiaries, but shall thereafter terminate. (c) If such termination of employment is because of dismissal for cause or because the Employee is in breach of any employment agreement, the Option will terminate on the date the Employee ceases to be an employee of the Company or one of its subsidiaries. (d) If such termination of employment is because the Employee has died or become permanently disabled within the meaning of Section 105(b) (4) of the Internal Revenue Code of 1986 (the "Code"), the Option may be exercised prior to the -2- 14 expiration of (i) six (6) months from the date the Employee ceases to be an employee or (ii) ten (10) years from the date hereof, whichever occurs first. (e) In the event of termination of employment, the Option shall be exercisable only to the extent that the right to Purchase the Shares under the Option has accrued and is in effect at the date of such cessation of employment, unless such cessation is because the Employee has become disabled, in which case the Option may be exercised to the full number of Shares covered hereby. (f) In the event of the death of the Employee, the Option may be exercised by the estate of the Employee, or by any person or persons who acquired the right to exercise the Option by bequest or inheritance or by reason of the death of the Employee. 5. Non-Transferability. The right of the Employee to exercise the Option shall not be assignable or transferable by the Employee other than by will or the laws of descent and distribution, and the Option may be exercised during the lifetime of the Employee only by him or by his guardian or legal representative. The Option shall be null and void and without effect upon the bankruptcy of the Employee or upon any attempted assignment or transfer, except as provided herein, including without limitation any purported assignment (whether voluntary or by operation of law), pledge, hypothecation or other disposition, attachment, trustee process or similar process, whether legal or equitable, upon the Option. 6. Investment Representation. Notwithstanding the provisions of Section 3 hereof, the Company may delay the issuance of Shares covered by the exercise of the Option and the delivery of a certificate for such Shares until Employee executes a written declaration that the Shares issued to him pursuant to such exercise of the Option are for his own account as an investment and not with a view to, or for resale in connection with, the distribution of any such Shares, and that he or she will make no transfer of the same except in compliance with the 1933 Act and the rules and regulations promulgated thereunder and then in effect. 7. Adjustments. In the event that the outstanding shares of the common stock of the Company are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of any reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares, or dividends payable in capital stock (other than in a tender offer as described in Section 8 hereof), appropriate adjustment shall be made in the number and kind of shares as to which the Option, or portion thereof then unexercised, shall be exercisable, to the end that the proportionate interest of the Employee shall be maintained as before the occurrence of such event; such adjustment in the Option shall be made without change in the total price applicable to the unexercised portion of the Option and with a corresponding adjustment in the Purchase Price per Share. No such adjustment shall be made which shall, within the meaning of any applicable sections of -3- 15 the Code, constitute a modification, extension or renewal of the Option or grant of additional benefits to the Employee. 8. Tender Offers. In the event of the purchase of in excess of fifty percent (50%) of the Company's outstanding common stock pursuant to a tender offer approved by the Company's Board of Directors and made in accordance with the provisions of the Securities Exchange Act of 1934 (a "Tender"), all options granted hereunder and not yet exercised on the date of the close of such Tender shall automatically terminate on such date, and all options which are exercisable as of sale date must be exercised within thirty (30) days after such date and shall automatically be converted into the right to receive in lieu of Common Stock an amount equal to the amount per share of Common Stock paid pursuant to the Tender. 9. Liquidation. Upon dissolution or liquidation of the Company, the Option shall terminate, but the Employee (if at such time in the employ of or otherwise associated with the Company or any of its subsidiaries) shall have the right, immediately prior to such dissolution or liquidation, to exercise the Option to the extent then exercisable. 10. Fractional Shares. No fraction of a share shall be purchasable or deliverable upon the exercise of the Option, but in the event any adjustment hereunder of the number of Shares covered by the Option shall cause such number to include a fraction of a share, such fraction shall be adjusted to the nearest smaller whole number of shares. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its President thereunto duly authorized, and the Employee has hereunto set his hand, effective as of the date first appearing above. EMPLOYEE BENEFIT PLANS, INC. By: ----------------------------------------- , President ---------------------------- EMPLOYEE -------------------------------------------- -4- 16 EMPLOYEE BENEFIT PLANS, INC. 1986 STOCK OPTION PLAN Incentive Stock Option Agreement with 17 EMPLOYEE BENEFIT PLANS, INC. INCENTIVE STOCK OPTION AGREEMENT This AGREEMENT entered into as of the 1st day of June, 1987, by and between Employee Benefit Plans, Inc., a Delaware corporation (the "Company"), and the undersigned employee of the Company (or one of its subsidiaries) (the "Employee"). Recitals 1. The Company desires to afford the Employee an opportunity to purchase shares of its common stock, par value $0.01 per share (the "Shares"), to carry out the purposes of its 1986 Stock Option Plan (the "Plan"). 2. Section 5 of the Plan provides that each option is to be evidenced by an option agreement, setting forth the terms and conditions of the option. ACCORDINGLY, in consideration of the premises and of the mutual covenants and agreements contained herein, the Company and the Employee hereby agree as follows: 1. Grant of Option. The Company hereby irrevocably grants to the Employee an incentive stock option (the "Option") to purchase all or any part of an aggregate of Five Thousand (5,000) Shares on the terms and conditions hereinafter set forth. 2. Purchase Price. The purchase price for the Shares covered by the Option (the "Purchase Price") shall be $3.00 per Share. 18 3. Time and Manner of Exercise of Option. (a) The Option shall be exercisable as to 20% of the Shares as of the date unless accelerated pursuant to Section 7 hereof, and shall become exercisable as to the remainder of the Shares in equal annual installments as follows:
Percentage of Shares Becoming Cumulative Available for Percentage On or After Exercise Available ----------- -------- --------- March 1, 1988 20% 40% March 1, 1989 20% 60% March 1, 1990 20% 80% March 1, 1991 20% 100%
(b) To the extent that the right to exercise the Option has accrued and is in effect, the Option may be exercised in full at one time or in part from time to time, by giving written notice, signed by the person or persons exercising the Option, to the Company, stating the number of Shares with respect to which the Option is being exercised, accompanied by payment in full of the Purchase Price for such Shares, which payment may be in whole or in part in shares of the common stock of the Company already owned by the person or persons exercising the Option, valued at fair market value determined by the Board of Directors of the Company in accordance with the terms of Section 6 of the Plan; provided, however, that there shall be no such exercise at any one time as to fewer than ten (10) Shares or all of the remaining Shares then purchasable by the person or persons exercising the Option, if fewer than ten (10) Shares. Upon such exercise, delivery of a certificate for paid-up, non-assessable Shares shall be made at the principal office of the Company to the person or persons exercising the Option at such time, during ordinary business hours, not more than thirty (30) days -2- 19 from the date of receipt of the notice by the Company, as shall be designated in such notice, or at such time, place and manner as may be agreed upon by the Company and the person or persons exercising the Option. (c) The Company shall at all times during the term of the Option reserve and keep available such number of shares of its common stock as will be sufficient to satisfy the requirements of the Option and shall pay all original issue and transfer taxes (if any) with respect to the issue and transfer of Shares pursuant hereto, and all other fees and expenses necessarily incurred by the Company in connection therewith. The holder of this Option shall not have any of the rights of a stockholder of the Company in respect of the Shares until one or more certificates for such Shares shall be delivered to him or her upon the due exercise of the Option. 4. Term of Option. (a) The Option shall terminate ten (10) years from the date hereof, but shall be subject to earlier termination as hereinafter provided. (b) Except as otherwise provided in this Section 4, in the event that the Employee ceases to be an employee of the Company or one of its subsidiaries, the Option may be exercised, to the extent then exercisable under Section 3(a) hereof, within three (3) months after the date the Employee ceases to be an employee of the Company or one of its subsidiaries, but shall thereafter terminate. (c) If such termination of employment is because of dismissal for cause or because the Employee is in breach of any employment agreement, the Option will terminate on the date the Employee ceases to be an employee of the Company or one of its subsidiaries. -3- 20 (d) If such termination of employment is because the Employee has become permanently disabled within the meaning of Section 105(b)(4) of the Internal Revenue Code of 1986 (the "Code"), the Option may be exercised prior to the expiration of (i) twelve (12) months from the date the Employee ceases to be an employee or (ii) ten (10) years from the date hereof, whichever occurs first. (e) In the event of termination of employment, the Option shall be exercisable only to the extent that the right to purchase the Shares under the Option has accrued and is in effect at the date of such cessation of employment, unless such cessation is because the Employee has become disabled, in which case the Option may be exercised to the full number of Shares covered hereby. (f) In the event of the death of the Employee, the Option may be exercised to the full number of Shares covered hereby, whether or not under the provisions of Section 3(a) hereof the Employee was entitled to do so at the date of his death, by the estate of the Employee, or by any person or persons who acquired the right to exercise the Option by bequest or inheritance or by reason of the death of the Employee. In such circumstances, the Option must be exercised prior to the expiration of (i) twelve (12) months after the death of the Employee or (ii) ten (10) years from the date hereof, whichever occurs first. 5. Non-Transferability. The right of the Employee to exercise the Option shall not be assignable or transferable by the Employee other than by will or the laws of descent and distribution, and the Option may be exercised during the lifetime of the Employee only by him or by his guardian or legal representative. The Option shall be null and void and without effect upon the bankruptcy of the Employee or upon any -4- 21 attempted assignment or transfer, except as provided herein, including without limitation any purported assignment (whether voluntary or by operation of law), pledge, hypothecation or other disposition, attachment, trustee process or similar process, whether legal or equitable, upon the Option. 6. Restrictions on Issue of Shares. (a) Notwithstanding the provisions of Section 3 hereof, the Company may delay the issuance of Shares covered by the exercise of the Option and the delivery of a certificate for such Shares until one of the following conditions shall be satisfied: (i) The Shares with respect to which such option has been exercised are at the time of the issuance of such shares effectively registered under applicable federal and state securities laws now in effect or as hereafter amended; or (ii) Counsel for the Company shall have given an opinion, which opinion shall not be unreasonably conditioned or withheld, that such Shares are exempt from registration under applicable federal and state securities laws, as now in effect or as hereafter amended. It is intended that all exercises of the Option shall be effective, and the Company shall use its best efforts to bring about compliance with the above conditions within a reasonable time, except that the Company shall be under no obligation to qualify Shares or to cause a registration statement or a post-effective amendment to any registration statement to be prepared for the purposes of covering the issuance of Shares, except as otherwise agreed by the Company in writing. (b) In the event that for any reason the Shares to be issued upon exercise of the Option shall not be effectively registered under the Securities Act of 1933 as now in effect or as hereafter amended (the "1933 Act"), upon any date on which the -5- 22 Option is exercised in whole or in part, the Company shall be under no further obligation to issue Shares covered by the Option, unless the person exercising the Option shall give a written representation and undertaking to the Company, substantially in the form attached hereto as Exhibit A ("Investment and Repurchase Agreement"), that such person is acquiring the Shares issued to him or her pursuant to such exercise of the Option for his or her own account as an investment and not with a view to, or for resale in connection with, the distribution of any such Shares, and that he or she will make no transfer of the same except in compliance with the 1933 Act and the rules and regulations promulgated thereunder and then in effect, and that if Shares are issued pursuant to such exercise of the Option without such registration, the Company may place a legend to this effect, upon any certificate representing the Shares so issued by reason of such exercise. (c) In the event that the Company shall, nevertheless, deem it necessary or desirable to register under the 1933 Act or other applicable statutes the Shares covered by the Option, or to qualify any such Shares for exemption under the 1933 Act or other applicable statutes, then the Company may take such action and may require from the Employee such information in writing for use in any registration statement, supplementary registration statement, prospectus, preliminary prospectus or offering circular as is reasonably necessary for such purpose and may require reasonable indemnity to the Company and its officers and directors from the Employee against all losses, claims, damages and liabilities arising from such use of the information so furnished and caused by any untrue statement of any material fact therein or caused by the omission to state a material fact required to be stated therein or necessary to make -6- 23 the statements therein not misleading in light of the circumstances under which they were made. (d) In the event that upon exercise of this Option the Shares are required to be pledged for the benefit of any creditor of the Company, the Employee shall enter into any pledge agreement which such creditor may request, and shall pledge his Shares issuable upon exercise hereof pursuant to such pledge agreement. 7. Recapitalizations, Reorganizations and the Like. In the event that the outstanding shares of the common stock of the Company are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of any reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares, or dividends payable in capital stock (other than any such transaction which results in a Change of Control, as hereinafter defined), appropriate adjustment shall be made in the number and kind of shares as to which the Option, or portion thereof then unexercised, shall be exercisable, to the end that the proportionate interest of the Employee shall be maintained as before the occurrence of such event; such adjustment in the Option shall be made without change in the total price applicable to the unexercised portion of the Option and with a corresponding adjustment in the Purchase Price per Share. No such adjustment shall be made which shall, within the meaning of any applicable sections of the Code, constitute a modification, extension or renewal of the Option or grant of additional benefits to the Employee. In addition, in the case of any (i) sale or conveyance to another entity of all or substantially all of the property and assets of the Company or (ii) Change in Control (as -7- 24 defined in the Plan) of the Company, the option shall be thereupon exercisable with respect to the full number of Shares covered thereby, and the purchaser(s) of the Company's assets or stock may, in his or its discretion, deliver to the Employee the same kind of consideration that is delivered to other shareholders of the Company as a result of such sale, conveyance or Change in Control, which consideration shall be equal in value to the value of those Shares or other securities the Employee would have received had the Option been exercised (to the extent then exercisable) and no disposition of the Shares or other securities acquired upon such exercise been made prior to such sale, conveyance or Change in Control, less the Purchase Price therefor. Upon receipt of such consideration by the Employee, the Option shall immediately terminate and be of no further force and effect. Upon dissolution or liquidation of the Company, the Option shall terminate, but the Employee (if at such time in the employ of or otherwise associated with the Company or any of its subsidiaries) shall have the right, immediately prior to such dissolution or liquidation, to exercise the Option to the extent then exercisable. No fraction of a share shall be purchasable or deliverable upon the exercise of the Option, but in the event any adjustment hereunder of the number of Shares covered by the Option shall cause such number to include a fraction of a share, such fraction shall be adjusted to the nearest smaller whole number of shares. -8- 25 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its President thereunto duly authorized, and the Employee has hereunto set his hand, all as of the day and year first above written. EMPLOYEE BENEFIT PLANS, INC. By ----------------------------------- William E. Sagan President EMPLOYEE: -------------------------------------- Signature -------------------------------------- Print Name -------------------------------------- Address -------------------------------------- Social Security Number -9- 26 Exhibit A ________________________________________________________________________________ INVESTMENT AND REPURCHASE AGREEMENT Dated as of ____________, 198[ ] EMPLOYEE BENEFIT PLANS, INC. ________________________________________________________________________________ 27 INVESTMENT AND REPURCHASE AGREEMENT TABLE OF CONTENTS
Page ---- PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF EBP 2.01 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.02 Capacity, Authorization and Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 3.01 Offering Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3.02 Private Placement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3.03 Reliance by EBP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE 4. RESTRICTIONS ON TRANSFER OF SHARES 4.01 No Transfer in Violation of 1933 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4.02 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ARTICLE 5. REGISTRATION OF SHARES 5.01 "Piggyback" Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5.02 Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5.03 Preparation; Reasonable Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ARTICLE 6. PROCEDURES ON SALE OF STOCK TO THIRD PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ARTICLE 7. MISCELLANEOUS 7.01 No Implied Right to Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 7.02 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 7.03 Agreements, Representations and Warranties to Survive Delivery; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 7.04 Certain Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 7.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 7.06 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 7.07 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 7.08 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(ii) 28 INVESTMENT AND REPURCHASE AGREEMENT dated as of ______________, 19___, between EMPLOYEE BENEFIT PLANS, INC., a Delaware corporation ("EBP"), and the undersigned purchaser of Shares (the "Purchaser"). WHEREAS, pursuant to the terms of an option agreement EBP granted the Purchaser an option to purchase ____________ shares of Common Stock of EBP at a price of $_________ per share (the "Shares"); NOW, THEREFORE, in consideration of the foregoing and the mutual agreements herein contained, the parties hereto agree as follows: ARTICLE 1. DEFINITIONS For the purposes of this Agreement, the following terms have the following meanings: "Affiliate" means, with respect to any person, any other Person directly or indirectly controlling, controlled by or under common control with, such Person. For the purpose of this definition, "control" (including with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Persons whether through the ownership of voting securities or by contract or otherwise. "Common Shares" means any shares of EBP Common Stock. "1933 Act" means the Securities Act of 1933, as amended, and the rules and regulations thereunder. "1934 Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. "Person" means an individual, a partnership, a joint venture, a corporation a trust, an unincorporated organization and a government or any department or agency thereof. "Purchaser" shall have the meaning set forth in the recitals. "Registration Expenses" means all out-of-pocket expenses incident to EBP's performance of or compliance with Article 7 hereof, including, without limitation, all registration and filing fees (including filing fees with respect to the Securities and Exchange Commission and the National Association of Securities Dealers, Inc.), all fees and expenses of complying with state securities or blue sky" laws (including reasonable fees and disbursements of underwriters counsel in connection with any "blue sky" memorandum or survey), all printing expenses, all registrars' and agents' fees, the fees and disbursements of EBP's counsel and of its independent public accountants, but 29 excluding (a) the expenses of any special audits required by or incident to such performance and compliance, (b) the fees and disbursements of any counsel retained by the holders of Common Shares being registered, and (c) underwriting discounts and commissions and applicable transfer taxes, if any, all of which shall be borne by the sellers of the Common Shares being registered in all cases in proportion to the shares sold by each. "Restricted Shares" means all Common Shares other than (a) Common Shares that have been registered under a registration statement pursuant to the 1933 Act, (b) Common Shares with respect to which a sale has been made in reliance on and in accordance with Rule 144 or (c) Common Shares with respect to which the holder thereof shall have delivered to EBP an opinion, in form and substance satisfactory to EBP, of counsel, who shall be satisfactory to EBP, to the effect that subsequent transfers of such Common Shares may be effected without registration under the 1933 Act. "Rule 144" means Rule 144 (or any successor provision) under the 1933 Act. "Shares" shall have the meaning set forth in the recitals. "Subsidiary" means, with respect to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time, directly or indirectly, owned by such Person. ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF EBP EBP represents and warrants to the Purchaser as follows: 2.01 Organization. It is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with full corporate power and authority to own or lease all property that it purports to own or lease and to carry on its businesses as now being conducted. Its Certificate of Incorporation and By-laws are in full force and effect, and it is not in violation of any of the provisions of its Certificate of Incorporation or By-laws. 2.02 Capacity, Authorization and Enforceability. It has full corporate power and authority to enter into this Agreement and, to perform all its obligations under this Agreement. This Agreement has been duly authorized, executed and delivered by it, and this Agreement constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms. -3- 30 ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER The Purchaser represents and warrants to EBP as follows: 3.01 Offering Representation. The Purchaser acknowledges his understanding that the issuance and sale of the Shares is intended to be exempt from registration under the 1933 Act. In furtherance thereof, the Purchaser represents and warrants to EBP that: (a) He has the financial ability to bear the economic risk of his investment in the Shares to be purchased by him, he could bear a total loss of such investment, he has no need for liquidity with respect to such investment, and he has adequate means for providing for his current needs and personal contingencies; (b) He has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of his investment in the Shares; (c) He has been given the opportunity to ask questions of, and receive answers from, EBP concerning an investment in the Shares, and the operations and financial condition of EBP; and (d) any information heretofore furnished to EBP by the Purchaser with respect to his financial position, personal background and investment experience is correct and complete as of the date of this Agreement. 3.02 Private Placement. The Purchaser has been advised that the Shares have not been registered under the 1933 Act and, therefore, cannot be resold unless they are registered under the 1933 Act or unless an exemption from registration is available. The Purchaser has also been advised that he may be required to pledge the Shares to a creditor of the Company. The Purchaser is acquiring the Shares for his own account for investment and not with a view to, or for resale in connection with, the distribution thereof, and the Purchaser has no present intention of distributing any thereof. In making the foregoing representation, the Purchaser is aware that he must bear the economic risk of an investment in the Shares for an indefinite period of time. 3.03 Reliance by EBP. The Purchaser acknowledges that EBP is entering into this Agreement in reliance upon the representations and warranties of the Purchaser in this Agreement, including, without limitation, those set forth in this Article 3. -4- 31 ARTICLE 4. RESTRICTIONS ON TRANSFER OF SHARES 4.01 No Transfer in Violation of 1933 Act. The Purchaser agrees that he will not, directly or indirectly, offer, sell, assign, transfer, grant a participation in, pledge or otherwise dispose of any Shares (or solicit any offers to buy or otherwise acquire, or take a pledge of any such Shares), except in compliance with the 1933 Act. 4.02 Legends. (a) Each certificate evidencing Shares issued to the Purchaser or any direct or indirect transferee thereof shall bear a legend in substantially the following form: The shares evidenced by this certificate were issued in a private placement without registration or qualification under the Securities Act of 1933, as amended, or the securities or "blue sky" laws of certain jurisdictions and without the review or approval of the securities administrators of such jurisdictions and in reliance upon the purchaser's representation that such shares were being acquired for investment and not for resale in connection with the distribution thereof. No registration of transfer of such shares will be made on the books of the issuer unless accompanied by an opinion, in form and substance satisfactory to the issuer, of counsel, who shall be satisfactory to the issuer, that such transfer may properly be made without registration under the Securities Act of 1933, as amended, or that such shares have been so registered under a registration statement that is in effect at the date of such transfer. (b) In the event that any Shares shall cease to be Restricted Shares, EBP shall upon the written request of the holder thereof issue to such holder a new certificate evidencing such Shares without the legend required by Section 4.02(a) endorsed thereon. ARTICLE 5. REGISTRATION OF SHARES 5.01 "Piggyback" Registration. If EBP decides to register its stock in accordance with the 1933 Act on any registration form other than a Form S-8 or any other special purpose form, it will notify each holder of Shares of that fact 30 days in advance of the anticipated first filing date of any registration statement with the Securities and Exchange Commission (the "Commission"). Such holders shall then have the right to include their Shares in any such registration, and shall so notify EBP within 15 days of notice from EBP that such registration will occur. The notice from EBP shall not constitute a commitment to register any Common Stock, and EBP may withdraw its Common Stock from the registration process, along with the Common Stock of the holders of Shares at any time. All Registration Expenses with respect to the Shares included in such registration pursuant to this Section 7.01 shall be borne by EBP. -5- 32 5.02 Registration Procedures. (a) If and whenever EBP is required to use its best efforts to effect the registration of Shares as provided in Section 5.01, EBP will as expeditiously as is reasonable: (i) prepare and file with the Commission on any appropriate form a registration statement with respect to the Shares and use its best efforts to cause such registration statement to become effective; (ii) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than 6 months (or such shorter period which will terminate when all Shares subject to such registration statement have been sold or withdrawn, but not prior to the expiration of the 90 day period specified in Section 4(3) of the 1933 Act, if applicable) and to comply with the provisions of the 1933 Act with respect to the disposition of all of Shares and other securities covered by such registration statement until such time as all of the Shares and other securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement; (iii) furnish to each seller of such Shares such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus), in conformity with the requirements of the 1933 Act, such documents incorporated by reference in such registration statement or prospectus, and such other documents, as such seller may reasonably request in order to facilitate the sale or disposition of such Shares; (iv) use its best efforts to register or qualify all Shares covered by such registration statement under such other securities or "blue sky" laws of such jurisdictions as each seller shall reasonably request, and do any and all other acts and things that may be necessary to enable such seller to consummate the disposition in such jurisdictions of its Shares covered by such registration statement, except that EBP shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it is not so qualified, or to subject itself to taxation in respect of doing business in any such jurisdiction, or to consent to general service of process in any such jurisdiction; (v) furnish to each seller of Shares (A) an opinion of counsel for EBP, dated the effective date of such registration statement (or, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), and, if authorized by the accountants, (B) a "cold comfort" letter signed by the independent public accountants who have issued a report on EBP's financial statements included in such registration -6- 33 statement, covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of such accountants letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer's counsel and in accountants letters delivered to underwriters in underwritten public offerings of securities and, in the case of the accountants letter, such other financial matters as such seller may reasonably request; (vi) immediately notify each seller of Shares covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the 1933 Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing or if it is necessary to amend or supplement such prospectus to comply with law, and at the request of any such seller prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary, so that, as thereafter delivered to the purchasers of such Shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and shall otherwise comply with law; (vii) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months, but not more than 18 months, beginning with the first month of the first fiscal quarter after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the 1933 Act; (viii) use its best efforts to list such Shares on each securities exchange on which its securities of the same class are then listed, if such listing is then permitted under the rules of such exchange, and provide a transfer agent and registrar for such Shares not later than the effective date of such registration statement; and (ix) issue to any underwriter to which any holder of Shares may sell such Shares in connection with any such registration (and to any direct or indirect transferee of any such underwriter), certificates evidencing Shares without the legends described in Section 4.02. EBP may require each seller of Shares as to which any registration is being effected to furnish EBP with such information regarding such seller and the distribution -7- 34 of such securities as EBP may from time to time reasonably request in writing and as shall be required by law or by the Commission in connection therewith. (b) If the managing underwriter of an offering with respect to which holders of Shares have requested inclusion thereof under Section 4.01 advises EBP that, in its judgment, the number of shares of Common Stock and any other securities, including any Shares, proposed to be included in such offering should be limited due to market conditions, then EBP will promptly so advise each holder of Shares and/or Common Stock sought to be included in such offering, and, if necessary to meet such limitation, all holders of Common Stock (including Shares) proposing to sell Common Stock in such offering shall share pro rata in the number of shares of Common Stock to be excluded from such offering, such sharing to be based on the respective numbers of shares of Common Stock as to which registration has been requested by such holders. If the offering is initiated by EBP or by any stockholder of EBP who has the right to request EBP to file a registration statement, EBP or such stockholder, as the case may be, shall not be required to limit the shares which it is offering, and such limitation shall be applied only against shares of Common Stock sought to be included by other selling shareholders, including holders of Shares. (c) EBP will enter into an underwriting agreement with the underwriters for any offering to be effected pursuant to this Article 4, such agreement to contain such terms, conditions, representations, warranties and covenants, including those relating to indemnification, on the part of EBP and the selling shareholders as are customarily contained in underwriting agreements. 5.03 Preparation; Reasonable Investigation. In connection with the preparation and filing of each registration statement registering Shares under the 1933 Act, EBP will give the holders on whose behalf Shares are to be so registered and their respective counsel and accountants, the opportunity to participate in the preparation of such registration statement at their own expense, each prospectus included therein or filed with the Commission, and each amendment thereof or supplement thereto, and will give each of them such opportunities to discuss the Business of EBP with its officers and independent public accountants as shall be necessary, in the opinion of such holders or their respective counsel, to conduct a reasonable investigation within the meaning of the 1933 Act. ARTICLE 6 PROCEDURES ON SALE OF STOCK TO THIRD PARTIES Except as expressly provided herein, the Purchaser hereby agrees that he shall not sell any Shares except in accordance with the following procedures: (a) The Purchaser shall first deliver to EBP a written notice (hereinafter in this Article 6 called the "Notice of Offer"), which shall be irrevocable for a period of -8- 35 thirty days after delivery thereof, naming the intended offeree(s) (the "Intended Offeree") and offering to sell to EBP all or any part of the Shares proposed to be sold by the Purchaser at the purchase price and for the terms specified therein. EBP shall have the right and option, but not the obligation, for a period of thirty days after delivery of the Notice of Offer, (the "Acceptance Period") to accept all or any part of the Shares so offered at the purchase price and on the terms specified therein. Such acceptance shall be made by delivering a written notice (a "Notice of Acceptance") to the Purchaser within said thirty day period. (b) If EBP exercises its option to purchase Shares under the terms of Section 6(a), such purchase shall be consummated at the offices of EBP on a mutually satisfactory business day within thirty days after the expiration of the Acceptance Period. Delivery of certificates or other instruments evidencing such Shares duly endorsed for transfer to EBP shall be made on such dates against payment of the purchase price therefor. (c) To the extent effective acceptances shall not be received pursuant to Section 6(a) above within the Acceptance Period with respect to all or any part of the Shares offered for sale pursuant to the Notice of Offer, then the Purchaser may sell to the Intended Offeree (but not to any other person) all (but not fewer than all) of the remaining shares of Common Stock so offered for sale at a price not less than the price, and on terms not more favorable to the Intended Offeree than the terms stated in the original Notice of Offer, at any time within sixty days after expiration of the Acceptance Period. In the event that the remaining shares of Common Stock are not sold by the Purchaser during such sixty day period, the right of the Purchaser to sell such remaining shares of Common Stock shall expire and the obligations of this Article 6 shall be reinstated; provided, however, that in the event the Purchaser determines at any time during such sixty day period, that the sale of all or any part of the remaining shares of Common Stock on the terms set forth in the original Notice of Offer is impractical, the Purchaser can terminate the offer and reinstate the procedure provided in this Article 6 without waiting for the expiration of such sixty day period. (d) Anything contained in this Article 6 to the contrary notwithstanding, any buyer of Common Stock pursuant to this Article 6 who is not a Stockholder of EBP shall agree in writing in advance with the parties hereto to be bound by and comply with all applicable provisions of this Agreement including without limitation the provisions of this Article 6. (e) The following are specifically exempt from the provisions of this Article 6: (i) Transfers involving public sales, whether pursuant to a registration statement filed under the 1933 Act or an exemption therefrom; -9- 36 (ii) Transfers of Shares between a shareholder and the trustees of a trust revocable by him alone; (iii) Transfers of Shares by gift between a spouse or children; (iv) Transfers of Shares between a shareholder and his guardian or conservator; provided that in the case of any transfer described in subparagraphs (ii), (iii) or (iv), the transferee first executes a counterpart of this Agreement with respect to all Shares transferred; and (v) Transfers of Shares upon death of a shareholder to the heirs or legal representative of such shareholder. ARTICLE 7. MISCELLANEOUS 7.01 No Implied Right to Employment. Neither this Agreement nor any provision hereof nor any action taken or omitted to be taken hereunder shall be deemed to create or confer on the Purchaser any right to be retained in the employ of EBP or to interfere with or to limit in any way the right of EBP to terminate the employment or engagement of the Purchaser at any time. 7.02 Term. This Agreement shall remain in force and effect for a period of ten years from the date hereof except as otherwise specifically provided herein. 7.03 Agreements, Representations and Warranties to Survive Delivery; Assignment. All agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the delivery to the Purchaser of the Shares and, notwithstanding any investigation heretofore or hereafter made by the Purchaser or EBP or on the Purchaser's or EBP's behalf, shall continue in full force and effect. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party; and all agreements herein by or on behalf of EBP or by or on behalf of the Purchaser, shall bind and inure to the benefit of the heirs, successors and permitted assigns of such parties hereto. 7.04 Certain Remedies. Without intending to limit the remedies available to EBP, the parties hereto agree that damages at law will be an insufficient remedy to EBP in the event of a violation by the Purchaser of the terms hereof, and further agree that EBP may apply for and have injunctive or other equitable relief in any court of competent jurisdiction to restrain the breach or threatened breach of, or otherwise specifically to enforce, any of the agreements set forth in such Article. -10- 37 7.05 Notices. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or sent by certified or registered mail, return receipt requested, postage prepaid, addressed, if to the Purchaser, to such Purchaser's attention at the address set forth below hereto (or to such other address as the Purchaser shall have specified to EBP in writing) and, if to EBP, to EBP, 6950 Wayzata Boulevard, Minneapolis, Minnesota 55246, Attn: President with a copy to Summit Ventures, Suite 3420, One Boston Place, Boston, MA 02108, Attn: E. Roe Stamps, IV (or to such other address as EBP shall have specified in writing). All such notices shall be conclusively deemed to be received and shall be effective, if sent by hand delivery, upon receipt, or if sent by registered or certified mail, on the fifth day after the day on which such notice is mailed. 7.06 Entire Agreement. This Agreement sets forth the entire agreement and understanding between the parties thereto and supersedes all prior agreements and understandings relating to the subject matter hereof. 7.07 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. 7.08 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware. IN WITNESS WHEREOF, the parties hereto set their hands as of the date first above written. EMPLOYEE BENEFIT PLANS, INC. By ----------------------------------- Title: PURCHASER: -------------------------------------- Signature -------------------------------------- Print Name Purchaser's Address: -------------------------------------- -11- EX-4.2 3 1990 STOCK OPTION PLAN 1 EXHIBIT 4.2 EMPLOYEE BENEFIT PLANS, INC. 1990 STOCK OPTION PLAN Restated effective June 25, 1990 Section 1: Purpose. The purpose of the 1990 Stock Option Plan is to induce certain designated key persons to remain in the employ of Employee Benefit Plans, Inc., a Delaware corporation (the "Corporation") and to encourage such persons to secure or increase on reasonable terms their stock ownership in the Corporation. The Board of Directors of the Corporation believes the Plan is in the best interest of the Corporation and will promote the success of the Corporation. This success will be achieved by encouraging continuity of management and increased incentive and personal interest in the welfare of the Corporation by those who are primarily responsible for shaping and implementing the long-range plans of the Corporation. The Plan was originally adopted effective April 11, 1990. Pursuant to Section 17 of the Plan, the Corporation hereby amends and restates the Plan in its entirety. Options granted under this Plan may either be Incentive Stock Options qualified under Section 422A of the Code or Non-Qualified Options. Section 2: Definitions. For purposes of this Plan, the following terms shall have the meanings indicated below: (a) "Capital Stock": any of the Corporation's authorized but unissued shares of voting common stock, par value $.01 per share. (b) "Code": the Internal Revenue Code of 1986, as amended from time to time. (c) "Fair Market Value": the price per share determined by the Board of Directors in the manner provided by the Code and Regulations, at the time any Option is granted. (d) "Incentive Stock Option": an option defined in Section 422A of the Code to purchase shares of the common stock of the Corporation. (e) "Non-Qualified Stock Option": an option, not intended to qualify as an Incentive Stock Option as defined in Section 422A of the Code, to purchase common stock of the Corporation. (f) "Option": the term shall refer to either an Incentive Stock Option or a Non-Qualified Stock Option. 2 (g) "Option Agreement": a written agreement pursuant to which the Corporation grants an option to an Optionee and sets the terms and conditions of the option. (h) "Option Date": the date upon which an Option Agreement for an option granted pursuant to this Plan is duly executed by or on behalf of the Corporation. (i) "Option Stock": the voting common stock of the Corporation, par value $.01 per share (subject to adjustment as described in Section 8) reserved for options pursuant to this Plan, or any other class of stock of the Corporation which may be substituted therefore by exchange, stock split or otherwise. (j) "Optionee": an officer, director, employee or other person or entity designated by the Corporation or one of its Subsidiaries to whom an option has been granted under the Plan. (k) "Plan": this 1990 Stock Option Plan, as amended and restated this even date, and as amended hereafter from time to time. (l) A "Subsidiary": any corporation in an unbroken chain of corporations beginning with the Corporation, if, at the time of granting the option, each of the corporations other than the last corporation in the chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. The term shall include any subsidiaries which become such after adoption of this Plan. Section 3: Options Available Under Plan. An aggregate of 250,000 shares of the Corporation's authorized but unissued shares of voting common stock, par value $.01 per share, is hereby made available, and shall be reserved for issuance, under this Plan. The aggregate number of shares available under this Plan shall be subject to adjustment on the occurrence of any of the events and in the manner set forth in Section 8. If an Option shall expire or terminate for any reason without having been exercised in full, the unpurchased shares, shall (unless the Plan shall have been terminated) become available for other Options under the Plan. The total number of shares reserved under this Plan, or any portion thereof, may be issued upon exercise of Options granted under this Plan provided that the total number of shares subject to Options cannot, in the aggregate, exceed 250,000, subject to adjustment as described in Section 8. Section 4: Administration. The Plan shall be administered by the Board of Directors of the Corporation. At all times subject to the authority of the Board of Directors, the Board of Directors may from time to time delegate some or all of its authority under the Plan to one or more officers or directors of the Company (the "Committee"). -2- 3 The Corporation shall grant Options pursuant to the Plan upon determinations of the Board of Directors or Committee as to which of the eligible persons shall be granted Options, the number of shares to be Optioned and the term during which any such Options may be exercised. At all times, a majority of the members of the Committee making determinations about the grant of Options to employee-directors must be disinterested in the grant being made. The Board of Directors or Committee may from time to time adopt rules and regulations for carrying out the Plan and interpretations and constructions of any provision of the Plan, which shall be final and conclusive. Section 5: Eligibility for Incentive Stock Options. Incentive Stock Options may only be granted to an officer, management level employee or other employee of the Corporation or any of its Subsidiaries. A director of the Corporation who is not also an employee shall not be eligible to receive an Incentive Stock Option. In selecting the employees to whom Incentive Stock Options shall be granted, as well as determining the number of shares subject to each Option, the Committee shall take into consideration such factors as it deems relevant in connection with accomplishing the purpose of the Plan. For any calendar year, the aggregate Fair Market Value (determined at the Option Date) of the stock with respect to which any Incentive Stock Options are exercisable for the first time by any individual employee (under all Incentive Stock Option plans of the Corporation and all Subsidiary corporations) shall not exceed $100,000. Subject to the provisions of Section 3, an employee who has been granted an Option may, if he or she is otherwise eligible, be granted an additional Option or Options if the Board of Directors or Committee shall so determine. No Incentive Stock Option may be granted under this Plan later than the expiration of ten (10) years from the effective date. Section 6: Eligibility for Non-Qualified Options. Non-Qualified Options may be granted to any officer, director, employee or other person or entity designated by the Corporation or one of its Subsidiaries. No further restrictions are placed on the Board of Directors or Committee in determining eligibility for granting Non-Qualified Options. Section 7: Terms and Conditions of Options. Whenever the Board of Directors or Committee shall designate an Optionee, it shall communicate to the Secretary of the Corporation the name of the Optionee, the number of shares to be Optioned and such other terms and conditions as it shall determine, not inconsistent with the provisions of this Plan. The President or other officer of the Corporation shall then enter into an Option Agreement with the Optionee, complying with and subject to the following terms and conditions and setting forth such other terms and conditions of the Option as determined by the Committee: (a) Number of shares and option price. The Option Agreement shall state the total number of shares to which it pertains. The price of Option Stock for a Nonqualified Stock Option shall be determined by the Committee and may be less -3- 4 than the Fair Market Value at the Option Date. The Option price shall be subject to adjustment as provided in Section 8 hereof. (b) Termination of Employment, Except Death or Disability. In the event that an Optionee shall cease to be employed by the Corporation for any reason other than his death, disability or "for cause", such Optionee shall have the right to exercise any outstanding Options at any time within three (3) months after the termination of the employee. In the event that Optionee shall be terminated "for cause" including but not limited to (i) his or her willful breach of any agreement entered into with the Corporation, (ii) misappropriation of the Corporation's property, fraud, embezzlement, other acts of dishonesty against the Corporation, or (iii) conviction of any felony or crime involving moral turpitude, the Option may be terminated as of the date of the Optionee's termination of employment. (c) Death or Disability of Optionee. If the Optionee shall die or become disabled within the definition of Section 105(d)(4) of the Code, (i) while in the employ of the Corporation or any Subsidiary, or (ii) within a period of three (3) months after the termination of his or her employment with the Corporation or any Subsidiary as provided in paragraph (c) of this section, and in either case shall not have fully exercised his or her Options, any Options granted pursuant to the Plan shall be exercisable only within six (6) months following his death or date of disability or until the earlier originally stated expiration thereof. In the case of death, such Option shall be exercised pursuant to this Section 6 by the person or persons to whom the Optionee's rights under the Option shall pass by the Optionee's will or by the laws of descent and distribution, and only to the extent that such Options were exercisable at the time of his death. (d) Tender Offers. In the event of the purchase of in excess of fifty percent (50%) of the Corporation's outstanding common stock pursuant to a tender offer approved by the Corporation's Board of Directors and made in accordance with the provisions of the Securities Exchange Act of 1934 (a "Tender"), all options granted hereunder and not yet exercised on the date of the close of such Tender shall automatically terminate on such date, and all options which are exercisable as of sale date must be exercised within thirty (30) days after such date and shall automatically be converted into the right to receive in lieu of Common Stock an amount equal to the amount per share of Common Stock paid pursuant to the Tender. (e) Transfer of Option. Each Option granted hereunder shall, by its terms, be not transferable by the Optionee other than by will or by the laws of descent and distribution, and shall be, during the Optionee's lifetime, exercisable only by the Optionee. Except as permitted by the preceding sentence, each Option granted under the Plan and the rights and privileges thereby conferred shall not be transferred, assigned or pledged in any way (whether by operation of law or otherwise), and shall not be subject to execution, attachment or similar process. Upon any attempt to so transfer, assign, pledge, or otherwise dispose of the Option, -4- 5 or of any right or privilege conferred thereby, contrary to the provisions of the Option or the Plan, or upon levy of any attachment or similar process upon such rights and privileges, the Option, and such rights and privileges, shall immediately become null and void. (f) Manner of Exercise of Options. An Option may be exercised, in whole or in part, at such time or times and rights with respect to such shares which have accrued and are in effect. Such Option shall be exercisable only within the Option period and only by (i) written notice to the Corporation of intent to exercise the Option with respect to a specified number of shares of stock; (ii) tendering the original Option Agreement to the Corporation; and (iii) payment to the Corporation of the amount of the Option purchase price for the number of shares of stock with respect to which the Option is then exercised. Payment of the Option purchase price may be made in cash (including certified check, bank draft or postal or express money order), by delivery of shares of common stock of the Corporation with a Fair Market Value equal to the Option purchase price, by a combination of cash and such shares, whose value together with such cash shall equal the Option purchase price or by any other method of payment which the Board shall approve, and, in the case of an Incentive Stock Option, which shall not be inconsistent with the provisions of Section 422A of the Code, provided, however, that there shall be no such exercise at any one time as to fewer than ten (10) shares or all of the remaining shares then purchasable by the Optionee or person exercising the Option. When shares of stock are issued to the Optionee pursuant to the exercise of an Option, the fact of such issuance shall be noted on the Option Agreement by the Corporation before the Agreement is returned to the Optionee. When all shares of Optioned stock covered by the Option Agreement have been issued to the Optionee, or the Option shall expire, the Option Agreement shall be cancelled and retained by the Corporation. (g) Delivery of Certificate. Between fifteen (15) and thirty (30) days after receipt of the written notice and payment specified above, the Corporation shall deliver to the Optionee certificates for the number of shares with respect to which the Option has been exercised, issued in the Optionee's name; provided, however, that such delivery shall be deemed effected for all purposes when the Corporation, or the stock transfer agent for the Corporation, shall have deposited such certificates in the United States mail, postage prepaid, addressed to the Optionee and the address specified in the written notice of exercise. (h) Other Provisions. The Option Agreements authorized under this Section shall contain such other provisions as the Committee shall deem advisable. Section 8: Adjustments. In the event that the outstanding shares of the common stock of the Corporation are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reasons of any reorganization, merger, consolidation, recapitalization, reclassification, stock split-up; combination of shares or dividends payable in capital stock, appropriate adjustment shall be -5- 6 made in the number and kind of shares as to which Options may be granted under the Plan and as to which outstanding Options or portions thereof then unexercised shall be exercisable, to the end that the proportionate interest of the participant shall be maintained as before the occurrence of such event; such adjustment in outstanding Options shall be made without change in the total price applicable to the unexercised portion of such Options and with a corresponding adjustment in the Option Price per share. No such adjustment shall be made which shall, within the meaning of any applicable sections of the Code, constitute a modification, extension or renewal of an Option or a grant of additional benefits to a participant. If the Corporation is a party to a merger, consolidation, reorganization or similar corporate transaction and if, as a result of that transaction, its shares of common stock are exchanged for (i) other securities of the Company or (ii) securities of another corporation which has assumed the outstanding Options under the Plan or has substituted for such Options its own Options, then each Optionee shall be entitled (subject to the conditions stated herein or in such substituted Options, if any), in respect of that Optionee's Options, to purchase that amount of such other securities of the Corporation or of such other corporation as is sufficient to ensure that the value of the Optionee's Options immediately before the corporate transaction is equivalent to the value of such Options immediately after the transaction, taking into account the Option Price of the Option before such transaction, the fair market value per share of the common stock immediately before such transaction and the fair market value immediately after the transaction, of the securities then subject to that Option (or to the Option substituted for that Option, if any). Upon the happening of any such corporate transaction, the class and aggregate number of shares subject to the Plan which have been heretofore or may be hereafter granted under the Plan shall be appropriately adjusted to reflect the events specified in this clause. Section 9: No Rights as Stockholder. An Optionee shall not, by reason of any Option granted hereunder, have any right of a stockholder of the Corporation with respect to the shares covered by his Option until such shares shall have been issued to the Optionee. Section 10: No Obligation to Exercise Option. The granting of an Option shall impose no obligation upon the Optionee to exercise such Option. Neither shall the Plan confer upon the Optionee any rights respecting continued employment nor limit the Optionee's rights or the employer corporation's rights to terminate such employment. Section 11: Withholding Taxes. Whenever under the Plan shares of Option Stock are to be issued upon exercise of the Options granted hereunder and prior to the delivery of any certificates or certificates for said shares by the Corporation, the Corporation shall have the right to require the employee to remit to the Corporation an amount sufficient to satisfy any federal and state withholding or other employment taxes resulting from such exercise. In lieu of remitting additional amounts to satisfy withholding tax liabilities, an employee may (a) request that shares otherwise issuable upon exercise of an Option having -6- 7 a fair market value equal to the required withholding amounts be withheld, or (b) deliver previously owned shares that have a fair market value equal to the required withholding amount. All requests are subject to review by the Board of Directors or Committee and will be denied if, in the opinion of counsel for the Company, such election will violate any federal or state securities or income tax laws or regulations. In the case of participants who are subject to Section 16(b) of the Securities Exchange Act of 1934, for which the participant is relying on the exemption contained in Rule 16b-3 thereunder and to the extent that the following restrictions are required under Rule 16b-3, (a) an election for share withholding may not be made within six (6) months of the date of grant, and (b) an election for where withholding may only be made six (6) months or more prior to the tax date (the exercise date if a Section 83(b) election is made or otherwise six (6) months later) or during the window periods described in Rule 16b-3. Section 12: Purchase for Investment; Rights of Holder on Subsequent Registration. Unless the shares to be issued upon exercise of an Option granted under the Plan have been effectively registered under the Securities Act of 1933 as now in force or hereafter amended (the "1933 Act"), the Corporation shall be under no obligation to issue any shares covered by any Option unless the person who exercises such Option, whether such exercise is in whole or in part, shall give a written representation and undertaking to the Corporation which is satisfactory in form and scope to counsel for the Corporation and upon which, in the opinion of such counsel, the Corporation may reasonably rely, that he or she is acquiring the shares issued to him or her pursuant to such exercise of the Option for his or her own account as an investment and not with a view to, or for sale in connection with, the distribution of any such shares, and that he or she will make no transfer of the same except in compliance with any rules and regulations in force at the time of such transfer under the 1933 Act, or any other applicable law, and that if shares are issued without such registration a legend to this effect may be endorsed on the securities so issued. In the event that the Company shall, nevertheless, deem it necessary or desirable to register under the 1933 Act or other applicable statutes any shares with respect to which an Option shall have been exercised, or to qualify any such shares for exemption from the 1933 Act or other applicable statutes, then the Corporation shall take such action at its own expense and may require from each participant such information in writing for use in any registration statement, prospectus, preliminary prospectus or offering circular as is reasonably necessary for such purpose and may require reasonable indemnity to the Company and its officers and Directors from such holder against all losses, claims, damage and liabilities arising from such use of the information so furnished and caused by any untrue statement of any material fact required to be stated therein or necessary to make the statement therein not misleading in light of the circumstances under which they were made. Section 13: Modification of Outstanding Options. The Board may accelerate the exercisability of an outstanding Option and may authorize the modification of any outstanding Option with the consent of the participant when and subject to such conditions as are deemed to be in the best interests of the Corporation and in accordance with the purposes of the Plan. -7- 8 Section 14: Effective Date. This Plan was adopted by the Board of Directors of the Corporation effective as of April 11, 1990 (the "Effective Date"). Section 15: Liquidation. Upon the complete liquidation of the Corporation, any unexercised Options theretofore granted under this Plan shall be deemed cancelled, except as otherwise provided in Section 8 in connection with a merger, consolidation or reorganization of the Corporation. Section 16: Restrictions on Issuance of Shares. Notwithstanding the provisions of Section 7, the Corporation may delay the issuance of shares covered by the exercise of any Option and the delivery of a certificate for such shares until one of the following conditions shall be satisfied: (a) The shares with respect to which the Option has been exercised are at the time of the issue of such shares effectively registered under applicable federal and state securities acts as now in force or hereafter amended; or (b) A no-action letter in respect of the issuance of such shares shall have been obtained by the Corporation from the Securities and Exchange Commission and any applicable state securities commissioner; or (c) Counsel for the Corporation shall have given an opinion, which opinion shall not be unreasonably conditioned or withheld, that such shares are exempt from registration under applicable federal and state securities acts as now in force or hereafter amended. It is intended that all exercise of Options shall be effective, and the Corporation shall use its best efforts to bring about compliance with the above conditions within a reasonable time, except that the Company shall be under no obligation to cause a registration statement or a post-effective amendment to any registration statement to be prepared at its expense solely for the purpose of covering the issue of shares in respect of which any option may be exercised. In addition, notwithstanding the provisions of Section 7, if the Corporation's Capital Stock is publicly traded the Corporation may delay the issuance of shares covered by the exercise of any Option and the delivery of a certificate for such shares until such time as the Corporation elects to make a public release of material "inside information" concerning the Corporation (as such term is customarily used under federal securities laws), if the Corporation reasonably believes, at its discretion, that the Optionee possesses such information or the exercise of the Option would create an obligation to disclose publicly such information. Section 17: Termination and Amendment of the Plan. This Plan shall terminate ten (10) years after the Effective Date or at such earlier time as the Board of Directors shall -8- 9 determine. Any termination shall not affect any Options then outstanding under the Plan. The Board may make such modifications of the Plan as it shall deem advisable. -9- 10 EMPLOYEE BENEFIT PLANS, INC. STOCK OPTION AGREEMENT PURSUANT TO 1990 STOCK OPTION PLAN This AGREEMENT is made effective as of the __________ day of _____________, 199_ by and between Employee Benefit Plans, Inc., a Delaware corporation (the "Company"), and the undersigned employee of the Company (or one of its subsidiaries) (the "Employee"). Recitals 1. The Company desires to afford the Employee an opportunity to purchase shares of its common stock, par value $.01 per share (the "Shares"), to carry out the purposes of its 1990 Stock Option Plan (the "Plan"), a copy of which has been provided to Employee and the terms of which are incorporated by reference herein. 2. Section 6 of the Plan provides that each option is to be evidenced by an Option Agreement, setting forth the terms and conditions of the Option. ACCORDINGLY, in consideration of the premises and of the mutual covenants and agreements contained herein, the Company and the Employee hereby agree as follows: 1. Grant of Option. The Company hereby irrevocably grants to the Employee a ______________ Stock Option (the "Option") to purchase all or any part of an aggregate of_______________________________ (______) Shares on the terms and conditions hereinafter set forth. 2. Purchase Price. The purchase price for the Shares covered by the Option (the "Purchase Price") shall be $_______ per Share. 3. Time and Manner of Exercise of Option. (a) The Option shall be exercisable as to _____% of the Shares as of the date hereof unless accelerated pursuant to Section 7 hereof, and shall become exercisable as to the remainder of the Shares in equal annual installments as follows:
Percentage of Shares Becoming Cumulative Available for Percentage On or After Exercise Available ----------- ------------------ -------------
11 (b) To the extent that the right to exercise the Option has accrued and is in effect, the Option may be exercised in full at one time or in part from time to time, by giving written notice, signed by the person or persons exercising the Option, to the Company, stating the number of Shares with respect to which the Option is being exercised, accompanied by payment in full of the Purchase Price for such Shares, which payment may be in whole or in part in shares of the common stock of the Company already owned by the person or persons exercising the Option with a fair market value equal to the exercise price; provided, however, that there shall be no such exercise at any one time as to fewer than ten (10) Shares or all of the remaining Shares then purchasable by the person or persons exercising the Option, if fewer than ten (10) Shares. Upon such exercise, delivery of a Certificate for Paid-up, non-assessable Shares shall be made at the Principal office of the Company to the Person or Persons exercising the Option at such time, during ordinary business hours, not more than thirty (30) days from the date of receipt of the notice by the Company, as shall be designated in such notice, or at such time, place and manner as may be agreed upon by the Company and the person or persons exercising the Option. (c) The Company shall at all times during the term of the Option reserve and keep available such number of shares of its common stock as will be sufficient to satisfy the requirements of the Option and shall pay all original issue and transfer taxes (if any) with respect to the issue and transfer of Shares pursuant hereto, and all other fees and expenses necessarily incurred by the Company in connection therewith. The holder of this Option shall not have any of the rights of a Stockholder of the Company in respect of the Shares until one or more Certificates for such Shares shall be delivered to the holder upon the due exercise of the Option. 4. Term of Option. (a) The Option shall terminate ten (10) years from the date hereof, but shall be subject to earlier termination as hereinafter Provided. (b) Except as otherwise Provided in this Section 4, in the event that the Employee ceases to be an employee of the Company or one of its subsidiaries, the Option may be exercised, to the extent then exercisable under Section 3(a) hereof, within three (3) months after the date the Employee ceases to be an employee of the Company or one of its subsidiaries, but shall thereafter terminate. (c) If such termination of employment is because of dismissal for cause or because the Employee is in breach of any employment agreement, the Option will terminate on the date the Employee ceases to be an employee of the Company or one of its subsidiaries. (d) If such termination of employment is because the Employee has died or become permanently disabled within the meaning of Section 105(b)(4) of the Internal Revenue Code of 1986 (the "Code"), the Option may be exercised prior to the expiration -2- 12 of (i) six (6) months from the date the Employee ceases to be an employee or (ii) ten (10) years from the date hereof, whichever occurs first. (e) In the event of termination of employment, the Option shall be exercisable only to the extent that the right to Purchase the Shares under the Option has accrued and is in effect at the date of such cessation of employment, unless such cessation is because the Employee has become disabled, in which case the Option may be exercised to the full number of Shares covered hereby. (f) In the event of the death of the Employee, the Option shall be exercisable only to the extent that the right to Purchase the Shares under the Option has accrued and may be exercised by the estate of the Employee, or by any person or persons who acquired the right to exercise the Option by bequest or inheritance or by reason of the death of the Employee. 5. Nontransferability. The right of the Employee to exercise the Option shall not be assignable or transferable by the Employee other than by will or the laws of descent and distribution, and the Option may be exercised during the lifetime of the Employee only by him or by his guardian or legal representative. The Option shall be null and void and without effect upon the bankruptcy of the Employee or upon any attempted assignment or transfer, except as provided herein, including without limitation any purported assignment (whether voluntary or by operation of law), pledge, hypothecation or other disposition, attachment, trustee process or similar process, whether legal or equitable, upon the Option. 6. Investment Representation; Delay in Issuance of Shares. Notwithstanding the provisions of Section 3 hereof, the Company may delay the issuance of Shares covered by the exercise of the Option and the delivery of a certificate for such Shares until (i) Employee executes a written declaration that the Shares issued to him pursuant to such exercise of the Option are for his own account as an investment and not with a view to, or for resale in connection with, the distribution of any such Shares, and that he or she will make no transfer of the same except in compliance with the 1933 Act and the rules and regulations promulgated thereunder and then in effect or (ii) such time as the Company elects to make a public release of material "inside information" concerning the Company (as such term is customarily used under federal securities laws), if the Company reasonably believes, at its discretion, that the holder of the Option possesses such information or the exercise of the Option would create an obligation to disclose publicly such information. 7. Adjustments. In the event that the outstanding shares of the common stock of the Company are charged into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of any reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares, or dividends payable in capital stock (other than in a tender offer as described in Section 8 hereof), appropriate adjustment shall be made in the number and kind of shares as to which the Option, or portion thereof then unexercised, shall be exercisable, to the end that the proportionate interest of the Employee shall be maintained as before the occurrence of -3- 13 such event; such adjustment in the Option shall be made without change in the total price applicable to the unexercised portion of the Option and with a corresponding adjustment in the Purchase Price per Share. No such adjustment shall be made which shall, within the meaning of any applicable sections of the Code, constitute a modification, extension or renewal of the Option or grant of additional benefits to the Employee. 8. Tender Offers. In the event of the purchase of in excess of fifty percent (50%) of the Company's outstanding common stock pursuant to a tender offer approved by the Company's Board of Directors and made in accordance with the provisions of the Securities Exchange Act of 1934 (a "Tender"), all options granted hereunder and not yet exercised on the date of the close of such Tender shall automatically terminate on such date, and all options which are exercisable as of sale date must be exercised within thirty (30) days after such date and shall automatically be converted into the right to receive in lieu of Common Stock an amount equal to the amount per share of Common Stock paid pursuant to the Tender. 9. Liquidation. Upon dissolution or liquidation of the Company, the Option shall terminate, but the Employee (if at such time in the employ of or otherwise associated with the Company or any of its subsidiaries) shall have the right, immediately prior to such dissolution or liquidation, to exercise the Option to the extent then exercisable. 10. Fractional Shares. No fraction of a share shall be purchasable or deliverable upon the exercise of the Option, but in the event any adjustment hereunder of the number of Shares covered by the Option shall cause such number to include a fraction of a share, such fraction shall be adjusted to the nearest smaller whole number of shares. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its President thereunto duly authorized, and the Employee has hereunto set his hand, effective as of the date first appearing above. EMPLOYEE BENEFIT PLANS, INC. By: ----------------------------------------- EMPLOYEE -------------------------------------------- -4- EX-4.3 4 1991 LONG-TERM INCENTIVE PLAN 1 EXHIBIT 4.3 1991 LONG-TERM INCENTIVE PERFORMANCE PLAN OF EMPLOYEE BENEFIT PLANS, INC. 1. PURPOSE The purpose of the 1991 Long-Term Incentive Performance Plan ("Plan") of Employee Benefit Plans, Inc. ("Company") is to amend and restate the Employee Benefit Plans, Inc. 1991 Stock Option Plan and to provide a means through which the Company and its Subsidiaries may attract able persons to enter and remain in the employ of the Company and to provide a means whereby those employees and other persons whose present and potential contributions to the welfare of the Company are of importance, can acquire and maintain equity ownership, thereby strengthening their commitment to the welfare of the Company and promoting an identity of interest between stockholders and these individuals. A further purpose of the Plan is to provide such key employees with additional incentive and reward opportunities designed to enhance the profitable growth of the Company. So that the appropriate incentive can be provided, the Plan provides for granting Incentive Stock options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Phantom Stock Unit Awards, Cash Incentive Awards and Performance Share Units, or any combination of the foregoing. 2. DEFINITIONS The following definitions shall be applicable throughout the Plan. "Appreciation Date" means the date designated by a Holder of Stock Appreciation Rights for measurement of the appreciation in the value of rights awarded to him, which date shall be the date notice of such designation is received by the Committee, or its designee. "Award" means, individually or collectively, any Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock Award, Phantom Stock Unit Award, Cash Incentive Award or Performance Share Unit Award. "Award Period" means a period of time within which performance is measured for the purpose of determining whether an Award of Performance Share Units has been earned. "Board" means the Board of Directors of the Company. 2 "Change in-Control" shall, unless the Board otherwise directs by resolution adopted prior thereto, be deemed to occur if (i) any "person" (as that term is used in Sections 13 and 14(d)(2) of the Securities Exchange Act of 1934 as amended ("Exchange Act")) is or becomes the beneficial owner (as that term is used in Section 13(d) of the Exchange Act), directly or indirectly, of 50% or more of the voting stock ("Voting Stock") or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board cease for any reason to constitute at least a majority thereof, unless the election or the nomination for election by the Company's shareholders of each new director was approved by a vote of at least three-quarters of the directors then still in office who were directors at the beginning of the period. Any merger, consolidation or corporate reorganization in which the owners of the Company's capital stock entitled to vote in the election of directors prior to said combination, own 50% or more of the resulting entity's Voting Stock shall not, by itself, be considered a change in control for the purposes of this Plan. "Code" means the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to such section and any regulations under such section. "Committee" means the Compensation Committee of the Board of Directors or such other committee as the Board may appoint to administer the Plan. "Common Stock" means the common stock par value $.01 per share, of the Company. "Company" means Employee Benefit Plans, Inc. "Date of Grant" means the date on which the granting of an Award is authorized or such other date as may be specified in such authorization. "Disability" means the complete and permanent inability by reason of illness or accident to perform the duties of the occupation at which a Participant was employed when such disability commenced or, if the Participant was retired when such disability commenced, the inability to engage in any substantial gainful activity, as determined by the Committee based upon medical evidence acceptable to it. "Disinterested Person" means a person who is a "disinterested person" within the meaning of Rule 16b-3 of the Exchange Act, or any successor rule or regulation. "Eligible Person" means any officer, director, employee or other person or entity designated by the Company or a Subsidiary who satisfies all of the requirements of Section 6. "Fair Market Value" on a given date means (a) the average between the high and low reported sale prices for the Stock on that date (or, if there were no such sales on that date, on the next most recent date on which there were such sales) as reported on the Composite -2- 3 Tape if the Stock is listed on the New York Stock Exchange ("NYSE") or on the National Association of Securities Dealers National Market System ("NMS") or (b) if the Stock is not then listed on the NYSE or the NMS, the average between the closing bid and asked price quotations for the Stock on that date (or if none on that date, on the next most recent date) as reported by the National Association of Securities Dealers Automatic Quotation System or any successor thereto. "Holder" means a Participant who has been granted an Option, a Stock Appreciation Right, a Restricted Stock Award, Phantom Stock Unit Award, Cash Incentive Award or a Performance Share Unit Award. "Incentive Stock Option" means an Option granted by the Committee to a Participant under the Plan which is designated by the Committee as an Incentive Stock Option pursuant to Section 422 of the Code. "Nonqualified Stock Option" means an Option granted by the Committee to a Participant under the Plan which is not designated by the Committee as an Incentive Stock Option. "Normal Termination" means termination: (i) At retirement pursuant to the Company retirement plan then in effect; (ii) On account of Disability; or (iii) With the written approval of the Committee. "Option" means an Award granted under Section 7 of the Plan. "Participant" means an Eligible Person who has been selected to participate in the Plan and to receive an Award pursuant to Section 6. "Performance Goals" means the performance objectives of the Company during an Award Period established for the purpose of determining whether, and to what extent, Awards will be earned for an Award Period. "Performance Share Unit" means a hypothetical investment equivalent equal to one share of Stock granted in connection with an Award made under Section 9 of the Plan. "Phantom Stock Unit" means a hypothetical investment equivalent equal to one share of Stock granted in connection with an Award made under Section 10 of the Plan. "Plan" means the 1991 Long-Term Incentive Performance Plan of Employee Benefit Plans, Inc. -3- 4 "Restricted Period" means, with respect to any share of Restricted Stock, the period of time determined by the Committee during which such share of Restricted Stock is subject to the restrictions set forth in Section 10. "Restricted Stock" means shares of Common Stock issued or transferred to a Participant subject to the restrictions set forth in Section 10 and any new, additional or different securities a Participant may become entitled to receive as a result of adjustments made pursuant to Section 12. "Restricted Stock Award" means an Award granted under Section 10 of the Plan. "Stock" means the voting Common Stock of the Company. "Stock Appreciation Right" or "SAR" means an Award granted under Section 8 of the Plan. "Subsidiary" means any corporation of which a majority of the outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company. "Valuation Date" means the last day of an Award Period or the date of death of a Participant, as applicable. 3. EFFECTIVE DATE, DURATION AND SHAREHOLDER APPROVAL Subject to the approval of this Plan by the shareholders of the Company at a duly convened meeting of shareholders, the Nonqualified Stock Option provisions became effective December 13, 1990 and other Awards may be granted under the Plan effective August __, 1991 and thereafter, and no further Awards may be made after December 13, 2000. The Plan shall continue in effect until all matters relating to the payment of Awards and administration of the Plan have been settled. 4. ADMINISTRATION The Committee shall administer the Plan. Each member of the Committee shall, at the time he takes any action with respect to the timing, pricing amount of or form of payment of an Award under the Plan to an officer or director of the Company, be a Disinterested Person. Two members of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present or acts approved in writing by a majority of the Committee shall be deemed the acts of the Committee. Subject to the provisions of the Plan, the Committee shall have exclusive power to: -4- 5 (a) Select the Eligible Persons to participate in the Plan; (b) Determine the nature and extent of the Awards to be made to each Participant; (c) Determine the time or times when Awards will be made; (d) Determine the duration of each Award Period; (e) Determine the conditions to which the payment of Awards may be subject; (f) Establish the Performance Goals for each Award Period; (g) Prescribe the form or forms evidencing Awards; and (h) Cause records to be established in which shall be entered, from time to time as Awards are made to Participants, the date of each Award, the number of Incentive Stock Options, Nonqualified Stock Options, SARs, Phantom Stock Units, Performance Share Units, Cash Incentive Awards and shares of Restricted Stock awarded by the Committee to each Participant, the expiration date, the Award Period and the duration of any applicable Restricted Period. The Committee shall have the authority, subject to the provisions of the Plan, to establish, adopt, or revise such rules and regulations and to make all such determinations relating to the Plan as it may deem necessary or advisable for the administration of the Plan. The Committee's interpretation of the Plan or any Awards granted pursuant thereto and all decisions and determinations by the Committee with respect to the Plan shall be final, binding, and conclusive on all parties unless otherwise determined by the Board. 5. GRANT OF OPTIONS, STOCK APPRECIATION RIGHTS, RESTRICTED STOCK AWARDS, PHANTOM STOCK AWARDS AND PERFORMANCE SHARE UNITS: SHARES SUBJECT TO THE PLAN The Committee may, from time to time, grant Awards of Options, Stock Appreciation Rights, Restricted Stock, Phantom Stock Units and/or Performance Share Units to one or more Participants; provided however that: (a) Subject to Section 13, the aggregate number of shares of Stock made subject to Awards may be up to, but may not equal or exceed, at the time of grant of an Award ten percent (10%) of the then issued and outstanding shares of stock before giving effect to such Award; provided however the aggregate number of shares of Stock available for issuance pursuant to Incentive Stock Option Awards under this Plan shall not exceed 350,000. -5- 6 (b) Such shares shall be deemed to have been used in payment of Awards whether they are actually delivered or the Fair Market Value equivalent of such shares is paid in cash. In the event any Option, SAR not attached to an Option, Restricted Stock, Phantom Stock Unit or Performance Share Unit, shall be surrendered, terminate, expire, or be forfeited, the number of shares of Stock no longer subject thereto shall thereupon be released and shall thereafter be available for new Awards under the Plan; and (c) Stock delivered by the Company in settlement of Awards under the Plan may be authorized and unissued Stock or Stock held in the treasury of the Company or may be purchased on the open market or by private purchase at prices no higher than the Fair Market Value at the time of purchase. 6. ELIGIBILITY Participants shall be limited to Eligible Person who have received written notification from the Committee or from a person designated by the Committee, that they have been selected to participate in the Plan. Only employees of the Company and its subsidiaries are eligible to receive grants of Incentive Stock Options. 7. STOCK OPTIONS One or more Options can be granted to any Participant. As determined by the Committee, they may be Incentive Stock Options or Nonqualified Stock Options. Each Option so granted shall be subject to the following conditions. (a) Option Price. For Incentive Stock Options, the Option price ("Option Price") per share of Stock shall be set by the grant but shall not be less than Fair Market Value at the Date of Grant. For Nonqualified Stock Options, the Option Price may be less than Fair Market Value at the Date of Grant. (b) Manner of exercise and form of payment. Options which have become exercisable may be exercised by delivery of written notice of exercise to the Committee accompanied by payment of the Option Price. The Option Price shall be payable 1) by Holder in cash at the time of exercise, 2) by Holder in shares of Stock valued at the Fair Market Value at the time the Option is exercised, 3) a combination of 1) and 2), or 4) through a registered brokerage firm promptly after sale of a portion of the shares being purchased ("cashless exercise"). (c) Other terms and conditions. If the Holder has not died or if a Normal Termination has not occurred, the Option shall become exercisable in such manner and within such period or periods ("Option Period"), not to exceed 10 years from its Date of Grant, as set forth in the Stock Option Agreement to be entered into in connection therewith. -6- 7 (i) Each Option shall lapse in the following situations: -Ten years after it is granted; -Three months after Normal Termination, except as otherwise provided by the Committee; or -Any earlier time set forth in the Stock Option Agreement. (ii) If the Holder's terminated employment is otherwise than by Normal Termination or death, the Option shall lapse at the time of termination. (iii) If the Holder dies within the Option Period or within 1 year after Normal Termination (or such other period as may have been established by the Committee), the Option shall lapse unless it is exercised within the Option Period and in no event later than 15 months after the date of Holder's death by the Holder's legal representative or representatives or by the person or persons entitled to do so under the Holder's last will and testament or, if the Holder shall fail to make testamentary disposition of such Option or shall die intestate, by the person entitled to receive said Option under the applicable laws of descent and distribution. (d) Stock Option Agreement. Each Option granted under the Plan shall be evidenced by a "Stock Option Agreement" between the Company and the Holder of the Option containing such provisions as may be determined by the Committee, but shall be subject to the following terms and conditions. (i) Each Option or portion thereof that is exercisable shall be exercisable for the full amount or for any part thereof, except as otherwise determined by the terms of the Stock Option Agreement. (ii) Each share of Stock purchased through the exercise of an Option shall be paid for in full at the time of the exercise in the manner set forth in (b) above. Each Option shall cease to be exercisable, as to any share of Stock, when the Holder purchases the share or exercises a related SAR or when the Option lapses. (iii) Options shall not be transferable by the Holder except by will or the laws of descent and distribution and shall be exercisable during the Holder's lifetime only by him. (iv) Each Option shall become exercisable by the Holder in accordance with the vesting schedule established by the Committee for the Award. (v) Each Stock Option Agreement may contain an agreement that, upon demand by the Committee for such a representation, the Holder shall deliver to the -7- 8 Committee at the time of any exercise of an Option a written representation that the shares to be acquired upon such exercise are to be acquired for investment and not for resale or with a view to the distribution thereof. Upon such demand, delivery of such representation prior to the delivery of any shares issued upon exercise of an Option shall be a condition precedent to the right of the Holder or such other person to purchase any shares. In the event certificates for Stock are delivered under the Plan with respect to which such investment representation has been obtained, the Committee may cause a legend or legends to be placed on such certificates to make appropriate reference to such representation and to restrict transfer in the absence of compliance with applicable federal or state securities laws. (e) Grants to 10% holders of Company voting stock. Notwithstanding Section 7(a), if an Incentive Stock Option is granted to a Holder who owns stock representing more than ten percent of the voting power of all classes of stock of the Company or of the Company and its Subsidiaries, the period specified in the Stock Option Agreement for which the Option thereunder is granted and at the end of which such Option shall expire shall not exceed five years from the Date of Grant of such Option and the Option Price shall be at least 110 percent of the Fair Market Value (on the Date of Grant) of the Stock subject to the Option. (f) Limitation. The aggregate Fair Market Value (as determined as of the Date of Grant) of Stock for which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all plans of the Company and its Subsidiaries) shall not exceed $100,000. Any options becoming exercisable for the first time in any calendar year in excess of the $100,000 limit shall be treated as Nonqualified Stock Options. Options shall be taken into account toward the $100,000 award limit in the order granted. (g) Voluntary Surrender. The Committee may permit the voluntary surrender of all or any portion of any Nonqualified Stock Option and its corresponding SAR, if any, granted under the Plan to be conditioned upon the granting to the Holder of a new Option for the same or a different number of shares as the Option surrendered or require such voluntary surrender as a condition precedent to a grant of a new Option to such Participant. Such new Option shall be exercisable at the Option Price, during the exercise period, and in accordance with any other terms or conditions specified by the Committee at the time the new Option is granted, all determined in accordance with the provisions of the Plan without regard to the Option Price, exercise period, or any other terms and conditions of the Nonqualified Stock Option surrendered. (h) Order of exercise. Options granted under the Plan may be exercised in any order, regardless of the Date of Grant or the existence of any other outstanding Option. (i) Notice of disposition. Participants shall give prompt notice to the Company of any disposition of Stock acquired upon exercise of an Incentive Stock Option if such disposition occurs within either two years after the Date of Grant of such Option and/or one year after the receipt of such Stock by the Holder. -8- 9 8. STOCK APPRECIATION RIGHTS Any Option granted under the Plan may include a SAR, either at the time of grant or by amendment except that in the case of an Incentive Stock Option, such SAR shall be granted only at the time of grant of the related Option. The Committee may also award to Participants SARs independent of any Option. A SAR shall be subject to such terms and conditions not inconsistent with the Plan as the Committee shall impose, including, but not limited to, the following: (a) Vesting. A SAR granted in connection with an Option shall become exercisable, be transferable and shall lapse according to the same vesting schedule, transferability and lapse rules that are established for the Option. A SAR granted independent of an Option shall become exercisable, be transferable and shall lapse in accordance with a vesting schedule, transferability and lapse rules established by the Committee. (b) Failure to exercise. If on the last day of the Option Period (or in the case of a SAR independent of an Option, the SAR period established by the Committee) the Fair Market Value of the Stock exceeds the Option Price, the Holder has not exercised the Option or SAR, and neither the Option nor the SAR has lapsed, such right shall be deemed to have been exercised by the Holder on such last day and the Company shall make the appropriate payment therefor. (c) Payment. The amount of additional compensation which may be received pursuant to the award of one SAR is the excess, if any, of the Fair Market Value of one share of Stock on the Appreciation Date over the Option Price, in the case of a SAR granted in connection with an Option, or the Fair Market Value of one share of Stock on the Date of Grant, in the case of a SAR granted independent of an Option. Unless a different form of payment is provided under the Award, the Company shall issue or transfer to the Participant shares of Stock with a Fair Market Value at such time equal to 100 percent of any such excess. Fractional shares shall be settled in cash. If the Award allows for an election by the Participant to receive cash in full or partial settlement for any SAR, for Participants subject to Section 16(b) of the Exchange Act, such election must be made in compliance with Rule 16b-3 under the Exchange Act. (d) Designation of Appreciation Date. A Participant may designate an Appreciation Date at such time or times as may be determined by the Committee at the time of grant by filing an irrevocable written notice with the Committee or its designee, specifying the number of SARs to which the Appreciation Date relates, and the date on which such SARs were awarded. (e) Expiration. Except as otherwise provided in the case of SARs granted in connection with Options, the SARs shall expire on a date designated by the Committee which is not later than ten years after the date on which the SAR was awarded. -9- 10 9. PERFORMANCE SHARE UNITS (a) Award grants. The Committee is authorized to establish Performance Share programs to be effective over designated Award Periods of not less than 1 year nor more than 10 years. At the beginning of each Award Period, the Committee will establish Performance Goals based upon financial objectives for the Company for such Award Period and a schedule relating the accomplishment of the Performance Goals to the Awards to be earned by Participants. Performance Goals may include absolute or relative growth in earnings per share or rate of return on stockholders' equity or other measurement of corporate performance and may be determined on an individual basis or by categories of Participants by the Committee as its discretion. The Committee may adjust Performance Goals or performance measurement standards as it deems equitable in recognition of extraordinary or non-recurring events experienced during an Award Period by the Company or by any other corporation whose performance is relevant to the determination of whether Performance Goals have been attained. The Committee shall determine the number of Performance Share Units to be awarded, if any, to each Participant who is selected to receive an Award. The Committee may add new Participants to a Performance Share program after its commencement by making pro rata grants. (b) Determination of Award. At the completion of a Performance Share program, or at other times as specified by the Committee, the Committee shall calculate the amount earned with respect to each Participant's Award by multiplying the Fair Market Value on the Valuation Date by the number of Performance Share Units granted to the Participant and multiplying the amount so determined by a performance factor representing the degree of attainment of the Performance Goals. (c) Partial Awards. A Participant for less than a full Award Period, whether by reason of commencement or termination of employment or otherwise, shall receive such portion of an Award, if any, for that Award Period as the Committee shall determine. (d) Payment of Non-deferred Awards. Unless otherwise provided in the letter or form evidencing the Award or unless deferred pursuant to Section 9(e), the amount earned with respect to an Award shall be payable 100% in shares of Stock based on the Stock's Fair Market Value on the Valuation Date; provided, however, that, at its discretion, the Committee may vary such form of payment as to any Participant upon the specific request of such Participant. The amount of any payment made in cash shall be based upon the Fair Market Value of the Performance Share Units. Except as provided in subparagraph 9(e), payments of Awards shall be made as soon as practicable after the completion of an Award Period. (e) Deferral of Payment. A Participant may file a written election with the Committee to defer the payment of any amount otherwise payable pursuant to subparagraph 9(d) on account of an Award to a period commencing at such future date, as specified in the election. Such election must be filed with the Committee no later than the last day of -10- 11 the first month of the Award Period during which the Award is earned, unless the Committee specifies later filing date. (f) Separate Accounts. At the conclusion of each Award Period, the Committee shall cause a separate account to be maintained in the name of each Participant with respect to whom all or a portion of an Award of Performance Share Units earned under the Plan has been deferred. All deferred amounts credited to such account shall be fully vested at all times. (g) Election of Form of Investment. Within 60 days from the end of each Award Period, and at such time or times, if any, as the Committee may permit, a Participant may file a written election with the Committee of the percentage of the deferred portion of any Award of Performance Share Units which is to be credited with interest and the percentage of such Award which is to be maintained as with Performance Share Units. In the event a Participant fails to file an election within the time prescribed, one hundred percent (100%) of the deferred portion of such Participant's Award shall be maintained as Units. (h) Interest Portion. The amount of interest credited with respect to the portion of an Award credited to the Participant's account which is deferred and credited with interest (the "Interest Portion") shall be equal to the amount such portion would have earned had it been credited with interest from the last day of the Award Period with respect to which the Award was made until the seventh business day preceding the date as of which payment is made, compounded annually, at the Company's average borrowing rate for each fiscal year that payment is deferred, or at such other rate as the Committee may from time to time determine. (i) Dividend Equivalents. Within thirty (30) days from the payment of a dividend by the Company on its Stock, the Performance Share Unit Portion of each Participant's account shall be credited with additional Performance Share Units the number of which shall be determined by (i) multiplying the dividend per share paid on the Company's Stock by the number of Performance Share Units credited to his account at the time such dividend was declared, then (ii) dividing such amount by the Fair Market Value on the payment date for such dividend. (j) Payment of Deferred Awards. Payment with respect to amounts credited to the account of a Participant shall be made in a series of installments over a period not to exceed ten (10) years as provided in the deferral election or the letter or form evidencing the Award. Except as otherwise provided by the Committee, each installment shall be withdrawn proportionately from the Interest Portion and from the Performance Share Unit Portion of a Participant's account based on the percentage of the Participant's account which he originally elected to be credited with interest and with Performance Share Units, or, if a later election has been permitted by the Committee and is then in effect, based on the percentage specified in such later election. Payments shall commence on the date specified by the Participant in his deferral election, unless the Committee in its sole discretion determines that payment shall be made over a shorter period or in more frequent -11- 12 installments, or commence on an earlier date, or any or all of the above. If a Participant dies prior to the date on which payment with respect to all amounts credited to his account shall have been completed, payment with respect to such amounts shall be made to the participant's beneficiary in a series of annual installments over a period of five (5) years, unless the Committee in its sole discretion determines that payment shall be made over a shorter period or in more frequent installments, or both. To the extent practicable, each installment payable hereunder shall approximate that part of the amount then credited to the Participant's or beneficiary's account which, if multiplied by the number of installments remaining to be paid would be equal to the entire amount then credited to the Participant's account. (k) Composition of Payment. Notwithstanding subparagraph (j), the Committee shall cause all payments with respect to deferred Awards to be made in a manner described in the letter or form authorizing the Award as the Committee shall determine in its sole discretion. (l) Adjustment of Performance Goals. The Committee may, during the Award Period, make such adjustments to Performance Goals as it may deem appropriate, to compensate for, or reflect, any significant changes that may have occurred during such Award Period in (i) applicable accounting rules or principles or changes in the Company's method of accounting or in that of any other corporation whose performance is relevant to the determination of whether an Award has been earned or (ii) tax laws or other laws or regulations that alter or affect the computation of the measures of Performance Goals used for the calculation of Awards. 10. RESTRICTED STOCK AWARDS AND PHANTOM STOCK UNITS (a) Award of Restricted Stock and Phantom Stock Units. (i) The Committee shall have the authority (1) to directly grant Restricted Stock and Phantom Stock Units Awards, (2) to issue or transfer Restricted Stock to Participants, and (3) to establish terms, conditions and restrictions applicable to such Restricted Stock and Phantom Stock Units, including the Restricted Period, which may differ with respect to each grantee, the time or times at which Restricted Stock or Phantom Stock Units shall be granted or become vested and the number of shares or units to be covered by each grant. (ii) The Holder of a Restricted Stock Award shall execute and deliver to the Secretary of the Company an agreement with respect to Restricted Stock satisfactory to the Committee and the appropriate blank stock powers with respect to the Restricted Stock covered by such agreements and shall pay to the Company, as the purchase price of the shares of Stock subject to such Award, the purchase price, if any, established by the Committee in its discretion and indicated in the Award within 60 days following the making of such Award. If a Participant shall fail to execute the agreement, stock powers or shall fail to pay such purchase price within -12- 13 such period, the Award shall be null and void. Subject to the restrictions set forth in Section 10(b), the Holder shall generally have the rights and privileges of a stockholder as to such Restricted Stock, including the right to vote such Restricted Stock. At the discretion of the Committee, cash and stock dividends with respect to the Restricted Stock may be either currently paid or withheld by the Company for the Holder's account, and interest may be paid on the amount of cash dividends withheld at a rate and subject to such terms as determined by the Committee. Cash or stock dividends so withheld by the Committee shall not be subject to forfeiture. (iii) In the case of a Restricted Stock Award, the Committee shall then cause stock certificates registered in the name of the Holder to be issued and held by the Secretary of the Company or an agent. (iv) In the case of a Phantom Stock Units Award, no shares of Common Stock shall be issued at the time the award is made, and the Company will not be required to set aside a fund for the payment of any such Award. The Committee shall, in its sole discretion, determine whether to credit to the account of, or to currently pay to, each Holder of an Award of Phantom Stock Units an amount equal to the cash dividends paid by the Company upon one share of Stock for each Phantom Stock Unit then credited to such Holder's account ("Dividend Equivalents"). Dividend Equivalents credited to Holder's account shall be subject to forfeiture and may bear interest at a rate and subject to such terms as determined by the Committee. (b) Restrictions. (i) Restricted Stock awarded to a Participant shall be subject to the following restrictions until the expiration of the Restricted Period: (1) the Holder shall not be entitled to delivery of the stock certificate; (2) the shares shall be subject to the restrictions on transferability set forth in the Grant; (3) the shares shall be subject to forfeiture to the extent provided by the Committee in the Incentive Plan Agreement and, to the extent such shares are forfeited, the stock certificates shall be returned to the Company, and all rights of the Holder to such shares and as a shareholder shall terminate without further obligation on the part of the Company. (ii) Phantom Stock Units awarded to any Participant shall be subject to the following restrictions until the expiration of the Restricted Period: (1) the units shall be subject to forfeiture to the extent provided in subparagraph (d), and to the extent such units are forfeited, all rights of the Holder to such units shall terminate without further obligation on the part of the Company and (2) any other restrictions which the Committee may determine in advance are necessary or appropriate. (iii) The Committee shall have the authority to remove any or all of the restrictions on the Restricted Stock and Phantom Stock Units whenever it may determine that, by reason of changes in applicable laws or other changes in -13- 14 circumstances arising after the date of the Restricted Stock Award or Phantom Stock Award, such action is appropriate. (c) Restricted Period. The Restricted Period of Restricted Stock and Phantom Stock Units shall commence on the Date of Grant and unless otherwise established by the Committee in the Incentive Plan Agreement, shall expire from time to time as to that part of the Restricted Stock and Phantom Stock Units in accordance with a schedule included in the letter or form evidencing the Award. (d) Delivery of Restricted Stock and Settlement of Phantom Stock Units. Upon the expiration of the Restricted Period with respect to any shares of Stock covered by a Restricted Stock Award, a stock certificate evidencing the shares of Restricted Stock which have not then been forfeited and with respect to which the Restricted Period has expired (to the nearest full share) shall be delivered without charge to the Holder, or his beneficiary, free of all restrictions under the Plan. Upon the expiration of the Restricted Period with respect to any Phantom Stock Units covered by a Phantom Stock Unit Award, the Company shall deliver to the Holder or his beneficiary without any charge one share of Stock for each Phantom Stock Unit which has not then been forfeited and with respect to which the Restricted Period has expired ("vested unit") and cash equal to any Dividend Equivalents credited with respect to each such vested unit and the interest thereon, if any; provided, however, that the Committee may, in its sole discretion, elect to pay cash or part cash and part Stock in lieu of delivering only Stock for vested units. If a cash payment is made in lieu of delivering Stock, the amount of such cash payment shall be equal to the Fair Market Value for the date on which the Restricted Period lapsed with respect to such vested unit. (e) Payment for Restricted Stock. Except as provided in subparagraph 10(a)(ii), a Holder shall not be required to make any payment for Stock received pursuant to a Restricted Stock Award. (f) SEC Restrictions. Unless the Restricted Stock has been otherwise registered with the SEC, each certificate representing Restricted Stock awarded under the Plan shall bear the following legend: "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE WERE ISSUED PURSUANT TO THE EMPLOYEE BENEFIT PLANS, INC. 1991 LONG-TERM PERFORMANCE INCENTIVE PLAN. SUCH SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE LAW AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE THEREWITH." If the shares of Common Stock to be issued to a Participant have been registered under the Securities Act of 1933, as amended, but the Participant is subject to resale restrictions under Rule 144 under the Securities Act of 1933, as amended, the Company may place the following legend on stock certificates issued to the Participant: -14- 15 "THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED TO AN AFFILIATE OF THE ISSUER AND THE RESALE OF SUCH SHARES IS SUBJECT TO CERTAIN RESTRICTIONS UNDER RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SUCH OTHER PROVISIONS APPLICABLE TO THE RESALE OF SECURITIES BY AFFILIATES." Stop transfer orders shall be entered with the Company's transfer agent and registrar against the transfer of legended securities except in compliance with the Securities Act of 1933, as amended ("Act"). 11. CASH INCENTIVE AWARDS The Committee also may grant Cash Incentive Awards which vest and become payable only upon the attainment of pre-defined Performance Goals as determined by the Committee. 12. GENERAL (a) Additional Provisions of an Award. The award of any benefit under the Plan may also be subject to such other provisions (whether or not applicable to the benefit awarded to any other Participant) as the Committee determines appropriate including, without limitation, provisions to assist the Participant in financing the purchase of Common Stock through the exercise of Options, provisions for the forfeiture of or restrictions on resale or other disposition of shares acquired under any form of benefit, provisions giving the Company the right to repurchase shares acquired under any form of benefit in the event the Participant elects to dispose of such shares, and provisions to comply with federal and state securities laws and federal and state income tax withholding requirements. In order to promote compliance with Section 16(b) of the Exchange Act, all grants of Awards payable in the form of stock or Awards considered "derivative securities" or other "equity securities" for purposes of the Exchange Act granted to Participants that are subject to the restrictions of Section 16(b) must include restrictions on sale, transfer or other disposition of such securities (unless otherwise exempted) for a period six (6) months after Date of Grant (or such other period as may be imposed under Section 16(b) or rules thereunder). (b) Privileges of stock ownership. Except as otherwise specifically provided in the Plan, no person shall be entitled to the privileges of stock ownership in respect of shares of Stock which are subject to Options or Restricted Stock Awards, Performance Share Unit Awards or Phantom Stock Unit Awards hereunder until such shares have been issued to that person upon exercise of an Option according to its terms or upon sale or grant of those shares in accordance with a Restricted Stock Award, Performance Share Unit Award or Phantom Stock Unit Award. (c) Government and other regulations. The obligation of the Company to make payment of Awards in Stock or otherwise shall be subject to all applicable laws, rules, and regulations, and to such approvals by governmental agencies as may be required. The Company shall be under no obligation to register under the Act any of the shares of Stock -15- 16 paid under the Plan. If the shares paid under the Plan may in certain circumstances be exempt from registration under the Act, the Company may restrict the transfer of such shares in such manner as it deems advisable to ensure the availability of any such exemption. (d) Tax withholding. Notwithstanding any other provision of the Plan, the Company or a Subsidiary, as appropriate, shall have the right to deduct from all Awards, to the extent paid in cash, all federal, state or local taxes as required by law to be withheld with respect to such Awards and, in the case of Awards paid in Stock, the Holder or other person receiving such Stock may be required to pay to the Company or a Subsidiary, as appropriate prior to delivery of such Stock, the amount of any such taxes which the Company or Subsidiary is required to withhold, if any, with respect to such Stock. Subject in particular cases to the disapproval of the Committee, the Company may accept shares of Stock of equivalent Fair Market Value or may agree to withhold shares of stock payable under an Award of equivalent Fair Market Value in payment of such withholding tax obligations, provided however if the Holder is subject to Section 16(b) of the Exchange Act, such Holder must comply with Rule 16b-3(e). (e) Claim to Awards and employment rights. No employee or other person shall have any claim or right to be granted an Award under the Plan nor, having been selected for the grant of an Award, to be selected for a grant of any other Award. Neither this Plan nor any action taken hereunder shall be construed as giving any Participant any right to be retained in the employ of the Company or a Subsidiary. (f) Conditions. Each Participant to whom Awards are granted under the Plan shall be required to enter into an Incentive Plan Agreement in a form authorized by the Committee, including provisions that the Participant shall not disclose any trade or secret data or any other confidential information of the Company or any of its Subsidiaries acquired during the course of such Participant's employment. (g) Designation and change of beneficiary. Each Participant shall file with the Committee a written designation of one or more persons as the beneficiary who shall be entitled to receive the amounts payable with respect to an Award of Performance Share Units, Phantom Share Units or Restricted Stock, if any, due under the Plan upon his death. A Participant may, from time to time, revoke or change his beneficiary designation without the consent of any prior beneficiary by filing a new designation with the Committee. The last such designation received by the Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant's death, and in no event shall it be effective as of a date prior to such receipt. (h) Payments to persons other than Participants. If the Committee shall find that any person to whom any amount is payable under the Plan is unable to care for his affairs because of illness or accident, or is a minor, or has died, then any payment due to such person or his estate (unless a prior claim therefor has been made by a duly appointed legal representative), may, if the Committee so directs the Company, be paid to his spouse, child, -16- 17 relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Committee and the Company therefor. (i) No liability of Committee members. No member of the Committee shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Committee nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan unless arising out of such person's own fraud or bad faith; provided, however, that approval of the Board shall be required for the payment of any amount in settlement of a claim against any such person. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or By-Laws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. (j) Governing law. The Plan shall be governed by and construed in accordance with the internal laws of the State of Minnesota without reference to the principles of conflicts of law thereof. (k) Funding. Except as provided under Section 10, no provision of the Plan shall require the Company for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Holders shall have no rights under the Plan other than as unsecured general creditors of the Company, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they shall have the same rights as other employees under general law. (l) Nontransferability. A person's rights and interests under the Plan, including amounts payable, may not be sold, assigned, donated, or transferred or otherwise disposed of, mortgaged, pledged or encumbered except (unless limited in the form evidencing the Award), (i) in the event of a Holder's death, to a designated beneficiary to the extent permitted by the Plan, or in the absence of-such designation, by will or the laws of descent and distribution, or (ii) in the case of a transfer pursuant to a "qualified domestic relations order" as defined in the Code. (m) Reliance on Reports. Each member of the Committee and each member of the Board shall be fully justified in relying, acting or failing to act, and shall not be liable for -17- 18 having so relied, acted or failed to act in good faith, upon any report made by the independent public accountant of the Company and its Subsidiaries and upon any other information furnished in connection with the Plan by any person or persons other than himself. (n) Relationship to other benefits. No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of the Company or any Subsidiary except as otherwise specifically provided. (o) Expenses. The expenses of administering the Plan shall be borne by the Company and its Subsidiaries. (p) Pronouns. Masculine pronouns and other words of masculine gender shall refer to both men and women. (q) Titles and headings. The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings shall control. 13. CHANGES IN CAPITAL STRUCTURE Options, SARs, Restricted Stock Awards, Phantom Stock Unit Awards, Performance Share Unit Awards, and any agreements evidencing such Awards, and Performance Goals shall be subject to adjustment or substitution, as determined by the Committee in its sole discretion, as to the number, price or kind of a share of Stock or other consideration subject to such Awards or as otherwise determined by the Committee to be equitable (i) in the event of changes in the outstanding Stock or in the capital structure of the Company, or of any other corporation whose performance is relevant to the attainment of Performance Goals hereunder, by reason of stock dividends, stock splits, recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges, or other relevant changes in capitalization occurring after the Date of Grant of any such Award or (ii) in the event of any change in applicable laws or any change in circumstances which results in or would result in any substantial dilution or enlargement of the rights granted to, or available for, Participants in the Plan, or which otherwise warrants equitable adjustment because it interferes with the intended operation of the Plan. In addition, in the event of any such adjustments or substitution, the aggregate number of shares of Stock available under the Plan shall be appropriately adjusted by the Committee, whose determination shall be conclusive. Any adjustment in Incentive Stock Options under this Section 12 shall be made only to the extent not constituting a "modification" within the meaning of Section 425(h)(3) of the Code. The Company shall give each Participant notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes. -18- 19 14. AWARDS MAY INCLUDE CHANGE IN CONTROL PROVISION (a) Unless otherwise provided in the discretion of the Committee and evidenced in the Award in the form indicated in b) below, the following shall apply in the event of a tender offer. In the event of the purchase of in excess of fifty percent (50%) of the Corporation's outstanding common stock pursuant to a tender offer approved by the Corporation's Board of Directors and made in accordance with the provisions of the Securities Exchange Act of 1934 (a "Tender"), all options granted hereunder and not yet exercised on the date of the close of such Tender shall automatically terminate on such date, and all options which are exercisable as of sale date must be exercised within thirty (30) days after such date and shall automatically be converted into the right to receive in lieu of Common Stock an amount equal to the amount per share of Common Stock paid pursuant to the Tender. With respect to all other Awards any elections with respect to receipt of Common Stock, such election must be made within thirty (30) days after the sale date and shall automatically be converted into the right to receive in lieu of Common Stock, an amount equal to the amount per share of Common Stock paid pursuant to the Tender. (b) If the provisions of subp. (a) are modified by the Committee on an individual basis, any such Award must include the following provisions: (i) In the event of a Change in Control, notwithstanding any vesting schedule provided for hereunder or by the Committee with respect to an Award of Options, SARs, Phantom Stock Units or Restricted Stock, such Option or SAR shall become immediately exercisable with respect to 100 percent of the shares subject to such Option or SAR, and the Restricted Period shall expire immediately with respect to 100 percent of the Phantom Stock Units or shares of Restricted Stock subject to Restrictions. (ii) In the event of a Change in Control, all incomplete Award Periods in effect on the date the Change in Control occurs shall end on the date of such change, and the Committee shall, (1) determine the extent to which Performance Goals with respect to each such Award Period have been met based upon such audited or unaudited financial information then available as it deems relevant, (2) cause to be paid to each Participant partial or full Awards with respect to Performance Goals for each such Award Period based upon the Committee's determination of the degree of attainment of Performance Goals, and (3) cause all previously deferred Awards to be settled in full as soon as possible. (iii) The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of -19- 20 the assets and business of the Company. The Company agrees that it will make appropriate provisions for the preservation of Participants' rights under the Plan in any agreement or plan which it may enter into or adopt to effect any such merger, consolidation, reorganization or transfer or assets. 15. NONEXCLUSIVITY OF THE PLAN Neither the adoption of this Plan by the Board nor the submission of this Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than under this Plan, and such arrangements may be either applicable generally or only in specific cases. 16. AMENDMENTS AND TERMINATION The Board may at any time terminate the Plan. With the express written consent of an individual participant, the Board may cancel or reduce or otherwise alter the outstanding Awards thereunder if, in its judgment, the tax, accounting, or other effects of the Plan or potential payouts thereunder would not be in the best interest of the Company. The Board may, at any time, or from time to time, amend or suspend and, if suspended, reinstate, the Plan in whole or in part, provided, however, that without further stockholder approval the Board shall not: (a) Increase the maximum number of shares of Stock which may be issued on exercise of Options, SARs, or pursuant to Restricted Stock Awards, Phantom Stock Unit Awards, or Performance Share Unit Awards, except as provided in Section 13; (b) Change the maximum Option Price; (c) Extend the maximum Option term; or (d) Extend the termination date of the Plan. -20- 21 Amendment No. 1 to Employee Benefit Plans, Inc. 1991 Long-Term Incentive Performance Plan (effective as of August 12, 1991) The last sentence of Section 10(a)(ii) of the Employee Benefit Plans, Inc. 1991 Long-Term Incentive Performance Plan (the "Plan") is hereby amended so that Section 10(a) of the Plan provides as follows: 10. RESTRICTED STOCK AWARDS AND PHANTOM STOCK UNITS (a) Award of Restricted Stock and Phantom Stock Units. (i) The Committee shall have the authority (1) to directly grant Restricted Stock and Phantom Stock Units Awards, (2) to issue or transfer Restricted Stock to Participants, and (3) to establish terms, conditions and restrictions applicable to such Restricted Stock and Phantom Stock Units, including the Restricted Period, which may differ with respect to each grantee, the time or times at which Restricted Stock or Phantom Stock Units shall be granted or become vested and the number of shares or units to be covered by each grant. (ii) The Holder of a Restricted Stock Award shall execute and deliver to the Secretary of the Company an agreement with respect to Restricted Stock satisfactory to the Committee and the appropriate blank stock powers with respect to the Restricted Stock covered by such agreements and shall pay to the Company, as the purchase price of the shares of Stock subject to such Award, the purchase price, if any, established by the Committee in its discretion and indicated in the Award within 60 days following the making of such Award. If a Participant shall fail to execute the agreement, stock powers or shall fail to pay such purchase price within such period, the Award shall be null and void. Subject to the restrictions set forth in Section 10(b), the Holder shall generally have the rights and privileges of a stockholder as to such Restricted Stock, including the right to vote such Restricted Stock. At the discretion of the Committee, cash and stock dividends with respect to the Restricted Stock may be either currently paid or withheld by the Company for the Holder's account, and interest may be paid on the amount of cash dividends withheld at a rate and subject to such terms as determined by the Committee. Cash or stock dividends so withheld by the Committee shall be subject to forfeiture at the discretion of the Committee. (iii) In the case of a Restricted Stock Award, the Committee shall then cause stock certificates registered in the name of the Holder to be issued and held by the Secretary of the Company or an agent. -1- 22 (iv) In the case of a Phantom Stock Units Award, no shares of Common Stock shall be issued at the time the award is made, and the Company will not be required to set aside a fund for the payment of any such Award. The Committee shall, in its sole discretion, determine whether to credit to the account of, or to currently pay to, each Holder of an Award of Phantom Stock Units an amount equal to the cash dividends paid by the Company upon one share of Stock for each Phantom Stock Unit then credited to such Holder's account ("Dividend Equivalents"). Dividend Equivalents credited to Holder's account shall be subject to forfeiture and may bear interest at a rate and subject to such terms as determined by the Committee. -2- 23 EMPLOYEE BENEFIT PLANS, INC. STOCK OPTION AGREEMENT PURSUANT TO 1991 LONG-TERM INCENTIVE PERFORMANCE PLAN This AGREEMENT is made effective as of the _____st day of ____________, 19____ by and between Employee Benefit Plans, Inc., a Delaware corporation (the "Company"), and the undersigned employee of the Company (or one of its subsidiaries) (the "Employee"). Recitals 1. The Company desires to afford the Employee an opportunity to purchase shares of its common stock, par value $.01 per share (the "Shares"), to carry out the purposes of its 1991 Long-Term Incentive Performance Plan, as amended (the "Plan"), a copy of which has been provided to Employee and the terms of which are incorporated by reference herein. 2. Section 7(d) of the Plan provides that each option is to be evidenced by an Option Agreement, setting forth the terms and conditions of the Option. ACCORDINGLY, in consideration of the premises and of the mutual covenants and agreements contained herein, the Company and the Employee hereby agree as follows: 1. Grant of Option. The Company hereby irrevocably grants to the Employee a Nonqualified Stock Option (the "Option") to purchase all or any part of an aggregate of (______) Shares on the terms and conditions hereinafter set forth. 2. Purchase Price. The purchase price for the Shares covered by the Option (the "Purchase Price") shall be $_______ per Share. 3. Time and Manner of Exercise of Option. (a) The Option shall be exercisable in the following annual installments commencing [one year from effective date]:
Percentage of Shares Becoming Cumulative Available for Percentage One or After Exercise Available ------------ ---------------- ----------- [one year from effective date] 33.34% 33.34% [two years from effective date] 33.33% 66.67% [three years from effective date] 33.33% 100%
24 (b) To the extent that the right to exercise the Option has accrued and is in effect, the Option may be exercised in full at one time or in part from time to time, by giving written notice, signed by the person or persons exercising the Option, to the Company, stating the number of Shares with respect to which the Option is being exercised, accompanied by payment in full of the Purchase Price for such Shares (or delivery of a notice from a registered brokerage firm advising that payment will be made by such firm to the Company under its "cashless exercise" procedures in accordance with the Plan), which payment may be in whole or in part in shares of the common stock of the Company already owned by the person or persons exercising the Option with a fair market value equal to the exercise price; provided, however, that there shall be no such exercise at any one time as to fewer than ten (10) Shares or all of the remaining Shares then purchasable by the person or persons exercising the Option, if fewer than ten (10) Shares. Upon such exercise, delivery of a Certificate for Paid-up, non-assessable Shares shall be made at the Principal office of the Company to the Person or Persons exercising the Option at such time, during ordinary business hours, not more than thirty (30) days from the date of receipt of the notice by the Company, as shall be designated in such notice, or at such time, place and manner as may be agreed upon by the Company and the person or persons exercising the Option. (c) The Company shall at all times during the term of the Option reserve and keep available such number of shares of its common stock as will be sufficient to satisfy the requirements of the Option and shall pay all original issue and transfer taxes (if any) with respect to the issue and transfer of Shares pursuant hereto, and all other fees and expenses necessarily incurred by the Company in connection therewith. The holder of this Option shall not have any of the rights of a stockholder of the Company with respect of the Shares until one or more Certificates for such Shares shall be delivered to the holder upon the due exercise of the Option. 4. Term of Option. (a) The Option shall terminate ten (10) years from the date hereof, but shall be subject to earlier termination as hereinafter provided. (b) Except as otherwise provided in this Section 4, in the event that the Employee ceases to be an employee of the Company or one of its subsidiaries, the Option may be exercised, to the extent then exercisable under Section 3(a) hereof, within three (3) months after the date the Employee ceases to be an employee of the Company or one of its subsidiaries, but shall thereafter terminate. (c) If such termination of employment is because of dismissal for cause or because the Employee is in breach of any employment agreement, the Option will terminate on the date the Employee ceases to be an employee of the Company or one of its subsidiaries. (d) If such termination of employment is because the Employee has died or becomes permanently disabled within the meaning of Section 105(b)(4) of the Internal -2- 25 Revenue Code of 1986 (the "Code"), the Option may be exercised prior to the expiration of (i) six (6) months from the date the Employee ceases to be an employee or (ii) ten (10) years from the date hereof, whichever occurs first. (e) Subject to Section 4(c) above, in the event of termination of employment, the Option shall be exercisable only to the extent that the right to Purchase the Shares under the Option has accrued and is in effect at the date of such cessation of employment, unless such cessation is because the Employee has become disabled, in which case the Option may be exercised to the full number of Shares covered hereby. (f) In the event of the death of the Employee, the Option shall be exercisable only to the extent that the right to Purchase the Shares under the Option has accrued and may be exercised by the estate of the Employee, or by any person or persons who acquired the right to exercise the Option by bequest or inheritance or by reason of the death of the Employee. 5. Nontransferability. The right of the Employee to exercise the Option shall not be assignable or transferable by the Employee other than by will or the laws of descent and distribution, and the Option may be exercised during the lifetime of the Employee only by them or by their guardian or legal representative. The Option shall be null and void and without effect upon the bankruptcy of the Employee or upon any attempted assignment or transfer, except as provided herein, including without limitations any purported assignment (whether voluntary or by operation of law), pledge, hypothecation or other disposition, attachment, trustee process or similar process, whether legal or equitable, upon the Option. 6. Investment Representation; Delay in Issuance of Shares. Notwithstanding the provisions of Section 3 hereof, the Company may delay the issuance of Shares covered by the exercise of the Option and the delivery of a certificate for such shares until (i) Employee executes a written declaration that the Shares issued to them pursuant to such exercise of the Option are for their own account as an investment and not with a view to, or for resale in connection with, the distribution of any such Shares, and that he or she will make no transfer of the same except in compliance with the 1933 Act and the rules and regulations promulgated thereunder and then in effect or (ii) such time as the Company elects to make a public release of material "inside information" concerning the Company (as such term is customarily used under federal securities laws), if the Company reasonably believes, at its discretion, that the holder of the Option possesses such information or the exercise of the Option would create an obligation to disclose publicly such information. 7. Adjustments. In the event that the outstanding shares of the common stock of the Company are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of any reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares, or dividends payable in capital stock (other than for a change in control as described in Section 8 hereof), appropriate adjustment shall be made in the number and kind of shares as to which the Option, or portion thereof then unexercised, shall be exercisable, to the end -3- 26 that the proportionate interest of the Employee shall be maintained as before the occurrence of such event; such adjustment in the Option shall be made without change in the total price applicable to the unexercised portion of the Option and with a corresponding adjustment in the Purchase Price per Share. No such adjustment shall be made which shall, within the meaning of any applicable sections of the Code, constitute a modification, extension or renewal of the Option or grant of additional benefits to the Employee. 8. Tender Offers. In the event of the purchase of in excess of fifty percent (50%) of the Company's outstanding common stock pursuant to a tender offer approved by the Company's Board of Directors and made in accordance with the provisions of the Securities Exchange Act of 1934, as amended (a "Tender"), all options granted hereunder and not yet exercised on the date of the close of such Tender shall automatically terminate on such date, and all Options which are exercisable as of sale date must be exercised within thirty (30) days after such date and shall automatically be converted into the right to receive in lieu of Common Stock an amount equal to the amount per share of Common Stock paid pursuant to the Tender. 9. Liquidation. Upon dissolution or liquidation of the Company, the Option shall terminate, but the Employee (if at such time in the employ of or otherwise associated with the Company or any of its subsidiaries) shall have the right, immediately prior to such dissolution or liquidation, to exercise the Option to the extent then exercisable. 10. Fractional Shares. No fraction of a share will be purchasable or deliverable upon the exercise of the Option, but in the event any adjustment hereunder of the number of Shares covered by the Option shall cause such number to include a fraction of a share, such fraction shall be adjusted to the nearest smaller whole number of shares. IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first appearing above. EMPLOYEE BENEFIT PLANS, INC. By:_____________________________________ William E. Sagan President & Chief Executive Officer EMPLOYEE ________________________________________ [name of employee] SS# ____________________________________ -4- EX-4.4 5 1993 OUTSIDE DIRECTOR'S STOCK OPTION PLAN 1 EXHIBIT 4.4 EMPLOYEE BENEFIT PLANS, INC. 1993 OUTSIDE DIRECTORS STOCK OPTION PLAN I. PURPOSE OF PLAN 1.1 The purpose of the Employee Benefit Plans, Inc. 1993 Outside Directors Stock Option Plan (the "Plan") is to provide a means whereby Employee Benefit Plans, Inc. (the "Company") may grant options to purchase common stock of the Company to those members of the Company's Board of Directors who are not employees of the Company or any of its subsidiaries ("Eligible Directors"). Options granted under the Plan are not intended to and do not qualify as incentive stock options as described in Section 422A of the Internal Revenue Code. II. NUMBER OF SHARES AVAILABLE UNDER THE PLAN 2.1 Options will be granted by the Company at the times described below, to Eligible Directors to purchase an aggregate of up to 250,000 shares of common stock ($.01 par value) of the Company and 250,000 shares shall be reserved for options granted under the Plan (subject to adjustment as provided in Section 4.9 below). The shares issued upon exercise of options granted under the Plan may be authorized and unissued shares or reacquired shares held by the Company. If any option granted under the Plan shall terminate, expire or with the consent of the optionee, be canceled as to any shares, new options may thereafter be granted covering such shares without affecting the amount of the option reserve noted above. III. ADMINISTRATION 3.1 The Plan shall be administered by a Committee consisting of the Chief Executive Officer and Chief Financial Officer of the Company who are not eligible to participate in the Plan (the "Committee"). Committee members shall have no discretion concerning the grant of options, the price at which options are to be granted or times at which options may be exercised. The Committee may interpret the Plan, amend and rescind any rules and regulations necessary or appropriate for the administration of the Plan and make other determinations and take such other action as it deems necessary or advisable. No such action will affect the rights of Eligible Directors who have been granted options prior to such action. Any interpretation or other action made or taken by the Committee shall be final, binding and conclusive. 2 IV. TERMS AND CONDITIONS 4.1 Time of Grant and Form. Each option granted under the Plan shall be evidenced by an option agreement which shall be subject to the terms and conditions of the Plan, including, without limitation, the following: (a) Initial Grant of 5,000 Options. Each Eligible Director shall receive an initial grant of options for the purchase of 5,000 shares of common stock of the Company, when applicable under subsections (1), (2) or (3) below: (1) Each Eligible Director of record on August 19, 1993 shall receive a grant of options for the purchase of 5,000 shares of common stock of the Company effective August 19, 1993; (2) An Eligible Director who is first appointed or elected to the Board of Directors of the Company after a June 1 Grant Date (as defined below) but before the next Annual Meeting of Shareholders of the Company (the "Annual Meeting"), shall receive a grant of options for the purchase of 5,000 shares of common stock of the Company effective on the date that person first becomes a director. (3) An Eligible Director who is first appointed or elected to the Board of Directors of the Company at an Annual Meeting, or between the Annual Meeting and on or before the next June 1 Grant Date, shall receive a grant of options for the purchase of 5,000 shares of common stock of the Company effective on the June 1 Grant Date following such Annual Meeting (provided that person is a director of record on the June 1 Grant Date). (b) Annual Grants of 2,500 Options. Except as otherwise provided in this Section 4.1(b), each Eligible Director of record on June 1 (or on the next business day if June 1 is not a business day) of each year while the Plan is in effect (the "June 1 Grant Date"), commencing June 1, 1994, shall receive a grant of options for the purchase of 2,500 shares of common stock of the Company effective on that June 1 Grant Date. Notwithstanding the foregoing, if an Eligible Director receives an initial grant of options under Section 4.1(a)(3) above, that person will not be eligible to receive the first annual grant of 2,500 options under this subsection until the June 1 Grant Date which occurs during the calendar year following that person's first appointment or election as a director (and provided that person is an Eligible Director on that June 1 Grant Date). 2 3 The foregoing respective dates of grant are referred to herein as the "Grant Date." Notwithstanding the foregoing, if on the scheduled Grant Date, the Chief Executive Officer or General Counsel of the Company determines, in their sole discretion, that the Company is in possession of material, undisclosed information that would prevent the Company from issuing securities, then the grant of options to Eligible Directors pursuant to this Section 4.1 will be suspended until the third day after public dissemination of such information. The Chief Executive Officer or General Counsel may only suspend the grant; the amount and other terms of the grant will remain as set forth in the Plan, with the exercise price of the option to be determined in accordance with the Plan on the date the option is finally granted. 4.2 Exercisability. Subject to Sections 4.6 and 4.9 below, each option agreement shall provide that the option will vest and become first exercisable six (6) months after the Grant Date, except that the options having a Grant Date of August 19, 1993 shall vest and become first exercisable on the latter of (a) six (6) months after the Grant Date or (b) the date on which the Plan is approved by the Company's shareholders. If the Plan is not approved by the shareholders at the Annual Meeting for the year ending December 31, 1993, all options granted under the Plan shall thereupon lapse. 4.3 Option Period. Subject to Sections 4.6 and 4.9 below, each option agreement shall provide that the option shall expire at the end of ten (10) years from the date granted or upon dissolution of the Company, if earlier. 4.4 Option Price. The exercise price per share for options granted under the Plan shall be the closing price of the common stock of the Company on the Grant Date or in the case of Eligible Directors granted options during the Plan Year, the closing price of the common stock of the Company on the date the option is granted. As used herein, the term "closing price" shall mean the closing price of the Company's common stock as reported on the New York Stock Exchange. If the Company's common stock is not listed on the New York Stock Exchange, the "closing price" shall be the last sale price of the Company's common stock as reported on the National Association of Securities Dealers Automated Quotation system or applicable securities exchange. 4.5 Payment of Option Price. The purchase price of the shares as to which an option shall be exercised shall be paid in cash, certified check, bank draft or money order made payable to the Company, or with shares of common stock of the Company at the time of exercise (valued based on the closing price on the date of exercise), unless the tender of shares as payment violates federal or state securities laws. 4.6 Exercise in the Event of Death or Ceasing to be a Board Member. Each option agreement shall be subject to the following: 3 4 (a) If an optionee ceases to be a director of the Company (other than by death or removal for cause), the options which are then vested may be exercised until the earlier of (1) three months after the date the optionee ceases to be a director of the Company or (2) ten years from the date of grant, and shall thereafter lapse. (b) If an optionee ceases to be a director of the Company because of removal for cause, all options shall lapse on the date the optionee ceases to be a director of the Company. (c) If an optionee ceases to be a director of the Company because of death, all outstanding options, whether or not vested, shall immediately become exercisable until the earlier of (1) three months after the date of death or (2) ten years from the date of grant, and shall thereafter lapse. Options that are not exercisable (not vested) as of the date an optionee ceases to be a director of the Company (other than by death) shall immediately lapse on that date. 4.7 Non-Transferability. No option granted under the Plan shall be transferable other than by will or by the laws of descent and distribution. During the lifetime of the optionee, an option shall be exercisable only by such optionee. 4.8 Investment Representation. Each option agreement shall contain an agreement that upon demand by the Board the optionee shall deliver to the Board at the time of exercise of an option a written representation that the shares to be acquired upon such exercise are to be acquired for investment and not for resale or with a view to distribution thereof. Upon such demand, delivery of such representation prior to the delivery of any shares issued upon exercise of an option and prior to the expiration of the option period shall be a condition precedent to the right of the optionee or to such other person to purchase any shares. 4.9 Adjustments. In the event that the outstanding shares of the common stock of the Company are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of any reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares or dividends payable in capital stock, appropriate adjustment shall be made in the number and kind of shares as to which options may be granted under the Plan and as to which outstanding options or portions thereof then unexercised shall be exercisable, to the end that the proportionate interest of the participant shall be maintained as before the occurrence of such event; such adjustment in outstanding options shall be made without change in the total price applicable to the unexercised portion of such options and with a corresponding adjustment in the option price per share. If the Company is a party to a merger, consolidation, reorganization or similar corporate transaction and if, as a result of that transaction, its shares of common stock 4 5 are exchanged for (a) other securities of the Company or (b) securities of another corporation which has assumed the outstanding options under the Plan or has substituted for such options its own options, then each holder of options under the Plan shall be entitled (subject to the conditions stated herein or in such substituted options, if any), in respect of that person's options, to purchase that amount of such other securities of the Company or of such other corporation as is sufficient to ensure that the value of that person's options immediately before the corporate transaction is equivalent to the value of such options immediately after the transaction, taking into account the option price of the option before such transaction, the fair market value per share of the common stock immediately before such transaction and the fair market value immediately after the transaction, of the securities then subject to that option (or to the option substituted for that option, if any). Upon the happening of any such corporate transaction, the class and aggregate number of shares subject to the Plan which have been heretofore or may be hereafter granted under the Plan shall be appropriately adjusted to reflect the events specified in this Section 4.9. 4.10 Expiration Date. This plan shall terminate ten (10) years from the date upon which it is approved by the shareholders of the Company, or on such earlier date determined by the Board. Any termination shall not affect any options then outstanding under the Plan. No options may be granted after termination. 4.11 Shareholder Rights. No optionee shall have any rights as a shareholder with respect to any shares subject to his or her option prior to the date of issuance to the optionee of a certificate or certificates for such shares. V. COMPLIANCE WITH OTHER LAWS AND REGULATIONS 5.1 The Plan, the option agreement and exercise of options thereunder and the obligation of the Company to sell and deliver shares under such option shall be subject to all applicable federal and state laws, rules and regulations and to such approval by any government or regulatory agency as may be required. The Company shall not be required to issue or deliver any certificates for shares of common stock prior to (a) the listing of any such shares on any stock exchange on which the common stock may be listed; and (b) the completion of any registration or qualification of such shares under any federal or state law, or any ruling or regulation of any governmental body which the Company shall in its sole discretion determine to be necessary or advisable. VI. AMENDMENT AND TERMINATION 6.1 The Board may from time to time amend, suspend or discontinue the Plan provided that, subject to the provisions of Section 4.9 above, no action of the Board may permit the granting of any option at the option price less than that determined in 5 6 accordance with Section 4.4 above; adjust or change the Grant Date determined under Section 4.1 above; or shorten the period provided for in Section 4.3 above. However, the Plan may not be amended more than once every six months other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules thereunder. Without the written consent of an optionee, no amendment or suspension of the Plan shall alter or impair any option previously granted to him or her under the Plan. The Board may, subject to limitations in the Plan, modify, extend or renew outstanding options granted under the Plan, or accept the surrender of outstanding options to the extent unexercised. VII. EFFECTIVE DATE 7.1 The Plan was adopted by the Board of Directors of the Company effective August 19, 1993, and its effectiveness is subject to approval by the shareholders of the Company. VIII. PLAN YEAR 8.1 The Plan year runs January 1 through December 31. IX. NAME OF PLAN 9.1 The Plan shall be known as the Employee Benefit Plans, Inc. 1993 Outside Directors Stock Option Plan. 6 7 EMPLOYEE BENEFIT PLANS, INC. STOCK OPTION AGREEMENT PURSUANT TO 1993 OUTSIDE DIRECTORS STOCK OPTION PLAN This AGREEMENT is made effective as of the 1st day of June, 19__ by and between Employee Benefit Plans, Inc., a Delaware corporation (the "Company"), and the undersigned outside director of the Company (the "Outside Director"). Recitals 1. The Company desires to afford the Outside Director an opportunity to purchase shares of its common stock, par value $.01 per share (the "Shares"), to carry out the purposes of its 1993 Outside Directors Stock Option Plan (the "Plan"), a copy of which has been provided to Outside Director and the terms of which are incorporated by reference herein. 2. Section 4.1 of the Plan provides that each option is to be evidenced by an Option Agreement, setting forth the terms and conditions of the Option. ACCORDINGLY, in consideration of the premises and of the mutual covenants and agreements contained herein, the Company and the Outside Director hereby agree as follows: 1. Grant of Option. The Company hereby grants to the Outside Director a nonqualified stock option (the "Option") to purchase all or any part of an aggregate of Two Thousand Five Hundred (2,500) Shares on the terms and conditions hereinafter set forth. 2. Purchase Price. The purchase price for the Shares covered by the Option (the "Purchase Price") shall be $________ per Share, which is the closing price of the Company's common stock as reported on the New York Stock Exchange on June 1, 19__. 3. Time and Manner of Exercise of Option. (a) The Option shall be exercisable as to 100% of the Shares commencing December 1, 19__, which is six (6) months after the date hereof, unless accelerated pursuant to Section 4(d) or 7 hereof. 8 (b) To the extent that the right to exercise the Option has accrued and is in effect, the Option may be exercised in full at one time or in part from time to time, by giving written notice, signed by the person or persons exercising the Option, to the Company, stating the number of Shares with respect to which the Option is being exercised, accompanied by payment in full of the Purchase Price for such Shares (or delivery of a notice from a registered brokerage firm advising that payment will be made by such firm to the Company under its "cashless exercise" procedures in accordance with the Plan), which payment may be in whole or in part in shares of the common stock of the Company already owned by the person or persons exercising the Option with a fair market value equal to the exercise price (the fair market value shall be the closing price of the common stock on the date of exercise, as determined under the Plan); provided, however, that there shall be no such exercise at any one time as to fewer than ten (10) Shares or all of the remaining Shares then purchasable by the person or persons exercising the Option, if fewer than ten (10) Shares. Upon such exercise, delivery of a Certificate for paid-up, non-assessable Shares shall be made at the principal office of the Company to the Person or Persons exercising the Option at such time, during ordinary business hours, not more than thirty (30) days from the date of receipt of the notice by the Company, as shall be designated in such notice, or at such time, place and manner as may be agreed upon by the Company and the person or persons exercising the Option, subject to Section 6 below. (c) The Company shall at all times during the term of the Option reserve and keep available such number of shares of its common stock as will be sufficient to satisfy the requirements of the Option and shall pay all original issue and transfer taxes (if any) with respect to the issue and transfer of Shares pursuant hereto, and all other fees and expenses necessarily incurred by the Company in connection therewith. The holder of this Option shall not have any of the rights of a stockholder of the Company with respect of the Shares until one or more Certificates for such Shares shall be delivered to the holder upon the due exercise of the Option. 4. Term of Option. (a) The Option shall terminate ten (10) years from the date hereof, but shall be subject to earlier termination as hereinafter provided. (b) If the Outside Director ceases to be a director of the Company (other than by death or removal for cause), the Option, to the extent then exercisable (vested) under Section 3(a) hereof, may be exercised until the earlier of (1) three months after the date the Outside Director ceases to be a director of the Company or (2) ten years from the date of hereof, and shall thereafter lapse. (c) If the Outside Director ceases to be a director of the Company because of removal for cause, the Option will terminate on the date the Outside Director ceases to be a director of the Company. 9 (d) If the Outside Director ceases to be a director of the Company because of death, the Option shall immediately become exercisable until the earlier of (1) three months after the date of death or (2) ten years from the date hereof, and shall thereafter lapse. (e) If the Option is not exercisable (not vested) as of the date that the Outside Director ceases to be a director of the Company (other than by death), the Option shall immediately lapse on that date. 5. Nontransferability. The right of the Outside Director to exercise the Option shall not be assignable or transferable by the Outside Director other than by will or the laws of descent and distribution, and the Option may be exercised during the lifetime of the Outside Director only by that person or by such person's guardian or legal representative. The Option shall be null and void and without effect upon the bankruptcy of the Outside Director or upon any attempted assignment or transfer, except as provided herein, including without limitations any purported assignment (whether voluntary or by operation of law), pledge, hypothecation or other disposition, attachment, trustee process or similar process, whether legal or equitable, upon the Option. 6. Investment Representation; Delay in Issuance of Shares. Notwithstanding the provisions of Section 3 hereof, the Company may delay the issuance of Shares covered by the exercise of the Option and the delivery of a certificate for such shares until (1) Outside Director executes a written declaration that the Shares issued to them pursuant to such exercise of the Option are for the Outside Director's own account as an investment and not with a view to, or for resale in connection with, the distribution of any such Shares, and that he or she will make no transfer of the same except in compliance with the 1933 Act and the rules and regulations promulgated thereunder and then in effect or (2) such time as the Company elects to make a public release of material "inside information" concerning the Company (as such term is customarily used under federal securities laws), if the Company reasonably believes, at its discretion, that the holder of the Option possesses such information or the exercise of the Option would create an obligation to publicly disclose such information. 7. Adjustments. In the event that the outstanding shares of the common stock of the Company are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of any reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares, or dividends payable in capital stock, appropriate adjustment shall be made in the number and kind of shares as to which the Option, or portion thereof then unexercised, shall be exercisable, to the end that the proportionate interest of the Outside Director shall be maintained as before the occurrence of such event; such adjustment in the Option shall be made without change in the total price applicable to the unexercised portion of the Option and with a corresponding adjustment in the Purchase Price per Share. 10 8. Liquidation. Upon dissolution or liquidation of the Company, the Option shall terminate, but the Outside Director (if at such time a director of the Company) shall have the right, immediately prior to such dissolution or liquidation, to exercise the Option to the extent then exercisable. 9. Fractional Shares. No fraction of a share shall be purchasable or deliverable upon the exercise of the Option, but in the event any adjustment hereunder of the number of Shares covered by the Option shall cause such number to include a fraction of a share, such fraction shall be adjusted to the nearest smaller whole number of shares. IN WITNESS WHEREOF, the Company and the Outside Director have executed this Agreement, effective as of the date first appearing above. EMPLOYEE BENEFIT PLANS, INC. By ----------------------------------- William E. Sagan President & Chief Executive Officer OUTSIDE DIRECTOR ----------------------------------- [outside director] SS# ------------------------------- EX-5 6 SUTHERLAND ASBILL & BRENNAN OPINION 1 S u t h e r l a n d, A s b i l l & B r e n n a n TEL: (404) 853-8000 999 PEACHTREE STREET, N.E. ATLANTA FAX: (404) 853-8806 ATLANTA, GEORGIA 30309-3996 AUSTIN NEW YORK WASHINGTON October 19, 1995 Board of Directors First Financial Management Corporation Suite 1400, 5660 New Northside Drive Atlanta, Georgia 30328 Gentlemen: We are acting as your counsel in connection with the registration of 56,635 shares of $.10 par value Common Stock (the "Common Stock") of First Financial Management Corporation, a Georgia corporation ("FFMC"). The Common Stock is being registered with the Securities and Exchange Commission pursuant to a Registration Statement on Form S-8 in connection with FFMC's assumption of the Employee Benefit Plans, Inc. ("EBP") 1986 Stock Option Plan, EBP 1990 Stock Option Plan, EBP 1991 Long-Term Incentive Performance Plan and EBP 1993 Outside Directors Stock Option Plan (the "Plans") and the conversion of the options outstanding under the Plans to options exercisable for FFMC Common Stock. Based upon our review of the relevant documents and materials, it is our opinion that the Common Stock, when issued according to the terms of the Plans, as amended and assumed by FFMC, will be legally issued, fully paid and nonassessable. We hereby consent to the reference to our firm under the caption "Item 5 - Interests of Named Experts and Counsel" in the above-described Registration Statement and to the filing of this opinion as an exhibit to such Registration Statement. Very truly yours, SUTHERLAND, ASBILL & BRENNAN By: /s/ Mark D. Wasserman ------------------------------------- Mark D. Wasserman EX-23.2 7 DELOITTE & TOUCHE LLP CONSENT 1 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT We consent to incorporation by reference in this Registration Statement of First Financial Management Corporation on Form S-8 of our reports dated January 27, 1995, appearing in the Annual Report on Form 10-K of First Financial Management Corporation for the year ended December 31, 1994. /s/ Deloitte & Touche LLP DELOITTE & TOUCHE LLP Atlanta, Georgia October 19, 1995 EX-23.3 8 ERNST & YOUNG LLP CONSENT (NEW YORK) 1 EXHIBIT 23.3 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement on Form S-8 of First Financial Management Corporation pertaining to the 1986 Stock Option Plan, 1990 Stock Option Plan, 1991 Long-Term Incentive Performance Plan and 1993 Outside Director's Stock Option Plan of Employee Benefit Plans, Inc. of our report dated February 3, 1995, with respect to the consolidated financial statements of First Data Corporation included in the Current Report on Form 8-K of First Financial Management Corporation dated July 25, 1995. /s/ Ernst & Young LLP --------------------- ERNST & YOUNG LLP New York, New York October 16, 1995 EX-23.4 9 ERNST & YOUNG LLP CONSENT (MELVILLE) 1 EXHIBIT 23.4 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement on Form S-8 of First Financial Management Corporation pertaining to the 1986 Stock Option Plan, 1990 Stock Option Plan, 1991 Long-Term Incentive Performance Plan and 1993 Outside Director's Stock Option Plan of Employee Benefit Plans, Inc. of our report dated August 26, 1994, with respect to the consolidated financial statements of CESI Holdings, Inc. included in the Current Report on Form 8-K of First Financial Management Corporation dated July 25, 1995. /s/ Ernst & Young LLP --------------------- ERNST & YOUNG LLP Melville, New York October 16, 1995 EX-23.5 10 ERNST & YOUNG LLP LETTER 1 EXHIBIT 23.5 October 16, 1995 First Financial Management Corporation We are aware of the incorporation by reference in the Registration Statement on Form S-8 of First Financial Management Corporation pertaining to the 1986 Stock Option Plan, 1990 Stock Option Plan, 1991 Long-Term Incentive Performance Plan and 1993 Outside Director's Stock Option Plan of Employee Benefit Plans, Inc. of our reports dated May 8 and August 4, 1995 relating to the unaudited consolidated interim financial statements of First Data Corporation included in the Current Reports on Form 8-K of First Financial Management Corporation dated July 25 and September 11, 1995. Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a part of the registration statement prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933. /s/ Ernst & Young LLP --------------------- ERNST & YOUNG LLP EX-23.6 11 PRICE WATERHOUSE LLP CONSENT 1 EXHIBIT 23.6 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus constituting part of this Registration Statement on Form S-8 of our report dated February 22, 1994, relating to the financial statements of Western Union Financial Services, Inc. (a wholly owned subsidiary of New Valley Corporation), which appears in the Current Report on Form 8-K of First Financial Management Corporation dated November 4, 1994. /s/ Price Waterhouse LLP - ------------------------ Price Waterhouse LLP Morristown, New Jersey October 17, 1995 -----END PRIVACY-ENHANCED MESSAGE-----