6
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT PAGE
4(a) Amended and Restated Articles of Incorporation of the Company
are incorporated by reference to Exhibit 3(a) to the Company's
Report on Form 10-K for the fiscal year ended December 31,
1999.
4(b) Amended and Restated Bylaws of the Company are incorporated by
reference to Exhibit 3(a) of the Company's Report on Form 10-Q
for the fiscal quarter ended June 30, 2002.
4(c) Specimen Stock Certificate is incorporated by reference to
Exhibit 4(d) to the Company's Registration Statement on Form
S-8, File No. 33-85012.
4(d) Rights Agreement dated as of March 19, 1998, between the
Company and Bank of Louisville is incorporated by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K filed
on March 20, 1998, to Exhibit 4.1 to the Company's
Registration Statement on Form 8-A/A filed on June 30, 2000,
and to Exhibit 4.1 to the Company's Registration Statement on
Form 8-A/A filed on September 14, 2000.
5 Opinion and Consent of Wyatt, Tarrant & Combs, LLP as to the
legality of the shares being registered. 7
23(a) Consent of Wyatt, Tarrant & Combs, LLP (contained in Exhibit 5).
23(b) Consent of PricewaterhouseCoopers LLP. 9
24 Power of Attorney (precedes signatures).
99 Churchill Downs Incorporated Fourth Amended and Restated
1997 Stock Option Plan. 10
7
Exhibit 5
[Wyatt, Tarrant & Combs, LLP letterhead]
October 16, 2002
Board of Directors
Churchill Downs Incorporated
Louisville, Kentucky 40208
Ladies and Gentlemen:
We have acted as counsel to Churchill Downs Incorporated, a
Kentucky corporation (the "Company"), in connection with the Registration
Statement on Form S-8 (the "Registration Statement") being filed by the Company
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended (the "Act"), to register 600,000 additional shares (the
"Shares") of the Company's common stock, no par value, issuable under the
Churchill Downs Incorporated Fourth Amended and Restated 1997 Stock Option Plan
(the "Plan").
We have examined and are familiar with the Company, its
organization and proceedings related thereto. We have also examined such other
documents and procedures as we have considered necessary for the purpose of this
opinion.
We have assumed, for purposes of this opinion, that the Shares
will be validly authorized on the respective dates of issuance of the Shares
under the Plan, and that, on the dates of issuance of the Shares under the Plan,
the obligations of the Company under the Plan will constitute
8
Board of Directors
October 16, 2002
Page 2
the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms.
Based upon the foregoing and subject to the qualifications
hereinafter set forth, we are of the opinion that the Shares are duly authorized
and, when issued and sold in accordance with the Registration Statement, the
prospectus delivered to participants in the Plan pursuant to the requirements of
the Act, the pertinent provisions of any applicable state securities laws and
the Plan, will be duly and validly issued, fully paid and nonassessable.
We express no opinion with respect to Shares issuable under
the Plan which are purchased by the Company on the open market or in private
transactions and are not original issuance shares.
We are members of the Bar of the Commonwealth of Kentucky and,
accordingly, do not purport to be experts on or express any opinion herein
concerning any law other than the laws of the Commonwealth of Kentucky, and the
federal law of the United States.
Our opinion is directed to the Board of Directors of the
Company and may not be relied upon by any persons other than said directors,
recipients of the prospectus and participants in the Plan. We expressly disclaim
any responsibility for advising you of any change hereafter occurring in
circumstances touching or concerning the transaction which is the subject of
this opinion, including any changes in the law or in factual matters occurring
subsequent to the date of this opinion.
We hereby consent to the filing of this opinion, or copies
thereof, as an Exhibit to the Registration Statement. In giving this consent, we
do not thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Securities and Exchange Commission thereunder.
Sincerely,
WYATT, TARRANT & COMBS, LLP
/s/ Wyatt, Tarrant & Combs, LLP
9
Exhibit 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 11, 2002 relating to the
financial statements and financial statement schedule, which appears in the 2001
Annual Report to Shareholders of Churchill Downs Incorporated, which is
incorporated by reference in the Churchill Downs Incorporated Annual Report on
Form 10-K for the year ended December 31, 2001.
PricewaterhouseCoopers LLP
/s/ PricewaterhouseCoopers LLP
Louisville, Kentucky
October 10, 2002
10
EXHIBIT 99
CHURCHILL DOWNS INCORPORATED
FOURTH AMENDED AND RESTATED 1997 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Churchill Downs Incorporated 1997
Stock Option Plan is to promote Company's interests by affording an incentive to
key employees to remain in the employ of Company and its Subsidiaries and to use
their best efforts on its behalf; and further to aid Company and its
Subsidiaries in attracting, maintaining, and developing capable personnel of a
caliber required to ensure the continued success of Company and its Subsidiaries
by means of an offer to such persons of an opportunity to acquire or increase
their proprietary interest in Company through the granting of incentive stock
options and nonstatutory stock options to purchase Company's stock pursuant to
the terms of the Plan and related stock appreciation rights.
2. DEFINITIONS.
A. "BOARD" means Company's Board of Directors.
B. "CHANGE IN CONTROL" means: (a) the sale, lease, exchange
or other transfer of all or substantially all of the assets of Company (in one
transaction or in a series of related transactions) to a person that is not
controlled by Company, (b) the approval by Company shareholders of any plan or
proposal for the liquidation or dissolution of Company, or (c) a change in
control of Company of a nature that would be required to be reported (assuming
such event has not been "previously reported") in response to Item 1(a) of the
Current Report on Form 8-K, as in effect on the effective date of the Plan,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, whether
or not Company is then subject to such reporting requirement; provided, however,
that, without limitation, such a change in control shall be deemed to have
occurred at such time as (i) any Person becomes after the date this Plan is
approved or ratified by Company's shareholders the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or
indirectly, of 30% or more of the combined voting power of Company's outstanding
securities ordinarily having the right to vote at elections of directors, or
(ii) individuals who constitute the board of directors of Company on the date
this Plan is approved or ratified by Company's shareholders cease for any reason
to constitute at least a majority thereof, provided that any person becoming a
director subsequent to such date whose election, or nomination for election by
Company's shareholders, was approved by a vote of at least a majority of the
directors comprising or deemed pursuant hereto to comprise the Board on the date
this Plan is approved or ratified by Company's shareholders (either by a
specific vote or by approval of the proxy statement of Company in which such
person is named as a nominee for director) shall be, for purposes of this clause
(ii) considered as though such person were a member of the Board on the date
this Plan is approved or ratified by Company's shareholders.
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C. "CODE" means the Internal Revenue Code of 1986, as
amended.
D. "COMMITTEE" means the committee appointed by the Board to
administer the Plan pursuant to Section 4.
E. "COMMON STOCK" means Company's common stock, no par
value, or the common stock or securities of a Successor that have been
substituted therefor pursuant to Section 11.
F. "COMPANY" means Churchill Downs Incorporated, a Kentucky
corporation, with its principal place of business at 700 Central Avenue,
Louisville, Kentucky 40208.
G. "DISABILITY" means, as defined by and to be construed in
accordance with Code Section 22(e)(3), any medically determinable physical or
mental impairment that can be expected to result in death or that has lasted or
can be expected to last for a continuous period of not less than twelve (12)
months, and that renders Optionee unable to engage in any substantial gainful
activity. An Optionee shall not be considered to have a Disability unless
Optionee furnishes proof of the existence thereof in such form and manner, and
at such time, as the Committee may require.
H. "ISO" means an option to purchase Common Stock that at
the time the option is granted qualifies as an incentive stock option within the
meaning of Code Section 422.
I. "NSO" means a nonstatutory stock option to purchase
Common Stock that at the time the option is granted does not qualify as an ISO.
J. "OPTION PRICE" means the price to be paid for Common
Stock upon the exercise of an option, in accordance with Section 6.E.
K. "OPTIONEE" means a key employee to whom an option has
been granted under the Plan.
L. "OPTIONEE'S REPRESENTATIVE" means the personal
representative of Optionee's estate, and after final settlement of Optionee's
estate, the successor or successors entitled thereto by law.
M. "PLAN" means the Churchill Downs Incorporated 1997 Stock
Option Plan as set forth herein, and as amended from time to time.
N. "SAR" means a stock appreciation right described in
Section 7.
O. "SUBSIDIARY" means any corporation that at the time an
option is granted under the Plan qualifies as a subsidiary of Company as defined
by Code Section 424(f).
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P. "SUCCESSOR" means the entity surviving a merger or
consolidation with Company, or the entity that acquires all or a substantial
portion of Company's assets or outstanding capital stock (whether by merger,
purchase or otherwise).
Q. "TEN PERCENT SHAREHOLDER" means an employee who, at the
time an option is granted, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of Company or Subsidiary
employing Optionee or of its parent (within the meaning of Code Section 424(e))
or Subsidiary corporation.
3. SHARES SUBJECT TO PLAN.
A. AUTHORIZED UNISSUED SHARES. Subject to the provisions of
Section 11, shares to be delivered upon exercise of options granted under the
Plan shall be made available, at the discretion of the Board, from the
authorized unissued shares of Common Stock.
B. AGGREGATE NUMBER OF SHARES. Subject to adjustments and
substitutions made pursuant to Section 11, the aggregate number of shares that
may be issued upon exercise of all options that may be granted under the Plan
shall not exceed one million two hundred thousand (1,200,000) of Company's
authorized shares of Common Stock.
C. SHARES SUBJECT TO EXPIRED OPTIONS. If an option is
canceled, expires or terminates for any reason without having been exercised in
full, the shares of Common Stock subject to, but not delivered under, such
option shall become available for any lawful corporate purpose, including for
transfer pursuant to other options granted to the same key employee or other key
employees without decreasing the aggregate number of shares of Common Stock that
may be granted under the Plan.
4. PLAN ADMINISTRATION. The Plan shall be administered by a Board
committee consisting of not fewer than two (2) directors who are not officers or
employees of Company or a parent or subsidiary company and who receive no
compensation from Company in any capacity other than as a director (except for
amounts for which disclosure is not required under federal securities law). The
Committee shall have full power and authority to construe, interpret, and
administer the Plan and may from time to time adopt such rules and regulations
for carrying out the Plan as it deems proper and in Company's best interests.
Subject to the terms, provisions and conditions of the Plan, the Committee shall
have exclusive jurisdiction: [i] to determine the key employees to whom awards
shall be granted; [ii] to determine the times at which awards shall be granted;
[iii] to determine the form, amount, and manner of exercise of awards; [iv] to
grant any combination of ISOs, NSOs and SARs; [v] to determine the limitations,
restrictions and conditions applicable to awards; [vi] to fix such other
provisions of the option agreement as it may deem necessary or desirable
consistent with the terms of the Plan; and [vii] to determine all other
questions relating to the administration of the Plan. In making such
determinations, the Committee may take into account the nature of the services
performed by such employees, their present and potential contributions to the
success of Company or a Subsidiary and such other factors as the Committee in
its discretion shall deem relevant. The interpretation of any provision of the
Plan by the Committee shall be final, conclusive, and binding upon all persons
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13
and the officers of Company shall place into effect and shall cause Company to
perform its obligations under the Plan in accordance with the determinations of
the Committee in administering the Plan.
5. ELIGIBILITY. Key employees of Company and its Subsidiaries shall
be eligible to receive options under the Plan. Key employees to whom options may
be granted under the Plan will be those selected by the Committee from time to
time who, in the sole discretion of the Committee, have contributed in the past
or who may be expected to contribute materially in the future to the successful
performance of Company and its Subsidiaries.
6. TERMS AND CONDITIONS OF OPTIONS. Each option granted under the
Plan shall be evidenced by an option agreement signed by Optionee and by a
member of the Committee on behalf of Company. An option agreement shall
constitute a binding contract between Company and Optionee, and every Optionee,
upon acceptance of such option agreement, shall be bound by the terms and
restrictions of the Plan and of the option agreement. Such agreement shall be
subject to the following express terms and conditions and to such other terms
and conditions that are not inconsistent with the Plan as the Committee may deem
appropriate.
A. $100,000 ISO LIMITATION. The aggregate fair market value
(determined as of the date an option is granted) of the Common Stock for which
ISOs will first become exercisable by an Optionee in any calendar year under all
ISO plans of Optionee's employer corporation and its parent (within the meaning
of Code Section 424(e)) or subsidiary (within the meaning of Code Section
424(f)) corporation shall not exceed $100,000. Options in excess of this
limitation shall constitute NSOs.
B. OPTION PERIOD. Each option agreement shall specify the
period during which the option is exercisable. The Committee may extend the
period; provided, however, that the period may not be extended without
Optionee's consent if the extension would disqualify the option as an ISO. In no
case shall such period, including extensions, exceed ten (10) years from the
date of grant, provided, however, that in the case of an ISO granted to a Ten
Percent Stockholder, such period, including extensions, shall not exceed five
(5) years from the date of grant.
C. OPTION VESTING. No part of any option may be exercised
until Optionee has been employed by Company or a Subsidiary for such period,
which shall be no less than one (1) year, after the date on which the option is
granted as the Committee may specify in the option agreement. The option
agreement may provide for exercisability in installments.
D. ACCELERATION OF OPTION VESTING. The Committee may, in its
discretion, provide that the exercise dates of outstanding options shall
accelerate and become exercisable on or after the date of a Change in Control or
termination of Optionee's employment due to death and/or Disability and, in
addition, on such terms and conditions deemed appropriate by the Committee and
set forth in the Option Agreement.
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14
E. OPTION PRICE. The Option Price per share of Common Stock
shall be determined by the Committee at the time an option is granted. The
Option Price for ISOs shall be not less than fair market value, or in the case
of an ISO granted to a Ten Percent Shareholder one hundred ten percent (110%) of
the fair market value, at date of grant. The fair market value of Common Stock
shall be the closing high bid quotation for the Common Stock in the
over-the-counter market, as reported by the National Association of Securities
Dealers Automated Quotation System, on the business day immediately preceding
the date of grant. The Option Price shall be subject to adjustments in
accordance with the provisions of Section 11.
F. OPTION EXPIRATION. An option shall expire, and cease to
be exercisable, at the earliest of the following times:
[1] ten (10) years after the date of grant; or
[2] in the case of an ISO granted to a Ten Percent
Shareholder, five (5) years after the date of grant; or
[3] in the case of both an ISO and NSO, unless provided
otherwise in the option agreement solely with respect to an NSO, five (5)
years after termination of employment with Company or a Subsidiary because of
Optionee's retirement in accordance with the terms of Company's tax-qualified
retirement plans or with the consent of the Committee; or
[4] two (2) years after termination of employment with
Company or a Subsidiary because of Optionee's death or Disability; or
[5] the earlier of: [i] date of Optionee's termination of
employment with Company or a Subsidiary for any reason other than death,
Disability or retirement; or [ii] the date on which written notice of such
employment termination is delivered by Company to Optionee; or
[6] any earlier time set by the grant as provided in the
option agreement.
G. EXERCISE BY OPTIONEE'S ESTATE. Upon Optionee's death,
options may be exercised, to the extent exercisable by Optionee on the date of
Optionee's death, by Optionee's Representative at any time before expiration of
said options.
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H. LEAVES OF ABSENCE. The Committee may, in its discretion,
treat all or any portion of a period during which an Optionee is on military or
an approved leave of absence as a period of employment with Company or
Subsidiary for purposes of accrual of rights under the Plan. Notwithstanding the
foregoing, in the case of an ISO, if the leave exceeds ninety (90) days and
reemployment is not guaranteed by contract or statute, Optionee's employment
shall be deemed to have terminated on the 91st day of the leave.
I. PAYMENT OF OPTION PRICE. Each option shall provide that
the Option Price shall be paid to Company at the time of exercise either in cash
or in such other consideration as the Committee deems appropriate, including,
but not limited to, Common Stock already owned by Optionee having a total fair
market value, as determined by the Committee, equal to the Option Price, or a
combination of cash and Common Stock having a total fair market value, as
determined by the Committee, equal to the Option Price.
J. MANNER OF EXERCISE. To exercise an option, Optionee shall
deliver to Company, or to a broker-dealer in the Common Stock with the original
copy to Company, the following: [i] seven (7) days' prior written notice
specifying the number of shares as to which the option is being exercised and,
if determined by counsel for Company to be necessary, representing that such
shares are being acquired for investment purposes only and not for purpose of
resale or distribution; and [ii] payment by Optionee, or the broker-dealer, for
such shares in cash, or if the Committee in its discretion agrees to so accept,
by delivery to Company of other Common Stock owned by Optionee, or in some
combination of cash and such Common Stock acceptable to the Committee. At the
expiration of the seven (7) day notice period, and provided that all conditions
precedent contained in the Plan are satisfied, Company shall, without transfer
or issuance tax or other incidental expenses to Optionee, deliver to Optionee,
at the offices of Company, a certificate or certificates for the Common Stock.
If Optionee fails to accept delivery of the Common Stock, Optionee's right to
exercise the applicable portion of the option shall terminate. If payment of the
Option Price is made in Common Stock, the value of the Common Stock used for
payment of the Option Price shall be the fair market value of the Common Stock,
determined in accordance with Section 6.E, on the business day preceding the day
written notice of exercise is delivered to Company. Options may be exercised in
whole or in part at such times as the Committee may prescribe in the applicable
option agreement.
K. CANCELLATION OF SARS. The exercise of an option shall
cancel a proportionate number, if any, of SARs included in such option.
L. EXERCISES CAUSING LOSS OF COMPENSATION DEDUCTION. No part
of an option may be exercised to the extent the exercise would cause Optionee to
have compensation from Company and its affiliated companies for any year in
excess of $1 million and that is nondeductible by Company and its affiliated
companies pursuant to Code Section 162(m) and the regulations issued thereunder.
Any option not exercisable because of this limitation shall continue to be
exercisable in any subsequent year in which the exercise would not cause the
loss of Company's or its affiliated companies' compensation tax deduction,
provided such exercise occurs before the option expires, and otherwise complies
with the terms and conditions of the Plan and option agreement.
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M. ISOs. Each option agreement that provides for the grant
of an ISO shall contain provisions deemed necessary or desirable by the
Committee to qualify such option as an ISO.
7. STOCK APPRECIATION RIGHTS.
A. FORM OF AWARD. The Committee may include an SAR in any
ISO or NSO granted under the Plan, either at the time of grant or thereafter
while the option is outstanding; provided that no SAR may be awarded with
respect to an outstanding ISO without the Optionee's consent to the extent the
award would disqualify the option as an ISO. SARs shall be subject to such terms
and conditions not inconsistent with the other provisions of the Plan as the
Committee shall determine.
B. EXERCISE OF SAR/CANCELLATION OF OPTION. An SAR shall
entitle the Optionee to surrender to Company for cancellation the unexercised
option, or portion thereof, to which it is related, and to receive from Company
in exchange therefor, at the discretion of the Committee, either: [i] a cash
payment equal to the excess of the fair market value of the Common Stock subject
to the option or portion thereof so surrendered over the aggregate Option Price
for the shares; or [ii] delivery to Optionee of Common Stock with a fair market
value equal to such excess, or [iii] a combination of cash and Common Stock with
a combined value equal to such excess. The value of the Common Stock shall be
determined by the Committee in accordance with Section 6.E on the day
immediately preceding the day written notice of exercise of the SAR is delivered
to Company. The exercise procedures provided by Section 6.J shall apply to the
exercise of an SAR to the extent applicable.
C. LIMITATIONS. An SAR shall be exercisable only to the
extent the option to which is relates is exercisable and shall be exercisable
only for such period as the Committee may provide in the option agreement (which
period may expire before, but not later than, the expiration date of the
option). Notwithstanding the preceding sentence, an SAR is exercisable only when
the fair market value of a share of Common Stock exceeds the Option Price for
the share.
8. INVESTMENT REPRESENTATION. Each option agreement may provide
that, upon demand by the Committee for such a representation, Optionee or
Optionee's Representative shall deliver to the Committee at the time of exercise
a written representation that the shares to be acquired upon exercise of an
option or SAR are to be acquired for investment and not for resale or
distribution. Upon such demand, delivery of such representation before delivery
of Common Stock shall be a condition precedent to the right of Optionee or
Optionee's Representative to purchase Common Stock.
9. TAX WITHHOLDING. Company shall have the right to: [i] withhold
from any payment due to Optionee or Optionee's Representative; or [ii] require
Optionee or Optionee's Representative to remit to Company; or [iii] retain
Common Stock otherwise deliverable to Optionee or Optionee's Representative, in
an amount sufficient to satisfy applicable tax
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withholding requirements resulting from the grant or exercise an option or SAR
or disqualifying disposition of Common Stock acquired pursuant to the Plan.
10. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant
and exercise of options and SARs and the obligation of Company to sell and
deliver shares under such options and SARs, shall be subject to all applicable
federal and state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required. Company shall not be
required to issue or deliver certificates for shares of Common Stock before [i]
the listing of such shares on any stock exchange or over-the-counter market,
such as NASDAQ, on which the Common Stock may then be listed or traded, and [ii]
the completion of any registration or qualification of any governmental body
which Company shall, in its sole discretion, determines to be necessary or
advisable.
11. CAPITAL ADJUSTMENTS AND MERGERS AND CONSOLIDATIONS.
A. CAPITAL ADJUSTMENTS. In the event of a stock dividend,
stock split, reorganization, merger, consolidation, or a combination or exchange
of shares, the number of shares of Common Stock subject to the Plan and the
number of shares under an option or SAR shall be automatically adjusted to take
into account such capital adjustment. The price of any share under an option or
SAR shall be adjusted so that there will be no change in the aggregate purchase
price payable upon exercise of such option or SAR.
B. MERGERS AND CONSOLIDATIONS. In the event Company merges
or consolidates with another entity, or all or a substantial portion of
Company's assets or outstanding capital stock are acquired (whether by merger,
purchase or otherwise) by a Successor, the kind of shares of Common Stock that
shall be subject to the Plan and to each outstanding option and SAR shall
automatically be converted into and replaced by shares of common stock, or such
other class of securities having rights and preferences no less favorable than
Company's Common Stock, of the Successor, and the number of shares subject to
the option and SAR and the purchase price per share upon exercise of the option
or SAR shall be correspondingly adjusted, so that each Optionee shall have the
right to purchase [a] that number of shares of common stock of the Successor
that have a value equal, as of the date of the merger, conversion or
acquisition, to the value, as of the date of the merger, conversion or
acquisition, of the shares of Common Stock of Company theretofore subject to
Optionee's option and SAR, [b] for a purchase price per share that, when
multiplied by the number of shares of common stock of the Successor subject to
the option and SAR, shall equal the aggregate exercise price at which Optionee
could have acquired all of the shares of Common Stock of Company theretofore
optioned to Optionee. Conversion of an ISO shall be done in a manner to comply
with Code Section 424 and the regulations thereunder so the conversion does not
disqualify the option as an ISO.
C. NO EFFECT ON COMPANY'S RIGHTS. The granting of an option
or SAR pursuant to the Plan shall not affect in any way the right and power of
Company to make adjustments, reorganizations, reclassifications, or changes of
its capital or business structure or to merge, consolidate, dissolve, liquidate,
sell or transfer all or any part of its business or assets.
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12. TRANSFERABILITY. Options and SAR granted under the Plan may not
be transferred by Optionee other than by will or the laws of descent and
distribution and during the lifetime of Optionee, may be exercised only by the
Optionee. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of an option or SAR, or levy or attachment or similar process not
specifically permitted herein, shall be null and void and without effect.
13. NO RIGHTS AS SHAREHOLDER. No Optionee or Optionee's
Representative shall have any rights as a shareholder with respect to Common
Stock subject to an option or SAR before the date of transfer to the Optionee of
a certificate for such shares.
14. NO RIGHTS TO CONTINUED EMPLOYMENT. Neither the Plan nor any
award under the Plan shall confer upon any Optionee any right with respect to
continuance of employment by Company or Subsidiary nor interfere with the right
of Company or Subsidiary to terminate the Optionee's employment.
15. AMENDMENT, SUSPENSION, OR TERMINATION. The Board may amend,
suspend or terminate the Plan at any time and in any respect that it deems to be
in Company's best interests, except that, without approval by shareholders of
Company holding not less than a majority of the votes represented and entitled
to be voted at a duly held meeting of Company's shareholders, no amendment shall
be made that would: [i] change the aggregate number of shares of Common Stock
which may be delivered under the Plan, except as provided in Section 11; or [ii]
change the employees or class of employees eligible to receive ISOs; or [iii]
require shareholder approval under federal or state securities laws.
16. EFFECTIVE DATE, TERM AND APPROVAL. The effective date of the
Plan is November 20, 1997 (the date of Board adoption of the Plan), subject to
approval by stockholders of Company holding not less than a majority of the
shares present and voting at its 1998 annual meeting on June 18, 1998. The Plan
shall terminate ten (10) years after the effective date of the Plan and no
options may be granted under the Plan after such time, but options granted prior
thereto may be exercised in accordance with their terms.
17. SEVERABILITY. The invalidity or unenforceability of any
provision of the Plan or any option or SAR granted pursuant to the Plan shall
not affect the validity and enforceability of the remaining provisions of the
Plan and the options and SARs granted hereunder. The invalid or unenforceable
provision shall be stricken to the extent necessary to preserve the validity and
enforceability of the Plan and the options SARs granted hereunder.
18. GOVERNING LAW. The Plan shall be governed by the laws of the
Commonwealth of Kentucky.
9
