-----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, WuiDQE9Tp2xR3+w/qFW6A8MhR1mA4QzZeWI9a1RhoBzzUIVB2t0lyEMBmpQVEdQO 4tDmq4P/Jx8UxUJ1Qm2Q/g== 0001012870-00-003100.txt : 20000526 0001012870-00-003100.hdr.sgml : 20000526 ACCESSION NUMBER: 0001012870-00-003100 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 20000525 EFFECTIVENESS DATE: 20000525 FILER: COMPANY DATA: COMPANY CONFORMED NAME: E TRADE GROUP INC CENTRAL INDEX KEY: 0001015780 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 942844166 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-37892 FILM NUMBER: 643973 BUSINESS ADDRESS: STREET 1: 4500 BOHANNON DRIVE CITY: MENLO PARK STATE: CA ZIP: 94025 BUSINESS PHONE: 6508422500 MAIL ADDRESS: STREET 1: 4500 BOHANNON DRIVE CITY: MENLO PARK STATE: CA ZIP: 94025 S-8 1 FORM S-8 As filed with the Securities and Exchange Commission on May 25, 2000 Registration No. 333-________ - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8 REGISTRATION STATEMENT Under The Securities Act of 1933 E*TRADE GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 94-2844166 (State or other jurisdiction (IRS Employer Identification No.) of incorporation or organization) 4500 Bohannon Drive Menlo Park, California 94025 (Address of principal executive offices) (Zip Code) CARD CAPTURE SERVICES, INC. 1996 INCENTIVE STOCK OPTION PLAN CARD CAPTURE SERVICES, INC. 1997 INCENTIVE STOCK OPTION PLAN CARD CAPTURE SERVICES, INC. 1998 STOCK INCENTIVE COMPENSATION PLAN (Full title of the Plans) Christos M. Cotsakos Chairman of the Board and Chief Executive Officer E*TRADE GROUP, INC. 4500 Bohannon Drive Menlo Park, California 94025 (650) 331-6000 (Name, address including zip code, and telephone number, including area code, of agent for service) CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------- Proposed Proposed Title of Maximum Maximum Securities Amount Offering Aggregate Amount of to be to be Price Offering Registration Registered Registered(1) per Share (2) Price (2) Fee ----------- ------------------ ------------- ------------- ------------ Card Capture Services, Inc. 1996 Incentive Stock Option Plan --------------------------- Common Stock $0.01 par value 684,551 shares $ 4.80 $3,285,844.80 $ 867.47 Card Capture Services, Inc. 1997 Incentive Stock Option Plan. --------------------------- Common Stock $0.01 par value 181,870 shares $ 6.43 $1,169,424.10 $ 308.73 Card Capture Services, Inc. 1998 Stock Incentive Compensation Plan - ----------------------------------------- Common Stock $0.01 par value 83,968 shares $17.19 $1,443,409.92 $ 381.06 Aggregate Filing Fee $1,557.26
(1) This Registration Statement shall also cover any additional shares of Common Stock which become issuable under the Card Capture Services, Inc. 1998 Stock Incentive Compensation Plan, the Card Capture Services, Inc. 1997 Incentive Stock Option Plan and/or the Card Capture Services, Inc. 1996 Incentive Stock Option Plan by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without Registrant's receipt of consideration which results in an increase in the number of the outstanding shares of Registrant's Common Stock. (2) Calculated solely for purposes of this offering under Rule 457(h) of the Securities Act of 1933, as amended, on the basis of the weighted average exercise price of the outstanding options. PART II Information Required in the Registration Statement Item 3. Incorporation of Documents by Reference --------------------------------------- E*TRADE Group, Inc. (the "Registrant") hereby incorporates by reference into this Registration Statement the following documents previously filed with the Securities and Exchange Commission (the "SEC"): (a) The Registrant's Annual Report on Form 10-K for the fiscal year ended September 30, 1999, filed with the SEC on October 22, 1999, as amended on Form 10-K/A, filed with the SEC on April 17, 2000 pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the "1934 Act"); (b) The Registrant's Quarterly Reports on Form 10-Q for the fiscal quarters ended December 31, 1999 and March 31, 2000, filed with the SEC on February 14. 2000, as amended on Form 10-Q/A, filed with the SEC on April 17, 2000, and on May 15, 2000, respectively; (c) The Registrant's Current Reports on Form 8-K for period dates January 12, 2000 and April 12, 2000, filed with the SEC on January 27, 2000 and April 17, 2000 respectively; and (d) The Registrant's Registration Statement No. 001-11921 on Form 8- A12B filed with the SEC on July 12, 1996 pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "1934 Act"), in which there is described the terms, rights and provisions applicable to the Registrant's outstanding Common Stock. All reports and definitive proxy or information statements filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this Registration Statement and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold shall be deemed to be incorporated by reference into this Registration Statement and to be a part hereof from the date of filing of such documents. 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 subsequently filed document which also 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. Item 4. Description of Securities ------------------------- Not Applicable. Item 5. Interests of Named Experts and Counsel -------------------------------------- Not Applicable. Item 6. Indemnification of Directors and Officers ----------------------------------------- Section 145 of the General Corporation Law of the State of Delaware (the "Delaware Law") empowers a Delaware corporation to indemnify any persons who are, or are threatened to be made, parties to any threatened, pending or completed legal action, suit or proceedings, whether civil, criminal, administrative or investigative (other than action by or in the right of such corporation), by reason of the fact that such person was an officer or director of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit II-1 or proceeding, provided that such officer or director acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests, and, for criminal proceedings, had no reasonable cause to believe his conduct was illegal. A Delaware corporation may indemnify officers and directors in an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation in the performance of his duty. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses which such officer or director actually and reasonably incurred. In accordance with the Delaware Law, the Restated Certificate of Incorporation of the Registrant contains a provision to limit the personal liability of the directors of the Registrant for violations of their fiduciary duty. This provision eliminates each director's liability to the Registrant or its stockholders for monetary damages except (i) for any breach of the director's duty of loyalty to the Registrant or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware Law providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions, or (iv) for any transaction from which a director derived an improper personal benefit. The effect of this provision is to eliminate the personal liability of directors for monetary damages for actions involving a breach of their fiduciary duty of care, including any such actions involving gross negligence. Article 5 of the Restated Bylaws of the Registrant provide for indemnification of the officers and directors of the Registrant to the fullest extent permitted by applicable law. In connection with the incorporation of the Registrant into the State of Delaware, the Registrant entered into indemnification agreements with each director and certain officers. The Indemnification Agreements provide indemnification to such directors and officers under certain circumstances for acts or omissions which may not be covered by directors' and officers' liability insurance. Item 7. Exemption from Registration Claimed ----------------------------------- Not Applicable. Item 8. Exhibits -------- Number Exhibit ------ ------- 4 Instruments Defining Rights of Stockholders. Reference is made to Registrant's Registration Statement No. 001-11921 on Form 8- A12B, including the exhibits thereto, which is incorporated herein by reference pursuant to Item 3(d). 5 Opinion and consent of Brobeck, Phleger & Harrison LLP. 23.1 Independent Auditors Consent - Deloitte & Touche LLP. 23.2 Consent of Independent Public Accountants - Arthur Andersen LLP. 23.3 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5. 24 Power of Attorney. Reference is made to page II-4 of this Registration Statement. 99.1 Card Capture Services, Inc. 1996 Incentive Stock Option Plan. 99.2 Card Capture Services, Inc. 1997 Incentive Stock Option Plan. 99.3 Card Capture Services, Inc. 1998 Stock Incentive Compensation Plan. 99.4 Form of 1996 Incentive Stock Option Plan Option Assumption Agreement-Full Acceleration. 99.5 Form of 1997 Incentive Stock Option Plan Option Assumption Agreement-Full Acceleration. 99.6 Form of 1998 Stock Incentive Compensation Plan Option Assumption Agreement-Standard. 99.7 Form of 1998 Stock Incentive Compensation Plan Option Assumption Agreement-Involuntary Termination 12 Months. 99.8 Form of 1998 Stock Incentive Compensation Plan Option Assumption Agreement-Involuntary Termination 6 Months. 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 1933 Act, (ii) to reflect in the prospectus any facts or events arising after the II-2 effective date of this 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 this Registration Statement and (iii) to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are incorporated by reference into this Registration Statement; (2) that for the purpose of determining any liability under the 1933 Act 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; and (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 Card Capture Services, Inc. 1996 Incentive Stock Option Plan, the Card Capture Services, Inc. 1997 Incentive Stock Option Plan and/or the Card Capture Services, Inc. 1998 Stock Incentive Compensation Plan. B. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the 1933 Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is incorporated by reference into this 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 1933 Act may be permitted to directors, officers, or controlling persons of the Registrant pursuant to the indemnification foregoing provisions summarized in Item 6 or otherwise, the Registrant has been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the 1933 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 1933 Act and will be governed by the final adjudication of such issue. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Menlo Park, State of California on this 25th day of May 2000. E*TRADE GROUP, INC. By: /s/ Christos M. Cotsakos ------------------------------ Christos M. Cotsakos Chairman of the Board and Chief Executive Officer POWER OF ATTORNEY ----------------- KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned officers and directors of E*TRADE Group, Inc., a Delaware corporation, do hereby constitute and appoint Brigitte Van Baelen, Theodore J. Theophilos and Leonard C. Purkis, and each one of them, the lawful attorneys-in-fact and agents with full power and authority to do any and all acts and things and to execute any and all instruments which said attorneys and agents, and any one of them, determine may be necessary or advisable or required to enable said corporation to comply with the Securities Act of 1933, as amended, and any rules or regulations or requirements of the Securities and Exchange Commission in connection with this Registration Statement. Without limiting the generality of the foregoing power and authority, the powers granted include the power and authority to sign the names of the undersigned officers and directors in the capacities indicated below to this Registration Statement, to any and all amendments, both pre-effective and post-effective, and supplements to this Registration Statement, and to any and all instruments or documents filed as part of or in conjunction with this Registration Statement or amendments or supplements thereof, and each of the undersigned hereby ratifies and confirms all that said attorneys and agents, or any one of them, shall do or cause to be done by virtue hereof. This Power of Attorney may be signed in several counterparts. IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney as of the date indicated. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
Signature Title Date - --------- ----- ---- /s/ Christos M. Cotsakos Chairman of the Board and Chief Executive May 25, 2000 - ----------------------------- Officer (Principal Executive Officer) Christos M. Cotsakos /s/ Leonard C. Purkis Chief Financial Officer (Principal May 25, 2000 - ----------------------------- Financial and Accounting Officer) Leonard C. Purkis
II-4 /s/ William A. Porter Chairman Emeritus May 25, 2000 - ----------------------------- William A. Porter /s/ Richard S. Braddock Director May 25, 2000 - ----------------------------- Richard S. Braddock /s/ William E. Ford Director May 25, 2000 - ----------------------------- William E. Ford /s/ George Hayter Director May 25, 2000 - ----------------------------- George Hayter /s/ Lewis E. Randall Director May 25, 2000 - ----------------------------- Lewis E. Randall /s/ Masayoshi Son Director May 25, 2000 - ----------------------------- Masayoshi Son /s/ Lester C. Thurow Director May 25, 2000 - ----------------------------- Lester C. Thurow /s/ Peter Chernin Director May 25, 2000 - ----------------------------- Peter Chernin
II-5 EXHIBIT INDEX ------------- Item 8. Exhibits -------- Number Exhibit ------ ------- 4 Instruments Defining Rights of Stockholders. Reference is made to Registrant's Registration Statement No. 001-11921 on Form 8- A12B, including the exhibits thereto, which is incorporated herein by reference pursuant to Item 3(d). 5 Opinion and consent of Brobeck, Phleger & Harrison LLP. 23.1 Independent Auditors Consent-Deloitte & Touche LLP. 23.2 Consent of Independent Public Accountants-Arthur Andersen, LLP. 23.3 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5. 24 Power of Attorney. Reference is made to page II-4 of this Registration Statement. 99.1 Card Capture Services, Inc. 1996 Incentive Stock Option Plan. 99.2 Card Capture Services, Inc. 1997 Incentive Stock Option Plan. 99.3 Card Capture Services, Inc. 1998 Stock Incentive Compensation Plan. 99.4 Form of 1996 Incentive Stock Option Plan Option Assumption Agreement-Full Acceleration. 99.5 Form of 1997 Incentive Stock Option Plan Option Assumption Agreement-Full Acceleration. 99.6 Form of 1998 Stock Incentive Compensation Plan Option Assumption Agreement-Standard. 99.7 Form of 1998 Stock Incentive Compensation Plan Option Assumption Agreement-Involuntary Termination 12 Months. 99.8 Form of 1998 Stock Incentive Compensation Plan Option Assumption Agreement-Involuntary Termination 6 Months. EX-5 2 OPINION AND CONSENT OF BROBECK EXHIBIT 5 Opinion and consent of Brobeck, Phleger & Harrison LLP May 25, 2000 E*TRADE Group, Inc. 4500 Bohannan Drive Menlo Park, California 94025 Re: E*TRADE Group, Inc. - Registration Statement for Offering of 950,389 Shares of Common Stock ------------------------------ Dear Ladies and Gentlemen: We have acted as counsel to E*TRADE Group, Inc., a Delaware corporation (the "Company"), in connection with the registration on Form S-8 (the "Registration Statement") under the Securities Act of 1933, as amended, an aggregate of 950,389 shares of common stock (the "Shares") and related stock options under (i) the Card Capture Services Inc. 1996 Incentive Stock Option Plan (the "1996 Plan") , (ii) the Card Capture Services 1997 Incentive Stock Option Plan (the "1997 Plan), and (iii) the Card Capture Services, Inc. 1998 Stock Incentive Compensation Plan (the "1998 Plan") (collectively, the "Plans"). The Plans, together with the outstanding options under the Plans, have been assumed by the Company in connection with the Company's acquisition of Card Capture Services, Inc. pursuant to an Agreement and Plan of Reorganization dated March 9, 2000 (the "Plan of Reorganization"). This opinion is being furnished in accordance with the requirements of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K. We have reviewed the Company's charter documents and the corporate proceedings taken by the Company in connection with the assumption of the Plans and the outstanding options thereunder. Based on such review, we are of the opinion that if, as and when the Shares are issued and sold (and the consideration therefor received) pursuant to the provisions of option agreements duly authorized under the Plans, and in accordance with the Registration Statement, such Shares will be duly authorized, legally issued, fully paid and nonassessable. We consent to the filing of this opinion letter as Exhibit 5 to the Registration Statement. This opinion letter is rendered as of the date first written above and we disclaim any obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinion expressed herein. Our opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters relating to the Company, the Plans, or the Shares. Very truly yours, /S/ Brobeck, Phleger & Harrison LLP BROBECK, PHLEGER & HARRISON LLP EX-23.1 3 CONSENT OF DELOITTE AND TOUCHE LLP EXHIBIT 23.1 INDEPENDENT AUDITORS CONSENT We consent to the incorporation by reference in this Registration Statement of E*TRADE Group, Inc. on Form S-8 of our report dated October 13, 1999 (March 15, 2000 as to the second paragraph of note 1), appearing in the Annual Report on Form 10-K/A of E*TRADE Group, Inc. for the year ended September 30, 1999. /s/ DELOITTE & TOUCHE LLP MAY 25, 2000 EX-23.2 4 CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23.2 Consent of Independent Public Accountants As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our report dated March 15, 2000 included in E*TRADE Group, Inc.'s Form 10-K/A for the year ended September 30, 1999 and to all references to our Firm included in this registration statement. /s/ ARTHUR ANDERSEN LLP Vienna, Virginia May 25, 2000 EX-99.1 5 1996 INCENTIVE STOCK OPTION PLAN EXHIBIT 99.1 CARD CAPTURE SERVICES, INC. 1996 INCENTIVE STOCK OPTION PLAN 1. Purpose. The continued growth and success of Card Capture Services, Inc. (the "Corporation") depend on its ability to obtain and retain the services of key employees of the highest competence, and to provide incentives for effective service and high-level performance. The purposes of this Incentive Stock Option Plan (the "Plan") are to provide a means whereby the Corporation can continue to attract, motivate and retain key employees who can contribute materially to the Corporation's growth and success, and to facilitate the acquisition of shares of the Corporation's Class A or Class B common stock (the "Stock") by key employees pursuant to options meeting the requirements of Internal Revenue Code of 1986 (as amended) ("Code") (S)422, so that such key employees will more closely identify their interests with those of the Corporation and its shareholders. 2. Stock. The Stock subject to options under the Plan shall be shares of the Corporation's authorized but unissued or reacquired Stock. Subject to the adjustments described in Section 6 of the Plan, the aggregate number of shares that may be issued pursuant to the Plan shall not exceed 1,649,924 shares of Stock. The shares issued under the Plan may be authorized and unissued shares or reacquired shares. More than one option may be granted to the same employee. In the event any outstanding option granted under the Plan for any reason expires or is terminated, the shares of Stock allocable to the unexercised portion of such option may again be the subject of options granted under the Plan. 3. Eligibility. The persons who shall be eligible to receive awards of options shall be such key employees (including officers, whether or not they are directors) of the Corporation as may be selected from time to time by the Board of Directors of the Corporation (the "Board"). 4. Administration. The Plan shall be administered by the members of the Board. The Board shall have full power and authority, subject to the provisions of the Plan, to: (a) Designate participants; (b) Determine the number of options to be granted to each participant; (c) Determine the terms of option agreements for each option; (d) Supervise administration of the Plan; (e) Interpret the provisions of the Plan and option agreements granted under it; and (f) Take all action in connection with the Plan as it deems necessary or advisable. Subject to the provisions of the Plan, the Board may from time to time adopt and amend rules and regulations relating to administration of the Plan, advance the lapse of any waiting period, accelerate any exercise date, waive or modify any restriction applicable to shares (except those restrictions imposed by law) and make all other determinations in the judgment of the Board necessary or desirable for the administration of the Plan. The interpretation and construction of the provisions of the Plan and related agreements by the Board shall be final and conclusive. The Board may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any related agreement in the manner and to the extent it shall deem expedient to implement the Plan and it shall be the sole and final judge of such expediency. No member of the Board shall be liable for any action or determination made in good faith with respect to the Plan or any option granted under it. 1--1996 INCENTIVE STOCK OPTION PLAN 5. Terms and Conditions of Options. Options under the Plan granted by the Board shall be evidenced by stock option agreements in such form as the Board shall from time to time approve, and shall comply with and be subject to the following terms and conditions: 5.1 Number of Shares. Each option agreement shall state the number of shares of Stock subject to the option. 5.2 Option Price. Each option agreement shall state the option price, which shall be not less than 100% (110% for 10% Shareholders, as defined below) of the fair market value, on the date the option is granted, of the shares of Stock subject to the option. A "10% Shareholder" is any person who, at the time an option is granted, owns stock of the Corporation possessing more than 10% of the combined voting power of all classes of stock of the Corporation or any affiliate. 5.3 Determination of Fair Market Value. The fair market value per share of Stock shall be determined by the Board in good faith at the time the option is granted. If the Stock is not publicly traded on the date the option is granted, the Board may consider any valuation methods it deems appropriate and may, but is not required to, obtain one or more independent appraisals of the Corporation. 5.4 Option Period and Limitations on Exercise. Each option shall expire and shall not be exercisable after the expiration of 10 years (5 years for 10% Shareholders) from the date the option is granted, or such lesser period as may be established by the Board at the time the option is granted. Each option shall be exercisable by the optionee either immediately or after such period, and according to such schedule for exercise, or in such other manner as the Board shall provide in the option agreement at the time the option is granted. Notwithstanding any other provision of the Plan, options granted under the Plan shall be exercisable only while the optionee remains an employee of the Corporation, except that (a) in the event of (1) an optionee's termination of employment with the Corporation by reason of disability (within the meaning of Code (S)22(e)(3)), or (2) an optionee's death while an employee of the Corporation, the option agreement may allow the option to remain exercisable, to the extent it was exercisable on the date of termination or the date of death, by the optionee or the estate or devisee of the decedent, until the expiration date of the term of the option or 1 year after the date of the optionee's termination of employment or death, whichever date is earlier; and (b) in the event of an optionee's involuntary termination of employment with the Corporation without cause, the option agreement may allow the option to remain exercisable, to the extent it was exercisable on the date of termination, by the optionee until the expiration date of the term of the option or 3 months after the date of the optionee's termination of employment, whichever date is earlier; and (c) the Board, at the time of grant or at any time thereafter, may extend the 1 year and 3 month exercise periods any length of time not longer than the original expiration date of the option, and may increase the portion of an option that is exercisable, subject to such terms and conditions as the Board may determine; and (d) to the extent that the option of any deceased optionee or of any optionee whose employment or service terminates is not exercised within the applicable period, all further rights to purchase shares pursuant to such option shall cease and terminate. 2--1996 INCENTIVE STOCK OPTION PLAN 5.5 Securities Restrictions. All option agreements evidencing options granted under the Plan shall provide that: (a) If the Board at any time determines that registration or qualification of the Stock or any option under state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable, then the option may not be exercised, in whole or in part, until such registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board. (b) Any person exercising an option to purchase shares of Stock may be required by the Corporation to give a written representation that he or she is acquiring such shares for his or her own account for investment and not with a view to the distribution of such shares. 5.6 Payment of Purchase Price. The option price upon exercise of an option under the Plan shall be payable to the Corporation in cash or, in the discretion of the Board, in installments on such terms and over such period as the Board shall determine. With the consent of the Board, in whole or in part, the option price may also be paid in Stock of the Corporation valued at fair market value. 5.7 Nontransferability. Options shall not be transferable except by testamentary will or the laws of descent and distribution, and shall be exercisable during an optionee's lifetime only by the optionee. 5.8 Shareholders' Agreement. Each option agreement shall provide that, as a condition of exercising any option granted under the Plan, the optionee shall agree to enter into and be bound by the agreement in force at the time of such exercise among the Corporation and its shareholders relating to the repurchase by the Corporation or continuing shareholders of its outstanding shares in certain circumstances and prohibiting competition with the Corporation. 5.9 Multiple Agreements. The terms of each option may differ from other options granted under the Plan at the same time or at some other time. The Board may also grant more than one option to a given optionee during the term of the Plan, either in addition to, or in substitution for, one or more options previously granted to that optionee. 5.9 Other Provisions. Any option agreement may contain such other or additional terms and provisions as may be determined by the Board to be consistent with the Plan, or necessary or desirable to comply with the provisions of applicable laws, rules or regulations. 6. Adjustments. In the event of a reorganization, recapitalization, stock dividend or stock split, or combination or other change in the shares of the Stock, the Board may, in order to prevent the dilution or enlargement of rights under outstanding options, make such adjustments in the number and type of shares authorized by the Plan, the number and type of shares covered by outstanding options and the exercise prices specified therein as may be determined to be appropriate and equitable. 6.1 Conditions and Restrictions. If, by reason of an adjustment, an optionee shall be entitled to exercise an option with respect to new, additional or different shares of stock or securities, such new, additional or different shares shall thereupon be subject to all of the conditions, restrictions and performance criteria which were applicable to the Stock subject to the option prior to such adjustment. 3--1996 INCENTIVE STOCK OPTION PLAN 6.2 Fractional Shares. In connection with any adjustment under this Section 6 resulting in a fractional share interest, such interest may be rounded down to the nearest whole share if such interest is less than 0.5 share; otherwise, such fractional share interest may be rounded up to the nearest whole share. 7. Change in Control. 7.1 Effect. Notwithstanding anything contained in the Plan but subject to any term in an option agreement to the contrary, in the event of a Change in Control, (i) all options granted under the Plan and outstanding on the date of such Change in Control shall become immediately and fully exercisable and (ii) upon termination of an optionee's employment with the Corporation following a Change in Control, options held by such optionee shall remain exercisable until the later of 1 year after termination or 60 days following the expiration of the Pooling Period (in the event the Change in Control constitutes a Pooling Transaction), but in no event beyond the stated term of the option. In addition, as and to the extent set forth in the option agreement evidencing the grant of an option, an optionee will be permitted to surrender for cancellation within 60 days after such Change in Control, any option or portion of an option, to the extent not yet exercised, and the optionee will be entitled to receive a cash payment in an amount equal to the excess, if any, of the fair market value on the date preceding the date of surrender of the Stock subject to the option or portion thereof surrendered over the aggregate purchase price for such Stock under the option or portion thereof surrendered. Provided, however, that in the case of an option granted within 6 months prior to the Change in Control to any optionee who may be subject to liability under Section 16(b) of the Exchange Act, such optionee shall be entitled to surrender his option for cancellation during the 60 day period commencing upon the expiration of 6 months from the date of grant of any such option. 7.2 Change in Control. A "Change in Control" shall have the meaning as set forth in the Amended and Restated Employment Agreement dated March 6, 1997 between the Corporation and the optionee and shall include a sale of all or substantially all of the assets of the Corporation. 7.3 Pooling Transactions. Notwithstanding anything contained in the Plan or any option agreement to the contrary, in the event of a Change in Control which is also intended to constitute a Pooling Transaction, the Board shall take such actions, if any, which are specifically recommended by an independent accounting firm retained by the Corporation to the extent reasonably necessary in order to assure that the Pooling Transaction will qualify as such, including but not limited to (I) deferring the vesting, exercise, payment, settlement or lapsing of restrictions with respect to any option, (ii) providing that the payment or settlement in respect of any option be made in the form of cash, Stock or securities of a successor or acquirer of the Corporation, or a combination of the foregoing, and (iii) providing for the extension of the term of any option to the extent necessary to accommodate the foregoing, but not beyond the maximum term permitted for any option. (a) "Pooling Transaction" means an acquisition of or by the Corporation in a transaction which is intended to be treated as a "pooling of interests" under generally accepted accounting principles. (b) "Pooling Period" means, with respect to a Pooling Transaction, the date on which the combined entity resulting from such Pooling Transaction publishes 30 days of combined operating results, or if the Board makes a determination, such other period following the Pooling Transaction which the Board reasonably determines is appropriate in connection with the Pooling Transaction as a means of qualifying for an pursuing "pooling of interests" accounting treatment. 4--1996 INCENTIVE STOCK OPTION PLAN 8. Proceeds. The proceeds received by the Corporation from the sale of Stock pursuant to the Plan will be used for general corporate purposes. 9. Tax Withholding. 9.1 Withholding. At such times as an optionee recognizes taxable income in connection with the receipt of Stock or cash hereunder (a "Taxable Event"), the optionee shall pay to the Corporation an amount equal to the federal, state and local income taxes and other amounts as may be required by law to be withheld by the Corporation in connection with the Taxable Event (the "Withholding Taxes") prior to the issuance, or release from escrow, of such Stock or the payment of such cash. The Corporation shall have the right to deduct from any payment of cash to an optionee an amount equal to the Withholding Taxes in satisfaction of the obligation to pay Withholding Taxes. In satisfaction of the obligation to pay Withholding Taxes to the Corporation, the optionee may make a written election (the "Tax Election"), which may be accepted or rejected in the discretion of the Board, to have withheld a portion of the Stock then issuable to the optionee having an aggregate fair market value, on the date preceding the date of such issuance, equal to the Withholding Taxes. Notwithstanding the foregoing, the Board may, by the adoption of rules or otherwise, modify the provisions of this Section 9.1 or impose such other restrictions on Tax Elections as may be necessary to ensure that the Tax Elections will be exempt transactions under Section 16(b) of the Exchange Act, and the Board may also permit Tax Elections to be made at such other times and subject to such other conditions as the Board determines will constitute exempt transactions under Section 16(b) of the Exchange Act. 9.2 Notice. If an optionee makes a disposition, within the meaning of Code (S)424(c) and regulations promulgated thereunder, of any Stock issued to such optionee pursuant to the exercise of an incentive stock option within the 2 year period commencing on the day after the date of the grant or within the 1 year period commencing after the date of transfer of such Stock to the optionee pursuant to such exercise, the optionee shall, within 20 days of such disposition, notify the Corporation of such disposition by delivery of written notice to the Corporation at its principal executive office. 10. Obligation to Exercise; Right to Continued Employment. The granting of an option shall impose no obligation on the optionee to exercise the option. The granting of an option does not confer any right to be continued in the employment of the Corporation. 11. Amendment and Discontinuance. The Board may alter, amend, suspend, or terminate the Plan, provided that the Board may not, without further approval by the holders of at least two-thirds of the outstanding shares of stock of the Corporation entitled to vote, (a) Increase the aggregate number of shares of Stock for which options may be granted under the Plan (except for adjustments pursuant to Section 6); (b) Decrease the option price at which Stock may be offered; (c) Materially modify the requirements as to eligibility for participation in the Plan; or (d) Alter or impair, without the optionee's consent, the rights or obligations under any option previously granted pursuant to the Plan. 12. Term of Plan and Effective Date. The Plan shall become effective on the date the Plan is approved by (1) the Board and (2) the holders of a majority of the outstanding shares of stock of the Corporation entitled to vote, whichever shall last occur. The Plan must be so 5--1996 INCENTIVE STOCK OPTION PLAN approved by the shareholders of Corporation within 12 months after the Plan is approved by the Board. Options may be granted pursuant to the Plan from time to time within 10 years after the Plan becomes effective. 6--1996 INCENTIVE STOCK OPTION PLAN EX-99.2 6 1997 INCENTIVE STOCK OPTION PLAN EXHIBIT 99.2 CARD CAPTURE SERVICES, INC. 1997 INCENTIVE STOCK OPTION PLAN 1. Purposes of the Plan. The purposes of this Incentive Stock -------------------- Option Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees and Consultants of the Company and its Subsidiaries and to promote the success of the Company's business. Options granted under the Plan may be incentive stock options (as defined under Section 422 of the Code) or nonstatutory stock options, as determined by the Administrator at the time of grant of an option and subject to the applicable provisions of Section 422 of the Code, as amended, and the regulations promulgated thereunder. 2. Definitions. As used herein, the following definitions shall ----------- apply: 2.1 "Administrator" means the Board or any of its Committees ------------- appointed pursuant to Section 4 of the Plan. 2.2 "Applicable Laws" means the legal requirements relating to the --------------- administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code and the applicable laws of any foreign country or jurisdiction where Options will be or are being granted under the Plan. 2.3 "Board" means the Board of Directors of the Company. ----- 2.4 "Code" means the Internal Revenue Code of 1986, as amended. ---- 2.5 "Committee" means a Committee appointed by the Board of --------- Directors in accordance with Section 4 of the Plan. 2.6 "Common Stock" means the Common Stock of the Company. ------------ 2.7 "Company" means Card Capture Services, Inc., an Oregon ------- corporation. 2.8 "Consultant" means any person who is engaged by the Company or ---------- any Parent or Subsidiary to render consulting or advisory services and is compensated for such services, and any director of the Company whether compensated for such services or not. If and in the event the Company registers any class of any equity security pursuant to the Exchange Act, the term Consultant shall thereafter not include directors who are not compensated for their services or are paid only a director's fee by the Company. 2.9 "Continuous Status as an Employee or Consultant" means that the ---------------------------------------------- employment or consulting relationship with the Company, any Parent, or Subsidiary, is not interrupted or terminated. Continuous Status as an Employee or Consultant shall not be considered interrupted in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. A leave of absence approved by the Company shall include sick leave, military leave, or any other personal leave approved by an authorized representative of the Company. For purposes of Incentive Stock Options, no such leave may exceed 90 days, unless reemployment upon expiration of such leave is guaranteed by statute or contract, including Company policies. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the 181st day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. 1--1997 STOCK OPTION PLAN 2.10 "Employee" means any person, including Officers and directors, -------- employed by the Company or any Parent or Subsidiary of the Company. The payment of a director's fee by the Company shall not be sufficient to constitute "employment" by the Company. 2.11 "Exchange Act" means the Securities Exchange Act of 1934, ------------ as amended. 2.12 "Fair Market Value" means, as of any date, the value of Common ----------------- Stock determined as follows: (a) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (b) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination; or (c) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator. The Administrator may consider any valuation methods it deems appropriate and may, but is not required to, obtain one or more independent appraisals. 2.13 "Incentive Stock Option" means an Option intended to qualify as ---------------------- an incentive stock option within the meaning of Section 422 of the Code. 2.14 "Nonstatutory Stock Option" means an Option not intended to ------------------------- qualify as an Incentive Stock Option. 2.15 "Officer" means a person who is an officer of the Company within ------- the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. 2.16 "Option" means a stock option granted pursuant to the Plan. ------ 2.17 "Optioned Stock" means the Common Stock subject to an Option. -------------- 2.18 "Optionee" means an Employee or Consultant who receives an -------- Option. 2.19 "Parent" means a "parent corporation", whether now or hereafter ------ existing, as defined in Section 424(e) of the Code. 2.20 "Plan" means this 1997 Stock Option Plan. ---- 2.21 "Section 16(b)" means Section 16(b) of the Securities Exchange ------------- Act of 1934, as amended. 2.22 "Share" means a share of the Common Stock, as adjusted in ----- accordance with Section 11 below. 2--1997 STOCK OPTION PLAN 2.23 "Subsidiary" means a "subsidiary corporation", whether ---------- now or hereafter existing, as defined in Section 424(f) of the Code. 3. Stock Subject to the Plan. Subject to the provisions of ------------------------- Section 11 of the Plan, the maximum aggregate number of Shares which may be optioned and sold under the Plan is 600,000 Shares. The Shares may be authorized, but unissued, or reacquired Common Stock. If an Option expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an option exchange program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated); provided, however, that Shares that have actually been issued under the Plan shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if unvested Shares are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan. 4. Administration of the Plan. -------------------------- 4.1 Initial Plan Procedure. Prior to the date, if any, upon which ---------------------- the Company becomes subject to the Exchange Act, the Plan shall be administered by the Board or a committee appointed by the Board. 4.2 Plan Procedure after the Date, if any, upon which the Company ------------------------------------------------------------- becomes Subject to the Exchange Act. - ----------------------------------- (a) Administration with respect to Directors and Officers. ----------------------------------------------------- With respect to grants of Options to Employees who are also Officers or directors of the Company, the Plan shall be administered by (A) the Board if the Board may administer the Plan in compliance with the rules under Rule 16b-3 promulgated under the Exchange Act or any successor thereto ("Rule 16b-3") relating to the disinterested administration of employee benefit plans under which Section 16(b) exempt discretionary grants and awards of equity securities are to be made, or (B) a Committee designated by the Board to administer the Plan, which Committee shall be constituted to comply with the rules under Rule 16b-3 relating to the disinterested administration of employee benefit plans under which Section 16(b) exempt discretionary grants and awards of equity securities are to be made. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. >From time to time the Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies, however caused, and remove all members of the Committee and thereafter directly administer the Plan, all to the extent permitted by the rules under Rule 16b-3 relating to the disinterested administration of employee benefit plans under which Section 16(b) exempt discretionary grants and awards of equity securities are to be made. (b) Multiple Administrative Bodies. If permitted by Rule ------------------------------ 16b-3, the Plan may be administered by different bodies with respect to directors, non-director Officers and Employees who are neither directors nor Officers. (c) Administration With Respect to Consultants and Other ---------------------------------------------------- Employees. With respect to grants of Options to Employees or Consultants who are - --------- neither directors nor Officers of the Company, the Plan shall be administered by (A) the Board or (B) a committee designated by the Board, which committee shall be constituted in such a manner as to satisfy Applicable Laws. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. From time to time the Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies, however caused, 3--1997 STOCK OPTION PLAN and remove all members of the Committee and thereafter directly administer the Plan, all to the extent permitted by the Applicable Laws. 4.3 Powers of the Administrator. Subject to the provisions of the --------------------------- Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, including the approval, if required, of any stock exchange upon which the Common Stock is listed, the Administrator shall have the authority, in its discretion: (a) to determine the Fair Market Value of the Common Stock, in accordance with Section 2.12 of the Plan; (b) to select the Consultants and Employees to whom Options may from time to time be granted hereunder; (c) to determine whether and to what extent Options are granted hereunder; (d) to determine the number of shares of Common Stock to be covered by each such award granted hereunder; (e) to approve forms of agreement for use under the Plan; (f) to determine the terms and conditions of any award granted hereunder; (g) to determine whether and under what circumstances an Option may be settled in cash under Section 9.6 instead of Common Stock; (h) to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option has declined since the date the Option was granted; and (i) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan. Subject to the provisions of the Plan, the Board may from time to time adopt and amend rules and regulations relating to administration of the Plan, advance the lapse of any waiting period, accelerate any exercise date, waive or modify any restriction applicable to shares (except those restrictions imposed by law) and make all other determinations in the judgment of the Board necessary or desirable for the administration of the Plan. The Board may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any related agreement in the manner and to the extent it shall deem expedient to implement the Plan and it shall be the sole and final judge of such expediency. No member of the Board shall be liable for any action or determination made in good faith with respect to the Plan or any option granted under it. 4.4 Effect of Administrator's Decision. All decisions, ---------------------------------- determinations and interpretations of the Administrator shall be final and binding on all Optionees and any other holders of any Options. 4--1997 STOCK OPTION PLAN 5. Eligibility. ----------- 5.1 Nonstatutory Stock Options may be granted to Employees and Consultants. Incentive Stock Options may be granted only to Employees. An Employee or Consultant who has been granted an Option may, if otherwise eligible, be granted additional Options. 5.2 Each Option shall be designated in the written option agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 5.2, Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted. 5.3 The Plan shall not confer upon any Optionee any right with respect to continuation of employment or consulting relationship with the Company, nor shall it interfere in any way with his or her right or the Company's right to terminate his or her employment or consulting relationship at any time, with or without cause. 6. Term of Plan. The Plan shall become effective upon the earlier ------------ to occur of its adoption by the Board of Directors or its approval by the shareholders of the Company, as described in Section 17 of the Plan. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 13 of the Plan. 7. Term of Option. The term of each Option shall be the term -------------- stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. However, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Option Agreement. 8. Option Exercise Price and Consideration. --------------------------------------- 8.1 The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following: (a) In the case of an Incentive Stock Option (i) granted to an Employee who, at the time of the grant of such Incentive Stock Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant. (ii) granted to any Employee other than an Employee described in the preceding paragraph, the per share exercise price shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. 5--1997 STOCK OPTION PLAN (b) In the case of a Nonstatutory Stock Option (i) granted to a person who, at the time of the grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of the grant. (ii) granted to any other person, the per Share exercise price shall be no less than eighty-five percent (85%) of the Fair Market Value per Share on the date of grant. 8.2 The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant) and may consist entirely of (1) cash, (2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares acquired upon exercise of an Option have been owned by the Optionee for more than six (6) months on the date of surrender and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised, (5) delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the exercise price, or (6) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. 9. Exercise of Option. ------------------ 9.1 Procedure for Exercise; Rights as a Shareholder. Any Option ----------------------------------------------- granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator, including performance criteria with respect to the Company and/or the Optionee, and as shall be permissible under the terms of the Plan, but in no case at a rate of less than twenty percent (20%) per year over five (5) years from the date the Option is granted. An Option may not be exercised for a fraction of a Share. An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment may, as authorized by the Administrator, consist of any consideration and method of payment allowable under Section 8.2 of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 11 of the Plan. Exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. 9.2 Termination of Employment or Consulting Relationship. In the ---------------------------------------------------- event of termination of an Optionee's Continuous Status as an Employee or Consultant with the Company (but not in the event of an Optionee's change of status from Employee to Consultant, in which case an Employee's Incentive Stock Option shall automatically convert to a Nonstatutory Stock 6--1997 STOCK OPTION PLAN Option on the date three (3) months and one (1) day from the date of such change of status, or from Consultant to Employee), such Optionee may, but only within such period of time as is determined by the Administrator, of at least thirty (30) days, with such determination in the case of an Incentive Stock Option not exceeding three (3) months after the date of such termination (but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), exercise his or her Option to the extent that the Optionee was entitled to exercise it at the date of such termination. To the extent that the Optionee was not entitled to exercise the Option at the date of such termination, or if the Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate. 9.3 Disability of Optionee. In the event of termination of an ---------------------- Optionee's consulting relationship or Continuous Status as an Employee as a result of his or her disability, such Optionee may, but only within twelve (12) months from the date of such termination or such other period of time as determined by the Administrator and specified in the Notice of Grant (provided, however, that such period shall not be less than six (6) months and in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), exercise the Option to the extent otherwise entitled to exercise it at the date of such termination; provided, however, that if such disability is not a "disability" as such term is defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such Incentive Stock Option shall automatically convert to a Nonstatutory Stock Option on the day three (3) months and one (1) day following such termination. To the extent that the Optionee is not entitled to exercise the Option at the date of termination, or if the Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 9.4 Death of Optionee. In the event of the death of an Optionee at ----------------- any time within three (3) months of the termination of employment, the Option may be exercised at any time within eighteen (18) months following the date of death or such other period of time as determined by the Administrator and specified in the Notice of Grant (provided, however, that such period shall not be less than six (6) months but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant), by the Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent that the Optionee was entitled to exercise the Option at the date of death. If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the Shares covered by the unexercisable portion of the Option shall immediately revert to the Plan. If, after death, the Optionee's estate or a person who acquired the right to exercise the Option by bequest or inheritance does not exercise the Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 9.5 Rule 16b-3. Options granted to persons subject to Section 16(b) ---------- of the Exchange Act must comply with Rule 16b-3 and shall contain such additional conditions or restrictions as may be required thereunder to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions. 9.6 Buyout Provisions. The Administrator may at any time offer to ----------------- buy out for a payment in cash or Shares, an Option previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made. 9.7 Shareholder Agreement. Each Option shall provide that, as a --------------------- condition of exercising the Option and so long as the Shares are not publicly traded, the Optionee shall agree to enter into and be bound by an agreement relating to the repurchase in certain circumstances by the Company of Shares issued pursuant to the Option and prohibiting competition with the Company. 7--1997 STOCK OPTION PLAN 9.8 Multiple Agreements. The terms of each Option may differ from ------------------- other Options granted under the Plan at the same time or at some other time. The Administrator may also grant more than one Option to a given Optionee during the term of the Plan, either in addition to, or in substitution for, one or more Options previously granted to that Optionee. 10. Non-Transferability of Options. Options may not be sold, ------------------------------ pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. 11. Adjustments Upon Changes in Capitalization or Merger. ---------------------------------------------------- 11.1 Changes in Capitalization. Subject to any required action by the ------------------------- shareholders of the Company, the number of shares of Common Stock covered by each outstanding Option, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per share of Common Stock covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Administrator, whose determination in that respect shall be final, binding and conclusive. In connection with any adjustment under this paragraph resulting in a fractional share interest, such interest may be rounded down to the nearest whole share if such interest is less than 0.5 share; otherwise, such fractional share interest may be rounded up to the nearest whole share. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option. 11.2 Dissolution or Liquidation. In the event of the proposed -------------------------- dissolution or liquidation of the Company, the Administrator shall notify the Optionee at least fifteen (15) days prior to such proposed action. To the extent it has not been previously exercised, the Option will terminate immediately prior to the consummation of such proposed action. 11.3 Merger. In the event of a merger of the Company with or into ------ another corporation, the Option may be assumed or an equivalent option may be substituted by such successor corporation or a parent or subsidiary of such successor corporation. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger, the option confers the right to purchase, for each Share of Optioned Stock subject to the Option immediately prior to the merger, the consideration (whether stock, cash or other securities or property) received in the merger by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger was not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option for each Share of Optioned Stock subject to the Option to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger. 8--1997 STOCK OPTION PLAN 12. Time of Granting Options. The date of grant of an Option shall, ------------------------ for all purposes, be the date on which the Administrator makes the determination granting such Option, or such other date as is determined by the Board. Notice of the determination shall be given to each Employee or Consultant to whom an Option is so granted within a reasonable time after the date of such grant. 13. Amendment and Termination of the Plan. ------------------------------------- 13.1 Amendment and Termination. The Board may at any time amend, ------------------------- alter, suspend or discontinue the Plan, but no amendment, alteration, suspension or discontinuation shall be made which would impair the rights of any Optionee under any grant theretofore made, without his or her consent. In addition, to the extent necessary and desirable to comply with Rule 16b-3 under the Exchange Act or with Section 422 of the Code (or any other applicable law or regulation, including the requirements of the NASD or an established stock exchange), the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required. 13.2 Effect of Amendment or Termination. Any such amendment or ---------------------------------- termination of the Plan shall not affect Options already granted, and such Options shall remain in full force and effect as if this Plan had not been amended or terminated, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. 14. Conditions Upon Issuance of Shares. Shares shall not be issued ---------------------------------- pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned relevant provisions of law. 15. Reservation of Shares. The Company, during the term of this --------------------- Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 9--1997 STOCK OPTION PLAN 16. Tax Withholding. --------------- 16.1 Withholding. At such times as an Optionee recognizes taxable ----------- income in connection with the receipt of Shares or cash hereunder (a "Taxable Event"), the Optionee shall pay to the Company an amount equal to the federal, state and local income taxes and other amounts as may be required by law to be withheld by the Company in connection with the Taxable Event (the "Withholding Taxes") prior to the issuance, or release from escrow, of such Shares or the payment of such cash. The Company shall have the right to deduct from any payment of cash to an Optionee an amount equal to the Withholding Taxes in satisfaction of the obligation to pay Withholding Taxes. In satisfaction of the obligation to pay Withholding Taxes to the Company, the Optionee may make a written election (the "Tax Election"), which may be accepted or rejected in the discretion of the Administrator, to have withheld a portion of the Shares then issuable to the Optionee having an aggregate fair market value, on the date preceding the date of such issuance, equal to the Withholding Taxes. Notwithstanding the foregoing, the Administrator may, by the adoption of rules or otherwise, modify the provisions of this paragraph or impose such other restrictions on Tax Elections as may be necessary to ensure that the Tax Elections will be exempt transactions under Section 16(b) of the Exchange Act, and the Administrator may also permit Tax Elections to be made at such other times and subject to such other conditions as the Administrator determines will constitute exempt transactions under Section 16(b) of the Exchange Act. 16.2 Notice. If an Optionee makes a disposition, within the meaning ------ of Code (S)424(c) and regulations promulgated thereunder, of any Shares issued to such Optionee pursuant to the exercise of an Incentive Stock Option within the two (2) year period commencing on the day after the date of the grant or within the one (1) year period commencing after the date of transfer of such Shares to the Optionee pursuant to such exercise, the Optionee shall, within twenty (20) days of such disposition, notify the Company of such disposition by delivery of written notice to the Company at its principal executive office. 17. Agreements. Options shall be evidenced by written agreements in ---------- such form as the Administrator shall approve from time to time. 18. Shareholder Approval. Continuance of the Plan shall be subject -------------------- to approval by the shareholders of the Company within twelve (12) months before or after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws and the rules of any stock exchange upon which the Common Stock is listed. 19. Information to Optionees and Purchasers. The Company shall --------------------------------------- provide to each Optionee, not less frequently than annually, copies of annual financial statements. The Company shall also provide such statements to each individual who acquires Shares pursuant to the Plan while such individual owns such Shares. The Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information. 10--1997 STOCK OPTION PLAN EX-99.3 7 1998 STOCK INCENTIVE COMPENSATION PLAN EXHIBIT 99.3 CARD CAPTURE SERVICES, INC. 1998 STOCK INCENTIVE COMPENSATION PLAN SECTION 1. PURPOSE The purpose of the Card Capture Services, Inc. 1998 Stock Incentive Compensation Plan (the "Plan") is to enhance the long-term shareholder value of Card Capture Services, Inc., an Oregon corporation (the "Company"), by offering opportunities to employees, directors, officers, consultants, agents, advisors and independent contractors of the Company and its Subsidiaries (as defined in Section 2) to participate in the Company's growth and success, and to encourage them to remain in the service of the Company and its Subsidiaries and to acquire and maintain stock ownership in the Company. SECTION 2. DEFINITIONS For purposes of the Plan, the following terms shall be defined as set forth below: 2.1 Award "Award" means an award or grant made pursuant to the Plan, including, without limitation, awards or grants of Options and Stock Awards, or any combination of the foregoing. 2.2 Board "Board" means the Board of Directors of the Company. 2.3 Cause "Cause" means (a) dishonesty, fraud, misconduct, unauthorized use or disclosure of confidential information or trade secrets, or conviction or confession of a crime punishable by law (except minor violations) or (b) willful and continuous failure or refusal to comply with any of the lawful and material policies, standards, rules and regulations of the Company from time to time established, after having received 30 days' written notice specifying the conduct or performance at issue and reasonable time to cure any deficiencies. The existence of "Cause" shall, in each case, be determined by the Plan Administrator, and its determination shall be conclusive and binding. 2.4 Code "Code" means the Internal Revenue Code of 1986, as amended from time to time. -1- 2.5 Common Stock "Common Stock" means the common stock, no par value per share, of the Company. 2.6 Corporate Transaction "Corporate Transaction" means any of the following events: (a) Consummation of any merger or consolidation of the Company in which the Company is not the continuing or surviving corporation, or pursuant to which shares of the Common Stock are converted into cash, securities or other property, if following such merger or consolidation the holders of the Company's outstanding voting securities immediately prior to such merger or consolidation own less than 51% of the outstanding voting securities of the surviving corporation; (b) Consummation of any sale, lease, exchange or other transfer in one transaction or a series of related transactions of all or substantially all of the Company's assets other than a transfer of the Company's assets to a majority-owned subsidiary corporation (as the term "subsidiary corporation" is defined in Section 8.3) of the Company; or (c) Approval by the holders of the Common Stock of any plan or proposal for the liquidation or dissolution of the Company. (d) Acquisition by a person, within the meaning of Section 3(a)(9) or of Section 13(d)(3) (as in effect on the ate of adoption of the Plan) of the Exchange Act of a majority or more of the Company's outstanding voting securities (whether directly or indirectly, beneficially or of record). Ownership of voting securities shall take into account and shall include ownership as determined by applying Rule 13d-3(d)(1)(i) (as in effect on the date of adoption of the Plan) under the Exchange Act. 2.7 Disability "Disability" means "disability" as that term is defined for purposes of Section 22(e)(3) of the Code. 2.8 Early Retirement "Early Retirement" means early retirement as that term is defined by the Plan Administrator from time to time for purposes of the Plan. 2.9 Exchange Act "Exchange Act" means the Securities Exchange Act of 1934, as amended. -2- 2.10 Fair Market Value "Fair Market Value" shall be as established in good faith by the Plan Administrator or (a) if the Common Stock is listed on the Nasdaq National Market, the average of the high and low per share sales prices for the Common Stock as reported by the Nasdaq National Market for a single trading day or (b) if the Common Stock is listed on the New York Stock Exchange or the American Stock Exchange, the average of the high and low per share sales prices for the Common Stock as such price is officially quoted in the composite tape of transactions on such exchange for a single trading day. If there is no such reported price for the Common Stock for the date in question, then such price on the last preceding date for which such price exists shall be determinative of Fair Market Value. 2.11 Good Reason "Good Reason" means the occurrence of any of the following events or conditions and the failure of the Successor Corporation to cure such event or condition within 30 days after receipt of written notice by the Holder: (a) a change in the Holder's status, title, position or responsibilities (including reporting responsibilities) that, in the Holder's reasonable judgment, represents a substantial reduction in the status, title, position or responsibilities as in effect immediately prior thereto; the assignment to the Holder of any duties or responsibilities that, in the Holder's reasonable judgment, are materially inconsistent with such status, title, position or responsibilities; or any removal of the Holder from or failure to reappoint or reelect the Holder to any of such positions, except in connection with the termination of the Holder's employment for Cause, for Disability or as a result of his or her death, or by the Holder other than for Good Reason; (b) a reduction in the Holder's annual base salary; (c) the Successor Corporation's requiring the Holder (without the Holder's consent) to be based at any place outside a 50-mile radius of his or her place of employment prior to a Corporate Transaction, except for reasonably required travel on the Successor Corporation's business that is not materially greater than such travel requirements prior to the Corporate Transaction; (d) the Successor Corporation's failure to (i) continue in effect any material compensation or benefit plan (or the substantial equivalent thereof) in which the Holder was participating at the time of a Corporate Transaction, including, but not limited to, the Plan, or (ii) provide the Holder with compensation and benefits substantially equivalent (in terms of benefit levels and/or reward opportunities) to those provided for under each material employee benefit plan, program and practice as in effect immediately prior to the Corporate Transaction; (e) any material breach by the Successor Corporation of its obligations to the Holder under the Plan or any substantially equivalent plan of the Successor Corporation or under any employment agreement with Holder; or -3- (f) any purported termination of the Holder's employment or service for Cause by the Successor Corporation that does not comply with the terms of the Plan or any substantially equivalent plan of the Successor Corporation. 2.12 Grant Date "Grant Date" means the date the Plan Administrator adopted the granting resolution or a later date designated in a resolution of the Plan Administrator as the date an Award is to be granted. 2.13 Holder "Holder" means: (i) the person to whom an Award is granted; (ii) for a Holder who has died, the personal representative of the Holder's estate, the person(s) to whom the Holder's rights under the Award have passed by will or by the applicable laws of descent and distribution, or the beneficiary designated in accordance with Section 10; or (iii) the person(s) to whom an Award has been transferred in accordance with Section 10. 2.14 Incentive Stock Option "Incentive Stock Option" means an Option to purchase Common Stock granted under Section 7 with the intention that it qualify as an "incentive stock option" as that term is defined in Section 422 of the Code. 2.15 Nonqualified Stock Option "Nonqualified Stock Option" means an Option to purchase Common Stock granted under Section 7 other than an Incentive Stock Option. 2.16 Option "Option" means the right to purchase Common Stock granted under Section 7. 2.17 Plan Administrator "Plan Administrator" means the Board or any committee of the Board designated to administer the Plan under Section 3.1. 2.18 Restricted Stock "Restricted Stock" means shares of Common Stock granted under Section 9, the rights of ownership of which are subject to restrictions prescribed by the Plan Administrator. 2.19 Retirement "Retirement" means retirement as of the individual's normal retirement date under the Company's 401(k) Plan or other similar successor plan applicable to salaried employees. -4- 2.20 Securities Act "Securities Act" means the Securities Act of 1933, as amended. 2.21 Stock Award "Stock Award" means an Award granted under Section 9. 2.22 Subsidiary "Subsidiary," except as provided in Section 8.3 in connection with Incentive Stock Options, means any entity that is directly or indirectly controlled by the Company or in which the Company has a significant ownership interest, as determined by the Plan Administrator, and any entity that may become a direct or indirect parent of the Company. 2.23 Successor Corporation "Successor Corporation" has the meaning set forth under Section 11.2. SECTION 3. ADMINISTRATION 3.1 Plan Administrator The Plan shall be administered by the Board or a committee or committees (which term includes subcommittees) appointed by, and consisting of two or more members of, the Board. If and so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, the Board shall consider in selecting the Plan Administrator and the membership of any committee acting as Plan Administrator, with respect to any persons subject or likely to become subject to Section 16 of the Exchange Act, the provisions regarding (a) "outside directors" as contemplated by Section 162(m) of the Code and (b) "nonemployee directors" as contemplated by Rule 16b-3 under the Exchange Act. The Board may delegate the responsibility for administering the Plan with respect to designated classes of eligible persons to different committees consisting of two or more members of the Board, subject to such limitations as the Board deems appropriate. Committee members shall serve for such term as the Board may determine, subject to removal by the Board at any time. 3.2 Administration and Interpretation by the Plan Administrator Except for the terms and conditions explicitly set forth in the Plan, the Plan Administrator shall have exclusive authority, in its discretion, to determine all matters relating to Awards under the Plan, including the selection of individuals to be granted Awards, the type of Awards, the number of shares of Common Stock subject to an Award, all terms, conditions, restrictions and limitations, if any, of an Award and the terms of any instrument that evidences the Award. The Plan Administrator shall also have exclusive authority to interpret the Plan and may from time to time adopt, and change, rules and regulations of general application for the Plan's administration. The Plan Administrator's interpretation of the Plan and its rules and regulations, and all actions taken and determinations made by the Plan Administrator pursuant to the Plan, shall be -5- conclusive and binding on all parties involved or affected. The Plan Administrator may delegate administrative duties to such of the Company's officers as it so determines. SECTION 4. STOCK SUBJECT TO THE PLAN 4.1 Authorized Number of Shares Subject to adjustment from time to time as provided in Section 11.1, a maximum of 1,000,000 shares of Common Stock shall be available for issuance under the Plan. Shares issued under the Plan shall be drawn from authorized and unissued shares or shares now held or subsequently acquired by the Company. 4.2 Reuse of Shares Any shares of Common Stock that have been made subject to an Award that cease to be subject to the Award (other than by reason of exercise or payment of the Award to the extent it is exercised for or settled in shares) shall again be available for issuance in connection with future grants of Awards under the Plan. SECTION 5. ELIGIBILITY Awards may be granted under the Plan to those officers, directors and employees of the Company and its Subsidiaries as the Plan Administrator from time to time selects. Awards may also be made to consultants, agents, advisors and independent contractors who provide services to the Company and its Subsidiaries. SECTION 6. AWARDS 6.1 Form and Grant of Awards The Plan Administrator shall have the authority, in its sole discretion, to determine the type or types of Awards to be made under the Plan. Such Awards may include, but are not limited to, Incentive Stock Options, Nonqualified Stock Options and Stock Awards. Awards may be granted singly or in combination. 6.2 Acquired Company Awards Notwithstanding anything in the Plan to the contrary, the Plan Administrator may grant Awards under the Plan in substitution for awards issued under other plans, or assume under the Plan awards issued under other plans, if the other plans are or were plans of other acquired entities ("Acquired Entities") (or the parent of the Acquired Entity) and the new Award is substituted, or the old award is assumed, by reason of a merger, consolidation, acquisition of property or of stock, reorganization or liquidation (the "Acquisition Transaction"). In the event that a written agreement pursuant to which the Acquisition Transaction is completed is approved by the Board and said agreement sets forth the terms and conditions of the substitution for or assumption of outstanding awards of the Acquired Entity, said terms and conditions shall be deemed to be the action of the Plan Administrator without any further action by the Plan -6- Administrator, except as may be required for compliance with Rule 16b-3 under the Exchange Act, and the persons holding such Awards shall be deemed to be Holders. SECTION 7. AWARDS OF OPTIONS 7.1 Grant of Options The Plan Administrator is authorized under the Plan, in its sole discretion, to issue Options as Incentive Stock Options or as Nonqualified Stock Options, which shall be appropriately designated. 7.2 Option Exercise Price The exercise price for shares purchased under an Option shall be as determined by the Plan Administrator, but shall not be less than 100% of the Fair Market Value of the Common Stock on the Grant Date with respect to Incentive Stock Options and not less than 85% of the Fair Market Value of the Common Stock on the Grant Date with respect to Nonqualified Stock Options. 7.3 Term of Options The term of each Option shall be as established by the Plan Administrator or, if not so established, shall be 10 years from the Grant Date. 7.4 Exercise of Options The Plan Administrator shall establish and set forth in each instrument that evidences an Option the time at which or the installments in which the Option shall vest and become exercisable, which provisions may be waived or modified by the Plan Administrator at any time. If not so established in the instrument evidencing the Option, the Option will vest and become exercisable according to the following schedule, which may be waived or modified by the Plan Administrator at any time:
Period of Holder's Continuous Employment or Service With the Company or Its Percent of Total Option Subsidiaries From the Option Grant Date That Is Vested and Exercisable --------------------------------------- ------------------------------ After 1 year 20% After 2 years 40% After 3 years 60% After 4 years 80% After 5 years 100%
To the extent that the right to purchase shares has accrued thereunder, an Option may be exercised from time to time by written notice to the Company, in accordance with procedures established by the Plan Administrator, setting forth the number of shares with respect to which the -7- Option is being exercised and accompanied by payment in full as described in Section 7.5. The Plan Administrator may determine at any time that an Option may not be exercised as to less than 100 shares at any one time (or the lesser number of remaining shares covered by the Option). 7.5 Payment of Exercise Price The exercise price for shares purchased under an Option shall be paid in full to the Company by delivery of consideration equal to the product of the Option exercise price and the number of shares purchased. Such consideration must be paid in cash or by check or, unless the Plan Administrator in its sole discretion determines otherwise, either at the time the Option is granted or at any time before it is exercised, a combination of cash and/or check (if any) and one or both of the following alternative forms: (a) tendering (either actually or, if and so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, by attestation) Common Stock already owned by the Holder for at least six months (or any shorter period necessary to avoid a charge to the Company's earnings for financial reporting purposes) having a Fair Market Value on the day prior to the exercise date equal to the aggregate Option exercise price; or (b) if and so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed exercise notice, together with irrevocable instructions, to (i) a brokerage firm designated by the Company to deliver promptly to the Company the aggregate amount of sale or loan proceeds to pay the Option exercise price and any withholding tax obligations that may arise in connection with the exercise and (ii) the Company to deliver the certificates for such purchased shares directly to such brokerage firm, all in accordance with the regulations of the Federal Reserve Board. In addition, to the extent permitted by the Plan Administrator in its sole discretion, the price for shares purchased under an Option may be paid, either singly or in combination with one or more of the alternative forms of payment authorized by this Section 7.5, by (y) a promissory note delivered pursuant to Section 13; or (z) such other consideration as the Plan Administrator may permit. 7.6 Post-Termination Exercises The Plan Administrator shall establish and set forth in each instrument that evidences an Option whether the Option will continue to be exercisable, and the terms and conditions of such exercise, if a Holder ceases to be employed by, or to provide services to, the Company or its Subsidiaries, which provisions may be waived or modified by the Plan Administrator at any time. [If not so established in the instrument evidencing the Option, the Option will be exercisable according to the following terms and conditions, which may be waived or modified by the Plan Administrator at any time. In case of termination of the Holder's employment or services other than by reason of death or Cause, the Option shall be exercisable, to the extent of the number of shares purchasable by the Holder at the date of such termination, only (a) within one year if the termination of the Holder's employment or services is coincident with Retirement, Early Retirement at the Company's request or Disability or (b) within three months after the date the Holder ceases to be an employee, director, officer, consultant, agent, advisor or independent contractor of the Company or a Subsidiary if termination of the Holder's employment or services is for any reason -8- other than Retirement, Early Retirement at the Company's request or Disability, but in no event later than the remaining term of the Option. Any Option exercisable at the time of the Holder's death may be exercised, to the extent of the number of shares purchasable by the Holder at the date of the Holder's death, by the personal representative of the Holder's estate, the person(s) to whom the Holder's rights under the Award have passed by will or the applicable laws of descent and distribution or the beneficiary designated pursuant to Section 10, at any time or from time to time within one year after the date of death, but in no event later than the remaining term of the Option. Any portion of an Option that is not exercisable on the date of termination of the Holder's employment or services shall terminate on such date, unless the Plan Administrator determines otherwise. In case of termination of the Holder's employment or services for Cause, the Option shall automatically terminate upon first notification to the Holder of such termination, unless the Plan Administrator determines otherwise. If a Holder's employment or services with the Company are suspended pending an investigation of whether the Holder shall be terminated for Cause, all the Holder's rights under any Option likewise shall be suspended during the period of investigation. A transfer of employment or services between or among the Company and its Subsidiaries shall not be considered a termination of employment or services. The effect of a Company-approved leave of absence on the terms and conditions of an Option shall be determined by the Plan Administrator, in its sole discretion. SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS To the extent required by Section 422 of the Code, Incentive Stock Options shall be subject to the following additional terms and conditions: 8.1 Dollar Limitation To the extent the aggregate Fair Market Value (determined as of the Grant Date) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time during any calendar year (under the Plan and all other stock option plans of the Company) exceeds $100,000, such portion in excess of $100,000 shall be treated as a Nonqualified Stock Option. In the event the Holder holds two or more such Options that become exercisable for the first time in the same calendar year, such limitation shall be applied on the basis of the order in which such Options are granted. 8.2 10% Shareholders If an individual owns more than 10% of the total voting power of all classes of the Company's stock, then the exercise price per share of an Incentive Stock Option shall not be less than 110% of the Fair Market Value of the Common Stock on the Grant Date and the Option term shall not exceed five years. The determination of 10% ownership shall be made in accordance with Section 422 of the Code. -9- 8.3 Eligible Employees Individuals who are not employees of the Company or one of its parent corporations or subsidiary corporations may not be granted Incentive Stock Options. For purposes of this Section 8.3, "parent corporation" and "subsidiary corporation" shall have the meanings attributed to those terms for purposes of Section 422 of the Code. 8.4 Term The term of an Incentive Stock Option shall not exceed 10 years. 8.5 Exercisability To qualify for Incentive Stock Option tax treatment, an Option designated as an Incentive Stock Option must be exercised within three months after termination of employment for reasons other than death, except that, in the case of termination of employment due to total disability, such Option must be exercised within one year after such termination. Employment shall not be deemed to continue beyond the first 90 days of a leave of absence unless the Holder's reemployment rights are guaranteed by statute or contract. For purposes of this Section 8.5, "total disability" shall mean a mental or physical impairment of the Holder that is expected to result in death or that has lasted or is expected to last for a continuous period of 12 months or more and that causes the Holder to be unable, in the opinion of the Company and two independent physicians, to perform his or her duties for the Company and to be engaged in any substantial gainful activity. Total disability shall be deemed to have occurred on the first day after the Company and the two independent physicians have furnished their opinion of total disability to the Plan Administrator. 8.6 Taxation of Incentive Stock Options In order to obtain certain tax benefits afforded to Incentive Stock Options under Section 422 of the Code, the Holder must hold the shares issued upon the exercise of an Incentive Stock Option for two years after the Grant Date of the Incentive Stock Option and one year from the date of exercise. A Holder may be subject to the alternative minimum tax at the time of exercise of an Incentive Stock Option. The Holder shall give the Company prompt notice of any disposition of shares acquired by the exercise of an Incentive Stock Option prior to the expiration of such holding periods. 8.7 Promissory Notes The amount of any promissory note delivered pursuant to Section 13 in connection with an Incentive Stock Option shall bear interest at a rate specified by the Plan Administrator but in no case less than the rate required to avoid imputation of interest (taking into account any exceptions to the imputed interest rules) for federal income tax purposes. -10- SECTION 9. STOCK AWARDS 9.1 Grant of Stock Awards The Plan Administrator is authorized to make Awards of Common Stock on such terms and conditions and subject to such restrictions, if any (which may be based on continuous service with the Company or the achievement of performance goals) as the Plan Administrator shall determine, in its sole discretion, which terms, conditions and restrictions shall be set forth in the instrument evidencing the Award. The terms, conditions and restrictions that the Plan Administrator shall have the power to determine shall include, without limitation, the manner in which shares subject to Stock Awards are held during the periods they are subject to restrictions and the circumstances under which forfeiture of Restricted Stock shall occur by reason of termination of the Holder's services. 9.2 Issuance of Shares Upon the satisfaction of any terms, conditions and restrictions prescribed in respect to a Stock Award, or upon the Holder's release from any terms, conditions and restrictions of a Stock Award, as determined by the Plan Administrator, the Company shall release, as soon as practicable, to the Holder or, in the case of the Holder's death, to the personal representative of the Holder's estate or as the appropriate court directs, the appropriate number of shares of Common Stock. 9.3 Waiver of Restrictions Notwithstanding any other provisions of the Plan, the Plan Administrator may, in its sole discretion, waive the forfeiture period and any other terms, conditions or restrictions on any Restricted Stock under such circumstances and subject to such terms and conditions as the Plan Administrator shall deem appropriate. SECTION 10. ASSIGNABILITY No Option granted under the Plan may be assigned or transferred by the Holder other than by will or by the applicable laws of descent and distribution, and, during the Holder's lifetime, such Awards may be exercised only by the Holder. Notwithstanding the foregoing, and to the extent permitted by Section 422 of the Code, the Plan Administrator, in its sole discretion, may permit such assignment, transfer and exercisability and may permit a Holder of such Awards to designate a beneficiary who may exercise the Award or receive compensation under the Award after the Holder's death; provided, however, that any Award so assigned or transferred shall be subject to all the same terms and conditions contained in the instrument evidencing the Award. -11- SECTION 11. ADJUSTMENTS 11.1 Adjustment of Shares In the event that, at any time or from time to time, a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization, merger, consolidation, distribution to shareholders other than a normal cash dividend, or other change in the Company's corporate or capital structure results in (a) the outstanding shares, or any securities exchanged therefor or received in their place, being exchanged for a different number or class of securities of the Company or of any other corporation or (b) new, different or additional securities of the Company or of any other corporation being received by the holders of shares of Common Stock of the Company, then the Plan Administrator shall make proportional adjustments in (i) the maximum number and kind of securities subject to the Plan as set forth in Section 4.1 and (ii) the number and kind of securities that are subject to any outstanding Award and the per share price of such securities, without any change in the aggregate price to be paid therefor. The determination by the Plan Administrator as to the terms of any of the foregoing adjustments shall be conclusive and binding. 11.2 Corporate Transaction Except as otherwise provided in the instrument that evidences the Award, in the event of any Corporate Transaction, each Award that is at the time outstanding shall automatically accelerate so that each such Award shall, immediately prior to the specified effective date for the Corporate Transaction, become 100% vested and exercisable. Such Award shall not so accelerate, however, if and to the extent that such Award is, in connection with the Corporate Transaction, either to be assumed by the successor corporation or parent thereof (the "Successor Corporation") or to be replaced with a comparable award for the purchase of shares of the capital stock of the Successor Corporation. The determination of Award comparability shall be made by the Plan Administrator, and its determination shall be conclusive and binding. Any such Awards granted to an "executive officer" (as that term is defined for purposes of Section 16 of the Exchange Act) of the Company that are assumed or replaced in the Corporate Transaction and do not otherwise accelerate at that time shall be accelerated in the event that the Holder's employment or services should subsequently terminate within two years following such Corporate Transaction, unless such employment or services are terminated by the Successor Corporation for Cause or by the Holder voluntarily without Good Reason. The acceleration will not occur if, in the opinion of the Company's outside accountants, it would render unavailable "pooling of interest" accounting for a Corporate Transaction that would otherwise qualify for such accounting treatment. 11.3 Further Adjustment of Awards Subject to Section 11.2, the Plan Administrator shall have the discretion, exercisable at any time before a sale, merger, consolidation, reorganization, liquidation or change in control of the Company, as defined by the Plan Administrator, to take such further action as it determines to be necessary or advisable, and fair and equitable to Holders, with respect to Awards. Such authorized action may include (but shall not be limited to) establishing, amending or waiving the -12- type, terms, conditions or duration of, or restrictions on, Awards so as to provide for earlier, later, extended or additional time for exercise, lifting restrictions and other modifications, and the Plan Administrator may take such actions with respect to all Holders, to certain categories of Holders or only to individual Holders. The Plan Administrator may take such action before or after granting Awards to which the action relates and before or after any public announcement with respect to such sale, merger, consolidation, reorganization, liquidation or change in control that is the reason for such action. 11.4 Limitations The grant of Awards will in no way affect the Company's right to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. SECTION 12. WITHHOLDING The Company may require the Holder to pay to the Company the amount of any withholding taxes that the Company is required to withhold with respect to the grant, vesting or exercise of any Award. Subject to the Plan and applicable law, the Plan Administrator may, in its sole discretion, permit the Holder to satisfy withholding obligations, in whole or in part, by paying cash, by electing to have the Company withhold shares of Common Stock or by transferring shares of Common Stock to the Company, in such amounts as are equivalent to the Fair Market Value of the withholding obligation. The Company shall have the right to withhold from any Award or any shares of Common Stock issuable pursuant to an Award or from any cash amounts otherwise due or to become due from the Company to the Holder an amount equal to such taxes. The Company may also deduct from any Award any other amounts due from the Holder to the Company or a Subsidiary. SECTION 13. LOANS, INSTALLMENT PAYMENTS AND LOAN GUARANTEES To assist a Holder (including a Holder who is an officer or a director of the Company) in acquiring shares of Common Stock pursuant to an Award granted under the Plan, the Plan Administrator, in its sole discretion, may authorize, either at the Grant Date or at any time before the acquisition of Common Stock pursuant to the Award, (a) the extension of a loan to the Holder by the Company, (b) the payment by the Holder of the purchase price, if any, of the Common Stock in installments, or (c) the guarantee by the Company of a loan obtained by the Holder from a third party. The terms of any loans, installment payments or loan guarantees, including the interest rate and terms of repayment, will be subject to the Plan Administrator's discretion; provided, however, that repayment of any Company loan to the Holder shall be secured by delivery of a full-recourse promissory note for the loan amount executed by the Holder, together with any other form of security determined by the Plan Administrator. The maximum credit available is the purchase price, if any, of the Common Stock acquired, plus the maximum federal and state income and employment tax liability that may be incurred in connection with the acquisition. -13- SECTION 14. AMENDMENT AND TERMINATION OF PLAN 14.1 Amendment of Plan The Plan may be amended only by the Board in such respects as it shall deem advisable; however, to the extent required for compliance with Section 422 of the Code or any applicable law or regulation, shareholder approval will be required for any amendment that will (a) increase the total number of shares as to which Options may be granted under the Plan or that may be issued as Stock Awards, (b) modify the class of persons eligible to receive Options, or (c) otherwise require shareholder approval under any applicable law or regulation. 14.2 Termination of Plan The Board may suspend or terminate the Plan at any time. The Plan will have no fixed expiration date; provided, however, that no Incentive Stock Options may be granted more than 10 years after the earlier of the Plan's adoption by the Board and approval by the shareholders. 14.3 Consent of Holder The amendment or termination of the Plan shall not, without the consent of the Holder of any Award under the Plan, impair or diminish any rights or obligations under any Award theretofore granted under the Plan. Any change or adjustment to an outstanding Incentive Stock Option shall not, without the consent of the Holder, be made in a manner so as to constitute a "modification" that would cause such Incentive Stock Option to fail to continue to qualify as an Incentive Stock Option. SECTION 15. GENERAL 15.1 Award Agreements Awards granted under the Plan shall be evidenced by a written agreement that shall contain such terms, conditions, limitations and restrictions as the Plan Administrator shall deem advisable and that are not inconsistent with the Plan. 15.2 Continued Employment or Services; Rights in Awards None of the Plan, participation in the Plan or any action of the Plan Administrator taken under the Plan shall be construed as giving any person any right to be retained in the employ of the Company or limit the Company's right to terminate the employment or services of any person. 15.3 Registration The Company shall be under no obligation to any Holder to register for offering or resale or to qualify for exemption under the Securities Act, or to register or qualify under state securities laws, any shares of Common Stock, security or interest in a security paid or issued under, or created by, the Plan, or to continue in effect any such registrations or qualifications if -14- made. The Company may restrict the exercise of any Option and may adopt exercise control restrictions in order to maintain any exemption requirements of federal or state securities laws. The Company may refuse the exercise of any Option for which an exemption from registration under federal and state securities laws is unavailable. The Company may issue certificates for shares with such legends and subject to such restrictions on transfer and stop-transfer instructions as counsel for the Company deems necessary or desirable for compliance by the Company with federal and state securities laws. Inability of the Company to obtain, from any regulatory body having jurisdiction, the authority deemed by the Company's counsel to be necessary for the lawful issuance and sale of any shares hereunder or the unavailability of an exemption from registration for the issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the nonissuance or sale of such shares as to which such requisite authority shall not have been obtained. 15.4 No Rights as a Shareholder No Option shall entitle the Holder to any cash dividend, voting or other right of a shareholder unless and until the date of issuance under the Plan of the shares that are the subject of such Option, free of all applicable restrictions. 15.5 Compliance With Laws and Regulations Notwithstanding anything in the Plan to the contrary, the Board, in its sole discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any provision of the Plan to Holders who are officers or directors subject to Section 16 of the Exchange Act without so restricting, limiting or conditioning the Plan with respect to other Holders. Additionally, in interpreting and applying the provisions of the Plan, any Option granted as an Incentive Stock Option pursuant to the Plan shall, to the extent permitted by law, be construed as an "incentive stock option" within the meaning of Section 422 of the Code. 15.6 No Trust or Fund The Plan is intended to constitute an "unfunded" plan. Nothing contained herein shall require the Company to segregate any monies or other property, or shares of Common Stock, or to create any trusts, or to make any special deposits for any immediate or deferred amounts payable to any Holder, and no Holder shall have any rights that are greater than those of a general unsecured creditor of the Company. 15.7 Severability If any provision of the Plan or any Award is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or any Award under any law deemed applicable by the Plan Administrator, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Plan Administrator's determination, materially altering the intent of the -15- Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect. SECTION 16. EFFECTIVE DATE The Plan's effective date is the date on which it is adopted by the Board, so long as it is approved by the Company's shareholders at any time within 12 months of such adoption. Adopted by the Board on August 31, 1998 and approved by the Company's shareholders on September 15, 1998. -16- PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS
Date of Adoption/ Amendment/ Date of Shareholder Adjustment Section Effect of Amendment Approval ---------- ------- ------------------- --------
-1- EX-99.4 8 FORM OF OPTION ASSUMPTION AGREEMENT EXHIBIT 99.4 Full Acceleration E*TRADE GROUP, INC. STOCK OPTION ASSUMPTION AGREEMENT CARD CAPTURE SERVICES, INC. 1996 INCENTIVE STOCK OPTION PLAN Optionee: First_Name Last_Name, STOCK OPTION ASSUMPTION AGREEMENT effective as of the 5th day of May, 2000 by E*TRADE Group, Inc., a Delaware corporation ("E*TRADE"). WHEREAS, the undersigned individual ("Optionee") holds one or more outstanding options to purchase shares of the common stock of Card Capture Services, Inc., an Oregon corporation ("CCS"), which were granted to Optionee under the CCS 1996 Incentive Stock Option Plan (the "Plan") and are each evidenced by a Stock Option Agreement (the "Option Agreement"). WHEREAS, CCS has been acquired by E*TRADE through the merger of Card Acquisition Inc. ("Merger Sub") with and into CCS, whereby CCS has become a wholly-owned subsidiary of E*TRADE (the "Merger") pursuant to the Agreement and Plan of Merger by and between E*TRADE, CCS and Merger Sub (the "Merger Agreement"). WHEREAS, the provisions of the Merger Agreement require E*TRADE to assume all obligations of CCS under all outstanding options under the Plan at the consummation of the Merger and to issue to the holder of each outstanding option an agreement evidencing the assumption of such option. WHEREAS, pursuant to the provisions of the Merger Agreement, the exchange ratio (the "Exchange Ratio") in effect for the Merger is 0.4149 of a share of E*TRADE common stock, par value $0.01 per share ("E*TRADE Stock"), for each outstanding share of CCS common stock ("CCS Stock"). WHEREAS, this Agreement became effective immediately upon the consummation of the Merger (the "Effective Time") in order to reflect certain adjustments to Optionee's outstanding options which have become necessary by reason of the assumption of those options by E*TRADE in connection with the Merger. NOW, THEREFORE, it is hereby agreed as follows: 1. The number of shares of CCS Stock subject to the options held by Optionee immediately prior to the Effective Time (the "CCS Options") and the exercise price payable per share are set forth below. E*TRADE hereby assumes, as of the Effective Time, all the duties and obligations of CCS under each of the CCS Options. In connection with such assumption, the number of shares of E*TRADE Stock purchasable under each CCS Option hereby assumed and the exercise price payable thereunder have been adjusted to reflect the Exchange Ratio. Accordingly, the number of shares of E*TRADE Stock subject to each CCS Option hereby assumed shall be as specified for that option below, and the adjusted exercise price payable per share of E*TRADE Stock under the assumed CCS Option shall also be as indicated for that option below.
- ------------------------------------------------------------------------------------------------------ CCS STOCK OPTIONS E*TRADE ASSUMED OPTIONS - ------------------------------------------------------------------------------------------------------ # of Shares of CCS Exercise Price # of Shares of Adjusted Exercise Common Stock per Share E*TRADE Common Stock Price per Share - ------------------------------------------------------------------------------------------------------ CCS Shares $CCS Price E*TRADE Shares $E*TRADE Price - ------------------------------------------------------------------------------------------------------
2. The intent of the foregoing adjustments to each assumed CCS Option is to assure that the spread between the aggregate fair market value of the shares of E*TRADE Stock purchasable under each such option and the aggregate exercise price as adjusted pursuant to this Agreement will, immediately after the consummation of the Merger, be not less than the spread which existed, immediately prior to the Merger, between the then aggregate fair market value of the CCS Stock subject to the CCS Option and the aggregate exercise price in effect at such time under the Option Agreement. Such adjustments are also intended to preserve, immediately after the Merger, on a per share basis, the same ratio of exercise price per option share to fair market value per share which existed under the CCS Option immediately prior to the Merger. 3. The following provisions shall govern each CCS Option hereby assumed by E*TRADE: (a) Unless the context otherwise requires, all references in each Option Agreement and, if applicable, in the Plan (as incorporated into such Option Agreement) (i) to "Card Capture Services, Inc., the "Corporation" or the "Company" shall mean E*TRADE, (ii) to "Share" shall mean a share of E*TRADE Stock, (iii) to "Stock" or "Common Stock" shall mean E*TRADE Stock, (iv) to the "Board" shall mean the Board of Directors of E*TRADE and (v) to the "Committee" shall mean the Compensation Committee of the E*TRADE Board of Directors. (b) The grant date and the expiration date of each assumed CCS Option and all other provisions which govern either the exercise or the termination of the assumed CCS Option shall remain the same as set forth in the Option Agreements applicable to that option, and the provisions of the Option Agreements shall accordingly govern and control Optionee's rights under this Agreement to purchase E*TRADE Stock. 2 (c) Pursuant to the terms of the Plan and the Option Agreement, your option assumed by E*TRADE in connection with the transaction, to the extent it was unvested prior to the merger, became fully vested and exercisable upon the consummation of the Merger. (d) Your option as assumed by E*TRADE which was originally designated on your Notice of Grant as an Incentive Option shall remain an Incentive Stock Option to the maximum extent allowed by law. (e) For purposes of applying any and all provisions of the Option Agreement and/or the Plan relating to Optionee's status as an employee of CCS, Optionee shall be deemed to continue in such status as an employee for so long as Optionee renders services as an employee to E*TRADE or any present or future E*TRADE subsidiary. Accordingly, the provisions of the Option Agreement and the Plan governing the termination of the assumed CCS Options upon Optionee's cessation of service as an employee of CCS shall hereafter be applied on the basis of Optionee's cessation of employee status with E*TRADE and its subsidiaries, and each assumed CCS Option shall accordingly terminate one (1) year following such cessation of service as an employee of E*TRADE and its subsidiaries. (f) The adjusted exercise price payable for the E*TRADE Stock subject to each assumed CCS Option shall be payable in any of the forms authorized under the Option Agreement applicable to that option. For purposes of determining the holding period of any shares of E*TRADE Stock delivered in payment of such adjusted exercise price, the period for which such shares were held as CCS Stock prior to the Merger shall be taken into account. (g) In order to exercise each assumed CCS Option, Optionee must deliver to E*TRADE a written notice of exercise in which the number of shares of E*TRADE Stock to be purchased thereunder must be indicated. The exercise notice must be accompanied by payment of the adjusted exercise price payable for the purchased shares of E*TRADE Stock and should be delivered to E*TRADE at the following address: E*TRADE Group, Inc. 4500 Bohannon Drive Menlo Park, California 94025 Attention: Stock Administration 4. Except to the extent specifically modified by this Option Assumption Agreement, all of the terms and conditions of each Option Agreement as in effect immediately prior to the Merger shall continue in full force and effect and shall not in any way be amended, revised or otherwise affected by this Stock Option Assumption Agreement. 3 IN WITNESS WHEREOF, E*TRADE Group, Inc. has caused this Stock Option Assumption Agreement to be executed on its behalf by its duly-authorized officer as of the ______ day of ___________, 2000. E*TRADE GROUP, INC. By: --------------------------------- Name: ------------------------------- Title: ------------------------------ ACKNOWLEDGMENT The undersigned acknowledges receipt of the foregoing Stock Option Assumption Agreement and understands that all rights and liabilities with respect to each of his or her CCS Options hereby assumed by E*TRADE are as set forth in the Option Agreement, the Plans, as applicable, and such Stock Option Assumption Agreement. ------------------------------ First_Name Last_Name, OPTIONEE DATED: __________________, 2000 4 EX-99.5 9 1997 INCENTIVE PLAN-FULL ACCELERATION EXHIBIT 99.5 Full Acceleration E*TRADE GROUP, INC. STOCK OPTION ASSUMPTION AGREEMENT CARD CAPTURE SERVICES, INC. 1997 INCENTIVE STOCK OPTION PLAN Optionee: First_Name Last_Name, STOCK OPTION ASSUMPTION AGREEMENT effective as of the 5th day of May, 2000 by E*TRADE Group, Inc., a Delaware corporation ("E*TRADE"). WHEREAS, the undersigned individual ("Optionee") holds one or more outstanding options to purchase shares of the common stock of Card Capture Services, Inc., an Oregon corporation ("CCS"), which were granted to Optionee under the CCS 1997 Incentive Stock Option Plan (the "Plan") and are each evidenced by a Stock Option Agreement (the "Option Agreement"). WHEREAS, CCS has been acquired by E*TRADE through the merger of Card Acquisition Inc. ("Merger Sub") with and into CCS, whereby CCS has become a wholly-owned subsidiary of E*TRADE (the "Merger") pursuant to the Agreement and Plan of Merger by and between E*TRADE, CCS and Merger Sub (the "Merger Agreement"). WHEREAS, the provisions of the Merger Agreement require E*TRADE to assume all obligations of CCS under all outstanding options under the Plan at the consummation of the Merger and to issue to the holder of each outstanding option an agreement evidencing the assumption of such option. WHEREAS, pursuant to the provisions of the Merger Agreement, the exchange ratio (the "Exchange Ratio") in effect for the Merger is 0.4149 of a share of E*TRADE common stock, par value $0.01 per share ("E*TRADE Stock"), for each outstanding share of CCS common stock ("CCS Stock"). WHEREAS, this Agreement became effective immediately upon the consummation of the Merger (the "Effective Time") in order to reflect certain adjustments to Optionee's outstanding options which have become necessary by reason of the assumption of those options by E*TRADE in connection with the Merger. NOW, THEREFORE, it is hereby agreed as follows: 1. The number of shares of CCS Stock subject to the options held by Optionee immediately prior to the Effective Time (the "CCS Options") and the exercise price payable per share are set forth below. E*TRADE hereby assumes, as of the Effective Time, all the duties and obligations of CCS under each of the CCS Options. In connection with such assumption, the number of shares of E*TRADE Stock purchasable under each CCS Option hereby assumed and the exercise price payable thereunder have been adjusted to reflect the Exchange Ratio. Accordingly, the number of shares of E*TRADE Stock subject to each CCS Option hereby assumed shall be as specified for that option below, and the adjusted exercise price payable per share of E*TRADE Stock under the assumed CCS Option shall also be as indicated for that option below.
- ------------------------------------------------------------------------------------------------------ CCS STOCK OPTIONS E*TRADE ASSUMED OPTIONS - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ # of Shares of CCS Exercise Price # of Shares of Adjusted Exercise Common Stock per Share E*TRADE Common Stock Price per Share - ------------------------------------------------------------------------------------------------------ CCS Shares $CCS Price E*TRADE Shares $E*TRADE Price - ------------------------------------------------------------------------------------------------------
2. The intent of the foregoing adjustments to each assumed CCS Option is to assure that the spread between the aggregate fair market value of the shares of E*TRADE Stock purchasable under each such option and the aggregate exercise price as adjusted pursuant to this Agreement will, immediately after the consummation of the Merger, be not less than the spread which existed, immediately prior to the Merger, between the then aggregate fair market value of the CCS Stock subject to the CCS Option and the aggregate exercise price in effect at such time under the Option Agreement. Such adjustments are also intended to preserve, immediately after the Merger, on a per share basis, the same ratio of exercise price per option share to fair market value per share which existed under the CCS Option immediately prior to the Merger. 3. The following provisions shall govern each CCS Option hereby assumed by E*TRADE: (a) Unless the context otherwise requires, all references in each Option Agreement and, if applicable, in the Plan (as incorporated into such Option Agreement) (i) to "Card Capture Services, Inc., the "Corporation" or the "Company" shall mean E*TRADE, (ii) to "Share" shall mean a share of E*TRADE Stock, (iii) to "Stock" or "Common Stock" shall mean E*TRADE Stock, (iv) to the "Board" shall mean the Board of Directors of E*TRADE and (v) to the "Committee" shall mean the Compensation Committee of the E*TRADE Board of Directors. (b) The grant date and the expiration date of each assumed CCS Option and all other provisions which govern either the exercise or the termination of the assumed CCS Option shall remain the same as set forth in the Option Agreements applicable to that option, and the provisions of the Option Agreements shall accordingly govern and control Optionee's rights under this Agreement to purchase E*TRADE Stock. 2 (c) Pursuant to the terms of the Option Agreement, your option assumed by E*TRADE in connection with the transaction, to the extent it was unvested prior to the merger, became fully vested and exercisable upon the consummation of the Merger. (d) Your option as assumed by E*TRADE which was originally designated on your Notice of Grant as an Incentive Option shall remain an Incentive Stock Option to the maximum extent allowed by law. (e) For purposes of applying any and all provisions of the Option Agreement and/or the Plan relating to Optionee's status as an employee of CCS, Optionee shall be deemed to continue in such status as an employee for so long as Optionee renders services as an employee to E*TRADE or any present or future E*TRADE subsidiary. Accordingly, the provisions of the Option Agreement governing the termination of the assumed CCS Options upon Optionee's cessation of service as an employee of CCS shall hereafter be applied on the basis of Optionee's cessation of employee status with E*TRADE and its subsidiaries, and each assumed CCS Option shall accordingly terminate, within the designated time period in effect under the Option Agreement for that option, following such cessation of service as an employee of E*TRADE and its subsidiaries. (f) The adjusted exercise price payable for the E*TRADE Stock subject to each assumed CCS Option shall be payable in any of the forms authorized under the Option Agreement applicable to that option. For purposes of determining the holding period of any shares of E*TRADE Stock delivered in payment of such adjusted exercise price, the period for which such shares were held as CCS Stock prior to the Merger shall be taken into account. (g) In order to exercise each assumed CCS Option, Optionee must deliver to E*TRADE a written notice of exercise in which the number of shares of E*TRADE Stock to be purchased thereunder must be indicated. The exercise notice must be accompanied by payment of the adjusted exercise price payable for the purchased shares of E*TRADE Stock and should be delivered to E*TRADE at the following address: E*TRADE Group, Inc. 4500 Bohannon Drive Menlo Park, California 94025 Attention: Stock Administration 4. Except to the extent specifically modified by this Option Assumption Agreement, all of the terms and conditions of each Option Agreement as in effect immediately prior to the Merger shall continue in full force and effect and shall not in any way be amended, revised or otherwise affected by this Stock Option Assumption Agreement. 3 IN WITNESS WHEREOF, E*TRADE Group, Inc. has caused this Stock Option Assumption Agreement to be executed on its behalf by its duly-authorized officer as of the ______ day of ___________, 2000. E*TRADE GROUP, INC. By: --------------------------------- Name: ------------------------------- Title: ------------------------------ ACKNOWLEDGMENT The undersigned acknowledges receipt of the foregoing Stock Option Assumption Agreement and understands that all rights and liabilities with respect to each of his or her CCS Options hereby assumed by E*TRADE are as set forth in the Option Agreement, the Plans, as applicable, and such Stock Option Assumption Agreement. ------------------------------- First_Name Last_Name, OPTIONEE DATED: __________________, 2000 4 EX-99.6 10 OPTION ASSUMPTION AGREEMENT-INVOLUNTARY TERMINATION EXHIBIT 99.6 Standard E*TRADE GROUP, INC. STOCK OPTION ASSUMPTION AGREEMENT CARD CAPTURE SERVICES, INC. 1998 STOCK INCENTIVE COMPENSATION PLAN Optionee: First_Name Last_Name, STOCK OPTION ASSUMPTION AGREEMENT effective as of the 5th day of May, 2000 by E*TRADE Group, Inc., a Delaware corporation ("E*TRADE"). WHEREAS, the undersigned individual ("Optionee") holds one or more outstanding options to purchase shares of the common stock of Card Capture Services, Inc., an Oregon corporation ("CCS"), which were granted to Optionee under the CCS 1998 Stock Incentive Compensation Plan (the "Plan") and are each evidenced by a Stock Option Agreement (the "Option Agreement"). WHEREAS, CCS has been acquired by E*TRADE through the merger of Card Acquisition Inc. ("Merger Sub") with and into CCS, whereby CCS has become a wholly-owned subsidiary of E*TRADE (the "Merger") pursuant to the Agreement and Plan of Merger by and between E*TRADE, CCS and Merger Sub (the "Merger Agreement"). WHEREAS, the provisions of the Merger Agreement require E*TRADE to assume all obligations of CCS under all outstanding options under the Plan at the consummation of the Merger and to issue to the holder of each outstanding option an agreement evidencing the assumption of such option. WHEREAS, pursuant to the provisions of the Merger Agreement, the exchange ratio (the "Exchange Ratio") in effect for the Merger is 0.4149 of a share of E*TRADE common stock, par value $0.01 per share ("E*TRADE Stock"), for each outstanding share of CCS common stock ("CCS Stock"). WHEREAS, this Agreement became effective immediately upon the consummation of the Merger (the "Effective Time") in order to reflect certain adjustments to Optionee's outstanding options which have become necessary by reason of the assumption of those options by E*TRADE in connection with the Merger. NOW, THEREFORE, it is hereby agreed as follows: 1. The number of shares of CCS Stock subject to the options held by Optionee immediately prior to the Effective Time (the "CCS Options") and the exercise price payable per share are set forth below. E*TRADE hereby assumes, as of the Effective Time, all the duties and obligations of CCS under each of the CCS Options. In connection with such assumption, the number of shares of E*TRADE Stock purchasable under each CCS Option hereby assumed and the exercise price payable thereunder have been adjusted to reflect the Exchange Ratio. Accordingly, the number of shares of E*TRADE Stock subject to each CCS Option hereby assumed shall be as specified for that option below, and the adjusted exercise price payable per share of E*TRADE Stock under the assumed CCS Option shall also be as indicated for that option below.
- ------------------------------------------------------------------------------------------------------ CCS STOCK OPTIONS E*TRADE ASSUMED OPTIONS - ------------------------------------------------------------------------------------------------------ # of Shares of CCS Exercise Price # of Shares of Adjusted Exercise Common Stock per Share E*TRADE Common Stock Price per Share ------------------------------------------------------------------------------------------------------ CCS Shares $CCS Price E*TRADE Shares $E*TRADE Price - ------------------------------------------------------------------------------------------------------
2. The intent of the foregoing adjustments to each assumed CCS Option is to assure that the spread between the aggregate fair market value of the shares of E*TRADE Stock purchasable under each such option and the aggregate exercise price as adjusted pursuant to this Agreement will, immediately after the consummation of the Merger, be not less than the spread which existed, immediately prior to the Merger, between the then aggregate fair market value of the CCS Stock subject to the CCS Option and the aggregate exercise price in effect at such time under the Option Agreement. Such adjustments are also intended to preserve, immediately after the Merger, on a per share basis, the same ratio of exercise price per option share to fair market value per share which existed under the CCS Option immediately prior to the Merger. 3. The following provisions shall govern each CCS Option hereby assumed by E*TRADE: (a) Unless the context otherwise requires, all references in each Option Agreement and, if applicable, in the Plan (as incorporated into such Option Agreement) (i) to "Card Capture Services, Inc., the "Corporation" or the "Company" shall mean E*TRADE, (ii) to "Share" shall mean a share of E*TRADE Stock, (iii) to "Stock" or "Common Stock" shall mean E*TRADE Stock, (iv) to the "Board" shall mean the Board of Directors of E*TRADE and (v) to the "Committee" shall mean the Compensation Committee of the E*TRADE Board of Directors. (b) The grant date and the expiration date of each assumed CCS Option and all other provisions which govern either the exercise or the termination of the assumed CCS Option shall remain the same as set forth in the Option Agreements applicable to that option, and the provisions of the Option Agreements shall accordingly govern and control Optionee's rights under this Agreement to purchase E*TRADE Stock. (c) Pursuant to the terms of the Option Agreement and the Plan, none of your options assumed by E*TRADE in connection with the 2 transaction, will become fully vested and exercisable upon the consummation of the Merger. Accordingly, each assumed CCS Option shall continue to vest and become exercisable in accordance with the same installment vesting schedule in effect for that option, pursuant to the provisions of the applicable Option Agreement, immediately prior to the Effective Time provided, however, that the number of shares subject to each such installment shall be adjusted to reflect the Exchange Ratio. (d) Your option as assumed by E*TRADE which was originally designated on your Notice of Grant as an Incentive Option shall remain an Incentive Stock Option to the maximum extent allowed by law. (e) For purposes of applying any and all provisions of the Option Agreement and/or the Plan relating to Optionee's status as an employee of CCS, Optionee shall be deemed to continue in such status as an employee for so long as Optionee renders services as an employee to E*TRADE or any present or future E*TRADE subsidiary. Accordingly, the provisions of the Option Agreement governing the termination of the assumed CCS Options upon Optionee's cessation of service as an employee of CCS shall hereafter be applied on the basis of Optionee's cessation of employee status with E*TRADE and its subsidiaries, and each assumed CCS Option shall accordingly terminate, within the designated time period in effect under the Option Agreement for that option, following such cessation of service as an employee of E*TRADE and its subsidiaries. (f) The adjusted exercise price payable for the E*TRADE Stock subject to each assumed CCS Option shall be payable in any of the forms authorized under the Option Agreement applicable to that option. For purposes of determining the holding period of any shares of E*TRADE Stock delivered in payment of such adjusted exercise price, the period for which such shares were held as CCS Stock prior to the Merger shall be taken into account. (g) In order to exercise each assumed CCS Option, Optionee must deliver to E*TRADE a written notice of exercise in which the number of shares of E*TRADE Stock to be purchased thereunder must be indicated. The exercise notice must be accompanied by payment of the adjusted exercise price payable for the purchased shares of E*TRADE Stock and should be delivered to E*TRADE at the following address: E*TRADE Group, Inc. 4500 Bohannon Drive Menlo Park, California 94025 Attention: Stock Administration 3 4. Except to the extent specifically modified by this Option Assumption Agreement, all of the terms and conditions of each Option Agreement as in effect immediately prior to the Merger shall continue in full force and effect and shall not in any way be amended, revised or otherwise affected by this Stock Option Assumption Agreement. IN WITNESS WHEREOF, E*TRADE Group, Inc. has caused this Stock Option Assumption Agreement to be executed on its behalf by its duly-authorized officer as of the ______ day of ___________, 2000. E*TRADE GROUP, INC. By: --------------------------------- Name: ------------------------------- Title: ------------------------------ ACKNOWLEDGMENT The undersigned acknowledges receipt of the foregoing Stock Option Assumption Agreement and understands that all rights and liabilities with respect to each of his or her CCS Options hereby assumed by E*TRADE are as set forth in the Option Agreement, the Plans, as applicable, and such Stock Option Assumption Agreement. ------------------------------ First_Name Last_Name, OPTIONEE DATED: __________________, 2000 4 EX-99.7 11 INVOLUNTARY TERMINATION-12 MONTHS EXHIBIT 99.7 Involuntary Termination 12 Mo. E*TRADE GROUP, INC. STOCK OPTION ASSUMPTION AGREEMENT CARD CAPTURE SERVICES, INC. 1998 STOCK INCENTIVE COMPENSATION PLAN Optionee: First_Name Last_Name, STOCK OPTION ASSUMPTION AGREEMENT effective as of the 5th day of May, 2000 by E*TRADE Group, Inc., a Delaware corporation ("E*TRADE"). WHEREAS, the undersigned individual ("Optionee") holds one or more outstanding options to purchase shares of the common stock of CCS Financial Corporation, an Oregon corporation ("CCS"), which were granted to Optionee under the CCS 1998 Stock Incentive Compensation Plan (the "Plan") and are each evidenced by a Stock Option Agreement (the "Option Agreement"). WHEREAS, CCS has been acquired by E*TRADE through the merger of Turbo Acquisition Corp. ("Merger Sub") with and into CCS, whereby CCS has become a wholly-owned subsidiary of E*TRADE (the "Merger") pursuant to the Agreement and Plan of Merger, by and between E*TRADE, CCS and Merger Sub (the "Merger Agreement"). WHEREAS, the provisions of the Merger Agreement require E*TRADE to assume all obligations of CCS under all outstanding options under the Plan at the consummation of the Merger and to issue to the holder of each outstanding option an agreement evidencing the assumption of such option. WHEREAS, pursuant to the provisions of the Merger Agreement, the exchange ratio (the "Exchange Ratio") in effect for the Merger is .4149 of a share of E*TRADE common stock ("E*TRADE Stock") for each outstanding share of CCS common stock ("CCS Stock"). WHEREAS, this Agreement became effective immediately upon the consummation of the Merger (the "Effective Time") in order to reflect certain adjustments to Optionee's outstanding options which have become necessary by reason of the assumption of those options by E*TRADE in connection with the Merger. NOW, THEREFORE, it is hereby agreed as follows: 1. The number of shares of CCS Stock subject to the options held by Optionee immediately prior to the Effective Time (the "CCS Options") and the exercise price payable per share are set forth below. E*TRADE hereby assumes, as of the Effective Time, all the duties and obligations of CCS under each of the CCS Options. In connection with such assumption, the number of shares of E*TRADE Stock purchasable under each CCS Option hereby assumed and the exercise price payable thereunder have been adjusted to reflect the Exchange Ratio. Accordingly, the number of shares of E*TRADE Stock subject to each CCS Option hereby assumed shall be as specified for that option below, and the adjusted exercise price payable per share of E*TRADE Stock under the assumed CCS Option shall also be as indicated for that option below.
- ----------------------------------------------------------------------------------------------------- CCS STOCK OPTIONS E*TRADE ASSUMED OPTIONS - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- # of Shares of CCS Exercise Price # of Shares of Adjusted Exercise Common Stock per Share E*TRADE Price per Share - ------------------------------------------------------------------------------------------------------ CCS Shares $CCS Price E*TRADE Shares $E*TRADE Price - ------------------------------------------------------------------------------------------------------
2. The intent of the foregoing adjustments to each assumed CCS Option is to assure that the spread between the aggregate fair market value of the shares of E*TRADE Stock purchasable under each such option and the aggregate exercise price as adjusted pursuant to this Agreement will, immediately after the consummation of the Merger, be not less than the spread which existed, immediately prior to the Merger, between the then aggregate fair market value of the CCS Stock subject to the CCS Option and the aggregate exercise price in effect at such time under the Option Agreement. Such adjustments are also intended to preserve, immediately after the Merger, on a per share basis, the same ratio of exercise price per option share to fair market value per share which existed under the CCS Option immediately prior to the Merger. 3. The following provisions shall govern each CCS Option hereby assumed by E*TRADE: (a) Unless the context otherwise requires, all references in each Option Agreement and, if applicable, in the Plan (as incorporated into such Option Agreement) (i) to "Card Capture Services, Inc.," the "Corporation" or the "Company" shall mean E*TRADE, (ii) to "Share" shall mean a share of E*TRADE Stock, (iii) to "Common Stock" or "Stock" shall mean E*TRADE Stock, (iv) to the "Board" shall mean the Board of Directors of E*TRADE and (v) to the "Committee" shall mean the Compensation Committee of the E*TRADE Board of Directors. (b) The grant date and the expiration date of each assumed CCS Option and all other provisions which govern either the exercise or the termination of the assumed CCS Option shall remain the same as set forth in the Option Agreement applicable to that option, and the provisions of the Option Agreement shall accordingly govern and control Optionee's rights under this Agreement to purchase E*TRADE Stock. (c) Your options assumed by E*TRADE which were originally designated in your Option Agreement as incentive stock options shall remain such to the maximum extent allowed by law. (d) Each CCS Option shall be assumed by E*TRADE as of the Effective Time. Pursuant to the terms of your Option Agreement, none of your CCS Options will vest or become exercisable on an accelerated basis because of the transaction. Each such assumed CCS Option shall thereafter continue to vest for any remaining unvested shares of E*TRADE Stock subject to that option in accordance with the same installment vesting schedule in effect under the applicable Option Agreement immediately prior to the Effective Time; provided, however, that the number of shares subject to each such installment shall be adjusted to reflect the Exchange Ratio. As provided in your Option Agreement, if your employment is terminated under certain circumstances within twelve months following the Effective Time, the remaining unvested portion of your CCS Options will immediately vest and become exercisable. (e) For purposes of applying any and all provisions of the Option Agreement and/or the Plan relating to Optionee's status as an employee of CCS, Optionee shall be deemed to continue in such status as an employee for so long as Optionee renders services as an employee to E*TRADE or any present or future E*TRADE subsidiary. Accordingly, the provisions of the Option Agreement governing the termination of the assumed CCS Options upon Optionee's cessation of service as an employee of CCS shall hereafter be applied on the basis of Optionee's cessation of employee status with E*TRADE and its subsidiaries, and each assumed CCS Option shall accordingly terminate, within the designated time period in effect under the Option Agreement for that option following such cessation of service as an employee of E*TRADE and its subsidiaries. (f) The adjusted exercise price payable for the E*TRADE Stock subject to each assumed CCS Option shall be payable in any of the forms authorized under the Option Agreement applicable to that option. For purposes of determining the holding period of any shares of E*TRADE Stock delivered in payment of such adjusted exercise price, the period for which such shares were held as CCS Stock prior to the Merger shall be taken into account. (g) In order to exercise each assumed CCS Option, Optionee must deliver to E*TRADE a written notice of exercise in which the number of shares of E*TRADE Stock to be purchased thereunder must be indicated. The exercise notice must be accompanied by payment of the adjusted exercise price payable for the purchased shares of E*TRADE Stock and should be delivered to E*TRADE at the following address: E*TRADE Group, Inc. 4500 Bohannon Drive Menlo Park, CA 94025 Attention: Stock Administration Except to the extent specifically modified by this Option Assumption Agreement, all of the terms and conditions of each Option Agreement as in effect immediately prior to the Merger shall continue in full force and effect and shall not in any way be amended, revised or otherwise affected by this Stock Option Assumption Agreement. IN WITNESS WHEREOF, E*TRADE Group, Inc. has caused this Stock Option Assumption Agreement to be executed on its behalf by its duly-authorized officer as of the _______ day of ______________, 2000. E*TRADE GROUP, INC. By: _____________________________ Name: __________________________ Title: _________________________ ACKNOWLEDGMENT The undersigned acknowledges receipt of the foregoing Stock Option Assumption Agreement and understands that all rights and liabilities with respect to each of his or her CCS Options hereby assumed by E*TRADE are as set forth in the Option Agreement, the Plans, as applicable, and such Stock Option Assumption Agreement. ---------------------------------- First_Name Last_Name, OPTIONEE DATED: ________ ___, 2000 EX-99.8 12 INVOLUNTARY TERMINATION-6 MONTHS EXHIBIT 99.8 Involuntary Termination 6 Mo. E*TRADE GROUP, INC. STOCK OPTION ASSUMPTION AGREEMENT CARD CAPTURE SERVICES, INC. 1998 STOCK INCENTIVE COMPENSATION PLAN Optionee: First_Name Last_Name, STOCK OPTION ASSUMPTION AGREEMENT effective as of the 5th day of May, 2000 by E*TRADE Group, Inc., a Delaware corporation ("E*TRADE"). WHEREAS, the undersigned individual ("Optionee") holds one or more outstanding options to purchase shares of the common stock of CCS Financial Corporation, an Oregon corporation ("CCS"), which were granted to Optionee under the CCS 1998 Stock Incentive Compensation Plan (the "Plan") and are each evidenced by a Stock Option Agreement (the "Option Agreement"). WHEREAS, CCS has been acquired by E*TRADE through the merger of Turbo Acquisition Corp. ("Merger Sub") with and into CCS, whereby CCS has become a wholly-owned subsidiary of E*TRADE (the "Merger") pursuant to the Agreement and Plan of Merger, by and between E*TRADE, CCS and Merger Sub (the "Merger Agreement"). WHEREAS, the provisions of the Merger Agreement require E*TRADE to assume all obligations of CCS under all outstanding options under the Plan at the consummation of the Merger and to issue to the holder of each outstanding option an agreement evidencing the assumption of such option. WHEREAS, pursuant to the provisions of the Merger Agreement, the exchange ratio (the "Exchange Ratio") in effect for the Merger is .4149 of a share of E*TRADE common stock ("E*TRADE Stock") for each outstanding share of CCS common stock ("CCS Stock"). WHEREAS, this Agreement became effective immediately upon the consummation of the Merger (the "Effective Time") in order to reflect certain adjustments to Optionee's outstanding options which have become necessary by reason of the assumption of those options by E*TRADE in connection with the Merger. NOW, THEREFORE, it is hereby agreed as follows: 1. The number of shares of CCS Stock subject to the options held by Optionee immediately prior to the Effective Time (the "CCS Options") and the exercise price payable per share are set forth below. E*TRADE hereby assumes, as of the Effective Time, all the duties and obligations of CCS under each of the CCS Options. In connection with such assumption, the number of shares of E*TRADE Stock purchasable under each CCS Option hereby assumed and the exercise price payable thereunder have been adjusted to reflect the Exchange Ratio. Accordingly, the number of shares of E*TRADE Stock subject to each CCS Option hereby assumed shall be as specified for that option below, and the adjusted exercise price payable per share of E*TRADE Stock under the assumed CCS Option shall also be as indicated for that option below.
- ------------------------------------------------------------------------------------------------- CCS STOCK OPTIONS E*TRADE ASSUMED OPTIONS - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- # of Shares of CCS Exercise Price # of Shares of Adjusted Exercise Common Stock per Share E*TRADE Price per Share Common Stock - ------------------------------------------------------------------------------------------------------ CCS Shares $CCS Price E*TRADE Shares $E*TRADE Price - ------------------------------------------------------------------------------------------------------
2. The intent of the foregoing adjustments to each assumed CCS Option is to assure that the spread between the aggregate fair market value of the shares of E*TRADE Stock purchasable under each such option and the aggregate exercise price as adjusted pursuant to this Agreement will, immediately after the consummation of the Merger, be not less than the spread which existed, immediately prior to the Merger, between the then aggregate fair market value of the CCS Stock subject to the CCS Option and the aggregate exercise price in effect at such time under the Option Agreement. Such adjustments are also intended to preserve, immediately after the Merger, on a per share basis, the same ratio of exercise price per option share to fair market value per share which existed under the CCS Option immediately prior to the Merger. 3. The following provisions shall govern each CCS Option hereby assumed by E*TRADE: (a) Unless the context otherwise requires, all references in each Option Agreement and, if applicable, in the Plan (as incorporated into such Option Agreement) (i) to "Card Capture Services, Inc.," the "Corporation" or the "Company" shall mean E*TRADE, (ii) to "Share" shall mean a share of E*TRADE Stock, (iii) to "Common Stock" or "Stock" shall mean E*TRADE Stock, (iv) to the "Board" shall mean the Board of Directors of E*TRADE and (v) to the "Committee" shall mean the Compensation Committee of the E*TRADE Board of Directors. (b) The grant date and the expiration date of each assumed CCS Option and all other provisions which govern either the exercise or the termination of the assumed CCS Option shall remain the same as set forth in the Option Agreement applicable to that option, and the provisions of the Option Agreement shall accordingly govern and control Optionee's rights under this Agreement to purchase E*TRADE Stock. (c) Your options assumed by E*TRADE which were originally designated in your Option Agreement as incentive stock options shall remain such to the maximum extent allowed by law. (d) Each CCS Option shall be assumed by E*TRADE as of the Effective Time. Pursuant to the terms of your Option Agreement, none of your CCS Options will vest or become exercisable on an accelerated basis because of the transaction. Each such assumed CCS Option shall thereafter continue to vest for any remaining unvested shares of E*TRADE Stock subject to that option in accordance with the same installment vesting schedule in effect under the applicable Option Agreement immediately prior to the Effective Time; provided, however, that the number of shares subject to each such installment shall be adjusted to reflect the Exchange Ratio. As provided in your Option Agreement, if your employment is terminated under certain circumstances within six months following the Effective Time, the remaining unvested portion of your CCS Options will immediately vest and become exercisable. (e) For purposes of applying any and all provisions of the Option Agreement and/or the Plan relating to Optionee's status as an employee of CCS, Optionee shall be deemed to continue in such status as an employee for so long as Optionee renders services as an employee to E*TRADE or any present or future E*TRADE subsidiary. Accordingly, the provisions of the Option Agreement governing the termination of the assumed CCS Options upon Optionee's cessation of service as an employee of CCS shall hereafter be applied on the basis of Optionee's cessation of employee status with E*TRADE and its subsidiaries, and each assumed CCS Option shall accordingly terminate, within the designated time period in effect under the Option Agreement for that option following such cessation of service as an employee of E*TRADE and its subsidiaries. (f) The adjusted exercise price payable for the E*TRADE Stock subject to each assumed CCS Option shall be payable in any of the forms authorized under the Option Agreement applicable to that option. For purposes of determining the holding period of any shares of E*TRADE Stock delivered in payment of such adjusted exercise price, the period for which such shares were held as CCS Stock prior to the Merger shall be taken into account. (g) In order to exercise each assumed CCS Option, Optionee must deliver to E*TRADE a written notice of exercise in which the number of shares of E*TRADE Stock to be purchased thereunder must be indicated. The exercise notice must be accompanied by payment of the adjusted exercise price payable for the purchased shares of E*TRADE Stock and should be delivered to E*TRADE at the following address: E*TRADE Group, Inc. 4500 Bohannon Drive Menlo Park, CA 94025 Attention: Stock Administration Except to the extent specifically modified by this Option Assumption Agreement, all of the terms and conditions of each Option Agreement as in effect immediately prior to the Merger shall continue in full force and effect and shall not in any way be amended, revised or otherwise affected by this Stock Option Assumption Agreement. IN WITNESS WHEREOF, E*TRADE Group, Inc. has caused this Stock Option Assumption Agreement to be executed on its behalf by its duly-authorized officer as of the _______ day of ______________, 2000. E*TRADE GROUP, INC. By: _____________________________ Name: __________________________ Title: __________________________ ACKNOWLEDGMENT The undersigned acknowledges receipt of the foregoing Stock Option Assumption Agreement and understands that all rights and liabilities with respect to each of his or her CCS Options hereby assumed by E*TRADE are as set forth in the Option Agreement, the Plans, as applicable, and such Stock Option Assumption Agreement. ---------------------------------- First_Name Last_Name, OPTIONEE DATED: ___________, 2000 -----END PRIVACY-ENHANCED MESSAGE-----