Exhibit # 10.21
Master Option Agreement
EXHIBIT B
INCENTIVE AND NON-STATUTORY
STOCK OPTION PLAN
SECTION 1. PURPOSE
This Incentive and Non-Statutory Stock Option Plan (the "Plan") is intended as a
performance incentive for officers and employees of Competitive Companies, Inc.,
a Nevada corporation (the "Company") and its Subsidiaries (as hereinafter
defined) and for certain other individuals providing services to or acting as
directors of the Company or its Subsidiaries, to enable the persons to whom
options are granted (an "Optionee" or "Optionees") to acquire or increase a
proprietary interest in the success of the Company. The Company intends that
this purpose will be effected by the granting of incentive stock options
("Incentive Options") as defined in Section 422A(b) of the Internal Revenue Code
of 1986 (the "Code") and other stock options ("Non-statutory Options") under the
Plan. The term "Subsidiaries" means any corporations in which stock possessing
50% or more of the total combined voting power of all classes of stock is owned
directly or indirectly by the Company.
SECTION 2. OPTIONS TO BE GRANTED AND ADMINISTRATION
2.1 OPTIONS TO BE GRANTED. Options granted under the Plan may be either
Incentive Options or Non-statutory Options.
2.2 ADMINISTRATION BY THE BOARD. This Plan shall be administered by the
Board of Directors of the Company (the "Board"). The Board shall have full and
final authority to operate, manage and administer the Plan on behalf of the
Company. This authority includes, but is not limited to: (i) the power to grant
options conditionally or unconditionally; (ii) the power to authorize an
increase or decrease in the un-issued shares subject to the plan, (iii) the
power to prescribe the form or forms of the instruments evidencing options
granted under this Plan; (iv) the power to interpret the Plan; (v) the power to
provide regulations for the operation of the incentive features of the Plan, and
otherwise to prescribe regulations for interpretation, management and
administration of the Plan; (vi) the power to delegate responsibility for Plan
operation, management and administration on such terms, consistent with the
Plan, as the Board may establish; (vii) the power to delegate to other persons
the responsibility for performing ministerial acts in furtherance of the Plan's
purpose; and (viii) the power to engage the services of persons or organizations
in furtherance of the Plan's purpose, including but not limited to, banks,
insurance companies, brokerage firms and consultants.
In addition, as to each option, the Board shall have full and final authority in
its discretion: (i) to detemine the number of shares subject to each option;
(ii) to determine the time or times at which options will be granted; (iii) to
determine the option price for the shares subject to each option, which price
shall be subject to the applicable requirements, if any, of Section 5.1(e)
hereof, and (iv) to determine the time or times when each option shall become
exercisable and the duration of the exercise period, which shall not exceed the
limitations specified in Section 5. 1 (a).
2.3 APPOINTMENT AND PROCEEDINGS OF COMMITTEE. The Board may appoint a Stock
Option Committee (the "Committee") which shall consist of at least two members,
at least one of whom shall be a member of the Board. Members of the Committee
shall all be "Non-Employee Directors". A "Non-Employee Director" is defined in
Rule 16b-3(b)(3)(i) of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, as promulgated by the Securities and Exchange
Commission, and as such Rule is amended from time to time. The Board may from
time to time appoint members of the Committee in substitution for or in addition
to members previously appointed, and may fill vacancies, however caused, in the
Committee. The Committee shall select one of its members as its chairman and
shall hold its meetings at such times and places as it shall deem advisable. If
the Committee consists of only two members, both members shall be required for a
quorum and all actions of the Committee shall require concurrence by both
members. If the Committee consists of more than two members, then a majority of
its members shall constitute a quorum, and all actions of the Committee shall be
taken by a majority of its members. Any action may be taken by a written and
signed by all of the members, and any action so taken shall be as fully
effective as if it had been taken by a vote of a majority of the members (or
both members if there are only two (2) as Committee members) at a meeting duly
called and held.
2.4 POWERS OF COMMITTEE. Subject to the provisions of this Plan and the
approval of the Board, the Committee shall have the power to make
recommendations to the Board as to whom options should be granted, the number of
shares to be covered by each option, the time or times of option grants, and the
terms and conditions of each option. In addition, the Committee shall have
authority to interpret the Plan, to prescribe, amend and rescind miles and
regulations relating to the Plan, and to exercise the administrative and
ministerial powers of the Board with regard to aspects of the Plan other than
the granting of options. The interpretation and construction by the Committee of
any provisions of the Plan or of any option granted hereunder and the exercise
of any power delegated to it hereunder shall be final, unless otherwise
determined by the Board. No member of the Board or the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any option granted hereunder.
SECTION 3. STOCK
3.1 SHARES SUBJECT TO PLANS. The stock subject to the options granted under
the Plan shall be shares of the Company's authorized but un-issued Class A
common stock, par value $0.001 ("Common Stock"). The total number of shares that
may be issued pursuant to options granted under the Plan shall not exceed an
aggregate of 7,500,000 shares of Common Stock.
3.2 LAPSED OR UNEXERCISED OPTIONS. Whenever any outstanding option under
the Plan expires, is cancelled or is otherwise terminated (other than by
exercise), the shares of Common Stock allocable to the unexercised portion of
such option shall be restored to the Plan and be available for the grant of
other options under the Plan except as otherwise provided in Section 5.1(d).
SECTION 4. ELIGIBILITY
4.1 ELIGIBLE OPTIONEES. Incentive Options may be granted only to officers
and other employees of the Company or its Subsidiaries, including members of the
Board who are also employees of the Company or a Subsidiary. Non-statutory
Options may be granted to officers or other employees of the Company or its
Subsidiaries, to members of the Board or the board of directors of any
Subsidiary who are also employees of the Company or such Subsidiary, and to
certain other individuals providing services to the Company or its Subsidiaries.
4.2 LIMITATIONS ON 10% STOCKHOLDERS. No Incentive Option shall be granted to
an individual who, at the time the Incentive Option is granted, owns (including
ownership attributed pursuant to Section 425(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the Company or any
parent or Subsidiary of the Company (a "greater-than-10% stockholder") unless
such Incentive Option provides that (i) the purchase price per share shall not
be less than 110% of the fair market value of the Common Stock at the time such
Incentive Option is granted, and (ii) that such Incentive Option shall not be
exercisable to any extent after the expiration of five years from the date it is
granted.
4.3 LIMITATION ON EXERCISABLE OPTIONS. The aggregate fair market value
(determined at the time the Incentive Option is granted) of the Common Stock
with respect to which Incentive Options are exercisable for the first time by
any person during any calendar year under the Plan and under any other Incentive
Option plan of the Company (or a parent or subsidiary as defined in Section 425
of the Code) shall not exceed $100,000. Any option granted in excess of the
foregoing limitation shall be specifically designated as being a Non-statutory
Option.
Incentive Options shall only become exercisable after two (2) years continued
employment of the Optionee with the Company or one of its Subsidiaries.
Incentive Options shall be exercisable only to the extent of forty percent (40%)
of the total number of shares subject to the Incentive Option after the
expiration of two (2) years following the date the Incentive Option is granted,
only to the extent of sixty percent (60%) of the total number of optioned shares
after the expiration of three (3) years following the date the Option is
granted, only to the extent of eighty percent (80%) of the total number of
shares subject to the Incentive Option after the expiration of four (4) years
following the date the option is granted, and in full immediately prior to the
expiration of five (5) years following the date the Incentive Option is granted;
such limitations being calculated, in the case of any resulting fraction, to the
nearest lower whole number of shares. Incentive Options must be exercised before
the expiration of ten (10) years following the date of grant. Any Incentive
Option granted not subject to the provision requiring two years of employment
before exercise and the twenty percent (20%) vesting schedule shall be
specifically designated as being a Non-statutory Option. Notwithstanding the
foregoing, the Committee may, in its sole discretion, (i) prescribe longer time
periods and additional requirements with respect to the exercise of an Incentive
Option and (ii) terminate in whole or in part such portion of any Incentive
Option as has not yet become exercisable at the time of termination if it
determines that the Optionee is not performing satisfactorily the duties to
which he was assigned on the date the Incentive Option was granted or exercised
unless the Optionee is at the time of such exercise in the employ of the Company
or of a Subsidiary and shall have been continuously so employed since the grant
of his Incentive Option. Absence or leave approved by the management of the
Company shall not be considered an interruption of employment for any purpose
under the Plan.
SECTION 5. TERMS OF THE OPTION AGREEMENTS
5.1 MANDATORY TERMS. Each option agreement shall contain such provisions as
the Board or the Committee shall from time to time deem appropriate, and shall
include provisions relating to the method of exercise, payment of exercise
price, adjustments on changes in the Company's capitalization and the effect of
a merger, consolidation, liquidation, sale or other disposition of or involving
the Company. Option Agreements shall clearly identify whether the option is an
Incentive Option or a Non-statutory Option and if an Incentive Option,
explicitly state that such Option is only exercisable by the Optionee during his
lifetime. Option agreements need not be identical, but each option agreement by
appropriate language shall include the substance of all of the following
provisions:
(a) EXPIRATION. Notwithstanding any other provision of the Plan or of
any option agreement, each option shall expire on the date specified in the
option agreement, which date shall not be later than the tenth anniversary of
the date on which the option was granted (fifth anniversary in the case of a
greater-than-10% stockholder).
(b) EXERCISE. Each option shall be deemed exercised when (i) the
Company has received written notice of such exercise in accordance with the
terms of the option, (ii) except in the event of loans to exercise options as
set forth in Section 5.1(c) or an alternative to payment as set forth in Section
5.1(d), full payment of the aggregate option price of the shares of Common Stock
as to which the option is exercised has been made, and (iii) arrangements that
are satisfactory to the Board or the Committee in its sole discretion have been
made for the optionee's payment to the Company of the amount that is necessary
for the Company or Subsidiary employing the optionee to withhold in accordance
with applicable federal or state tax withholding requirements. Unless further
limited by the Board or the Committee in any option, the option price of any
shares of Common Stock purchased shall be paid in cash, by certified or official
bank check, by money order, with shares of Common Stock or by a combination of
the above; provided further, however, that the Board or the Committee in its
sole discretion may accept a personal check in full or partial payment of any
shares of Common Stock. If the exercise price is paid in whole or in part with
shares, the value of the shares surrendered shall be their fair market value on
the date the option is exercised as determined in accordance with Section 5.1(f)
hereof. No Optionee shall be deemed to be a holder of any shares of Common Stock
subject to an option unless and until a stock certificate or certificates for
such shares of Common Stock are issued to such person(s) under the terms of the
Plan. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash securities or other property) or distributions or other rights
for which the record date is prior to the date such stock certificate is issued,
except as expressly provided in Section 6 hereof.
(c) LOANS FOR EXERCISE OF OPTIONS. The Company in its sole discretion
may, on an individual basis or pursuant to a general program established in
connection with this Plan, lend money to an Optionee, guarantee a loan to an
Optionee, or otherwise assist an Optionee to obtain the cash necessary to
exercise all or a portion of an option granted hereunder or to pay any tax
liability of the Optionee attributable to such exercise. If the exercise price
is paid in whole or in part with Optionee's promissory note, such note shall (i)
provide for full recourse to the maker, (ii) be collateralized by the pledge of
the shares of Common Stock that the Optionee purchases upon exercise of such
option, (iii) bear interest at the rate the Company pays to its principal
lender, from time to time, and (iv) contain such other terms as the Board or the
Committee in its sole discretion shall reasonably require. No Optionee shall be
deemed to be a holder of any shares of Common Stock subject to an option unless
and until a stock certificate or certificates for such shares of Common Stock
are issued to such person(s) under the terms of the Plan.
(d) ALTERNATIVE TO PAYMENT. As an alternative to payment in full by the
Optionee for the number of shares in respect of which an Incentive Option is
exercised, the Committee may provide alternative settlement methods as follows:
(i) The Committee, in its discretion, may provide in the initial
grant of any Incentive Option, that the Optionee may elect either of the
alternative settlement methods set forth in subsection (ii) below.
(ii) The alternative settlement methods are for the Optionee, upon
exercise of the Incentive Option, to receive from the Company:
(1) cash in an amount equal to the excess of the value of one share over the
option price times the number of shares as to which the option is exercised; or
(2) the number of whole shares having an aggregate value not
greater than the cash amount calculated under Section 5.1(d)(ii)(1). For
purposes of determining an alternative settlement, the value per share shall be
the "fair market value" determined under the methods set forth in Section 5.1(f)
hereof, applied as of the date of the exercise of the Incentive Option, or such
other price as the Committee shall determine to be the fair market value of the
Common Stock on the date of exercise.
An election of any of the alternative settlement methods provided for under
Section 5.1(d)(ii) shall be binding on the Optionee, when made. The Optionee may
elect to what extent the alternative settlement method elected shall be paid in
cash, in Common Stock, or partially in Common Stock, provided that the aggregate
value of the payments shall not be greater than the cash amount calculated under
Section 5.1(d)(ii)(1). No fractional shares of Common Stock shall be issued, and
the Committee shall determine whether cash shall be paid in lieu of such
fractional share interest or whether such fractional share interest shall be
eliminated.
The alternative settlement methods provided above in Section 5.1(d)(ii) shall
not be available unless the cash amount calculated thereunder shall be positive,
i.e. when the value of one share shall exceed the option price per share.
Exercise of an option in any manner, including an exercise involving an election
of an alternative settlement method with respect to an option, shall result in a
decrease in the number of shares of Common Stock which thereafter may be
available under the Plan by the number of shares as to which the Incentive
Option is exercised.
To the extent that the exercise of options by one of the alternative settlement
methods provided for in Section 5.1(d)(ii) results in compensation income to the
Optionee, the Company will withhold from the amount due to the Optionee
utilizing such alternative settlement method, an appropriate amount for federal,
state and local taxes.
(e) EVENTS CAUSING IMMEDIATE EXERCISE. Unless otherwise provided in any
option, each outstanding option shall become immediately fully exercisable.
(i) if there occurs any action (which shall include a series of
transactions occurring within sixty (60) days or occurring pursuant to a plan),
that has the result that stockholders of the Company immediately before such
transaction cease to own at least 51 percent (51%) of the voting stock of the
Company or of any entity that results from the participation of the Company in a
reorganization, consolidation, merger, liquidation or any other form of
corporate transaction;
(ii) if the stockholders of the Company shall approve a plan of
merger, consolidation, reorganization, liquidation or dissolution in which the
Company does not survive (unless the approved merger, consolidation,
reorganization, liquidation or dissolution is subsequently abandoned); or
(iii) if the stockholders of the Company shall approve a plan for
the sale, lease, exchange or other disposition of all or substantially all the
property and assets of the Company (unless such plan is subsequently abandoned).
The Board or the Committee may in its sole discretion accelerate the date on
which any option may be exercised and may accelerate the vesting of any shares
of Common Stock subject to any option or previously acquired by the exercise of
any option. However, in no event shall any option become fully exercisable if
the exercise created an "excess parachute payment" as that term is defined in
Section 280G of the Code.
(f) PURCHASE PRICE. The purchase price per share of the Common Stock
under each Incentive Option shall be not less than the fair market value of the
Common Stock on the date the option is granted (110% of the fair market value in
the case of a greater-than-10% stockholder). The price at which shares may be
purchased pursuant to Non-statutory Options shall be specified by the Board at
the time the option is granted, and may be less than, equal to or greater than
the fair market value of the shares of Common Stock on the date Non-statutory
Option is granted, but shall not be less than the par value of shares of Common
Stock.
For the purpose of the Plan, the "fair market value" per share of Common Stock
on any date of reference shall be the Closing Price of the Common Stock of the
Company which is referred to in either clause (i), (ii) or (iii) below, on the
business day immediately preceding such date, or if not referred to in either
clause (i), (ii) or (iii) below, "fair market value" per share of Common Stock
shall be such value as shall be determined by the Board or the Committee, unless
the Board or the Committee in its sole discretion shall determine otherwise in a
fair and uniform manner. For this purpose, the Closing Price of the Common Stock
on any business day shall be (i) if the Common Stock is listed or admitted for
trading on any United States national securities exchange, or if actual
transactions are otherwise reported on a consolidated transaction reporting
system the last reported sale price of Common Stock on such exchange or
reporting system, as reported in any newspaper of general circulation, (ii) if
the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), or any similar system of automated
dissemination of quotations of securities prices in common use, the mean between
the closing high bid and low asked quotations for such day of Common Stock on
such system, or (iii) if neither clause (i) or (ii) is applicable, the mean
between the high bid and low asked quotations for the Common Stock as reported
by the National Quotation Bureau, Incorporated if at least two (2) securities
dealers have inserted both bid and asked quotations for Common Stock on at least
five (5) of the ten (10) preceding days.
(g) TRANSFERABILITY OF OPTIONS. Incentive options granted under the
Plan and the rights and privileges conferred thereby may not be transferred,
assigned, pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by applicable laws of descent and distribution,
and shall not be subject to execution, attachment or similar process. Upon any
attempt so to transfer, assign, pledge, hypothecate or otherwise dispose of any
Incentive Option under the Plan or any right or privilege conferred hereby,
contrary to the provisions of the Plan, or upon the sale or levy or any
attachment or similar process upon the rights and privileges conferred hereby,
such option shall thereupon terminate and become null and void. Non-statutory
Options shall be transferable to the extent provided in the option agreements
under which they are granted.
(h) TERMINATION OF EMPLOYMENT OR DEATH OF OPTIONEE. Except as may be
otherwise expressly provided in the terms and conditions of the option granted
to an Optionee, options granted hereunder shall terminate on the earlier to
occur of termination for cause or voluntary separation on the part of the
Optionee without the consent of the Company or Subsidiary;
(i) the date of expiration thereof, or
(ii) other than the case of death of the Optionee or disability of
the Optionee within the meaning of Section 22(e)(3) of the Code ("disability"),
(a) except for termination for cause, 90 days after termination of the
employment between the Company and the Optionee in the case of an Incentive
Option, (b) except for termination for cause, 90 days after termination of the
employment or other relationship between the Company and the Optionee, unless
such termination provision is waived by resolution adopted by the Board within
30 days of the termination of such relationship, in the case of a Non-statutory
Option.
An employment relationship between the Company and the Optionee shall be deemed
to exist during any period during which the Optionee is employed by the Company
or by any Subsidiary. Whether authorized leave of absence or absence on military
government service shall constitute termination of the employment relationship
between the Company and the Optionee shall be determined by the Board at the
time thereof except as may otherwise be expressly provided in the terms and
conditions of the option granted to an Optionee, in the event of the death of an
Optionee while in an employment or other relationship with the Company and
before the date of expiration of such option, such option shall terminate one
year following the date of such death. After the death of the Optionee, his
executors, administrators or any person or persons to whom his option may be
transferred by will or by laws of descent and distribution, shall have the
night, at any time prior to such time termination, to exercise the option to the
extent the Optionee was entitled to exercise such option immediately prior to
his death.
Except as may otherwise be expressly provided in the terms and conditions of the
option granted to an Optionee, if an Optionee's employment or other relationship
with the Company terminates because of a disability or retirement on the
Optionee's retirement date, the Optionee's option shall become immediately fully
exercisable and the exercise thereof shall then terminate one year following
such disability or retirement.
(i) RIGHTS OF OPTIONEES. No Optionee shall be deemed for any purpose to
be the owner of any shares of Common Stock subject to any option unless and
until (i) the option shall have been exercised pursuant to the terms thereof,
(ii) the Company shall have issued and delivered the shares of the Optionee, and
(iii) the Optionee's name shall have been entered as a stockholder of record on
the books of the Company. Thereupon, the Optionee shall have full voting,
dividend and other ownership rights with respect to such shares of Common Stock.
SECTION 6. ADJUSTMENT OF SHARES OF COMMON STOCK
6.1 INCREASE OR DECREASE OF OUTSTANDING SHARES. If at any time while the
Plan is in effect or unexercised options are outstanding, there shall be any
increase or decrease in the number of issued and outstanding shares of Common
Stock through the declaration of a stock dividend or through any
recapitalization resulting in a stock split-up, combination or exchange of
shares of Common Stock, then and in such event (i) appropriate adjustment shall
be made in the maximum number of shares of Common Stock available for grant
under the Plan, so that the same percentage of the Company's issued and
outstanding shares of Common Stock shall continue to be subject to being so
optioned, and (ii) appropriate adjustment shall be made in the number of shares
and the exercise price per share of Common Stock thereof then subject to any
outstanding option, so that the same percentage of the Company's issued and
outstanding shares of Common Stock shall remain subject to purchase at the same
aggregate exercise price.
6.2 CONVERSION OF SHARES. Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to the number of or
exercise price of shares of Common Stock then subject to outstanding options
granted under the Plan.
6.3 GENERAL. Without limiting the generality of the foregoing, the existence
of outstanding options granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the shares subject to outstanding
options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
SECTION 7. AMENDMENT OF THE PLAN
The Board may amend the Plan at any time, and from time to time, subject to the
limitation that no amendment shall be effective unless approved by the
stockholders of the Company in accordance with applicable law and regulations at
an annual or special meeting held within twelve (12) months before or after the
date of adoption of such amendment, in any instance in which such amendment
would: (i) increase the number of shares of Common Stock as to which options may
be granted under the Plan; of (ii) change in substance the provisions of Section
4 hereof relating to eligibility to participate in the Plan.
In the event of a conflict between any option agreement and the Plan, the
terms and conditions of the Plan shall prevail.
Rights and obligations under any option granted before any amendment of the Plan
shall not be altered or impaired by such amendment, except with the consent of
the Optionee.
SECTION 8. NON-EXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor the approval of the Plan by
the stockholders of the Company shall be construed as creating any limitations
on the power of the Board to adopt such other incentive arrangements as it may
deem desirable, including without limitation the granting the stock options
otherwise than under the Plan, and such arrangements may be either applicable
generally or only in specific cases.
SECTION 9. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW
The obligation of the Company to sell and deliver shares of Common Stock with
respect to options granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by government agencies
as may be deemed necessary or appropriate by the Board or the Committee. All
shares sold under the Plan shall bear appropriate legends. The Plan shall be
governed by and construed in accordance with the laws of the State of Nevada.
SECTION 1O. EFFECTIVE DATE OF PLAN
The effective date of the Plan shall be the later date on which it is approved
by the Board or by the stockholders of the Company.
EXHIBIT B
NON-EMPLOYEE DIRECTORS NON-STATUTORY STOCK OPTION PLAN
SECTION 1. PURPOSE
This Non-Statutory Stock Option Plan (the "Plan") is intended as an incentive
for members of the Board of Directors of COMPETITIVE COMMUNICATIONS, INC. a
Nevada corporation (the "Company"), who are not employed by the Company or its
Subsidiaries (as hereinafter defined), to enable such persons ("Optionee" or
"Optionees") to acquire or increase a proprietary interest in the success of the
Company.
SECTION 2. OPTIONS TO BE GRANTED AND ADMINISTRATION
2.1 OPTIONS TO THE GRANTED. Options granted under the Plan shall be
Non-statutory Options. It is intended that this Plan be considered a "formula
plan" as contemplated by Rule 16b-3, promulgated under the Securities Exchange
Act of 1934, as amended (the "Act"). This Plan may be amended from time to time
by the Board to the extent necessary in order for transactions under the Plan to
be exempt from Section 16(b) of the Act.
2.2 APPOINTMENT AND PROCEEDINGS OF COMMITTEE. The Board of Directors of the
Company (the "Board") may appoint an Option Committee (the "Committee") which
shall consist of at least two members of the Board. The Board may from time to
time appoint members of the Committee in substitution for or in addition to
members previously appointed, and may fill vacancies, however caused, in the
Committee. The Committee shall select one of its members as its chairman and
shall hold its meetings at such times and places as it shall deem advisable. If
the Committee consists of only two members, both members shall be required for a
quorum and all actions of the Committee shall require concurrence by both
members. If the Committee consists of more than two members, then a majority of
its members shall constitute a quorum, and all actions of the Committee shall be
taken by a majority of its members. Any action may be taken by a written
instrument signed by all of the members, and any action so taken shall be as
fully effective as if it had been taken by a vote of a majority of the members
(or both members if there are only two Committee Members) at a meeting duly
called and held.
2.3 ADMINISTRATION BY THE COMMITTEE. This Plan shall be administered by the
Committee. The Committee shall have full and final authority to operate, manage
and administer the Plan on behalf of the Company. Subject to the provisions of
this Plan and the approval of the Board, the Committee shall have the power to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, and to exercise the administrative and ministerial powers
of the Board with regard to aspects of the Plan. The interpretation and
construction by the Committee of any provisions of the Plan or of any option
granted hereunder and the exercise of any power delegated to it hereunder shall
be final, unless otherwise determined by the Board. No member of the Board or
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted hereunder.
SECTION 3. STOCK
3.1 SHARES SUBJECT TO PLANS. The stock subject to the options granted under
the Plan shall be shares of the Company's authorized but un-issued Class A
common stock, par value $0.001 ("Common Stock"). The total number of shares that
may be issued pursuant to options granted under the Plan shall not exceed an
aggregate of 7,500,000 shares of Common Stock.
3.2 LAPSED OR UNEXERCISED OPTIONS. Whenever any outstanding option under the
Plan expires, is in cancelled or is otherwise terminated (other than by
exercise), the shares of Common Stock allocable to the unexercised portion of
such option shall be restored to the Plan and be available for the grant of
other options under the Plan.
SECTION 4. ELIGIBILITY
4.1 INITIAL GRANT OF OPTIONS. On the date of appointment to the Board, each
eligible Optionee shall be granted an option to purchase at the "fair market
value" from the Company an aggregate of 5,000 shares of Common Stock. The option
shall vest and become exercisable at the rate of 20% per year after the
expiration of the first year following the date on which the option is granted
and shall be exercisable in full only after the expiration of five (5) years
following the date the option is granted.
4.2 ANNUAL GRANT OF OPTIONS. On the date of the annual stockholders meeting
of the Company, each eligible Optionee shall be granted an option to purchase at
the "fair market value" from the Company an aggregate of 1,000 shares of Common
Stock. The option shall vest and become exercisable one (1) year from the date
of grant.
4.3 ELIGIBLE OPTIONEES. Options shall be granted to each member of the Board
who, as of the date of grant, (i) is not an employee of the Company or a
Subsidiary, (ii) is appointed, elected, re-elected or otherwise continues to
serve on the Board, and (iii) with respect to annual grants under Section 4.2
above, has served on the Board for at least six (6) months.
SECTION 5. TERMS OF THE OPTION AGREEMENTS
5.1 MANDATORY TERMS. Each option agreement shall contain such provisions as
the Board or the Committee shall from time to time deem appropriate, and shall
include provisions relating to the method of exercise, payment of exercise
price, adjustments on changes in the Company's capitalization and the effect of
a merger, consolidation, liquidation, sale or other disposition of or involving
the Company. Option agreements shall include the following provisions:
5.1.1 EXPIRATION. Notwithstanding any other provision of the Plan or of any
option agreement, each option shall expire on the tenth anniversary of the date
on which the option was granted.
5.1.2 EXERCISE. Each option shall be deemed exercised when (i) the Company
has received written notice of such exercise in accordance with the terms of the
option, and (ii) except in the event of loans to exercise options as set forth
in Section 5.1.3, full payment of the aggregate option price of the shares of
Common Stock as to which the option is exercised has been made. Unless further
limited by the Board or the Committee in any option, the option price of any
shares of Common Stock purchased shall be paid in cash, by certified or official
bank check, by money order, with shares of Common Stock or by a combination of
the above; provided further, however, that the Board or the Committee in its
sole discretion may accept a personal check in full or partial payment of any
shares of Common Stock. If the exercise price is paid in whole or in part with
shares, the value of the shares surrendered shall be their fair market value on
the date the option is exercised as determined in accordance with Section 5.1.5
hereof.
5.1.3 LOANS FOR EXERCISE OF OPTIONS. The Company in its sole discretion may,
on an individual basis or pursuant to a general program established in
connection with this Plan, lend money to an optionee, guarantee a loan to an
optionee, or otherwise assist an optionee to obtain the cash necessary to
exercise all or a portion of an option granted hereunder or to pay any tax
liability of the optionee attributable to such exercise. If the exercise price
is paid in whole or in part with optionee's promissory note, such note shall (i)
provide for full recourse to the maker, (ii) be collateralized by the pledge of
the shares of Common Stock that the optionee purchases upon exercise of such
option, (iii) bear interest at the rate the Company pays to its principal
lender, from time to time, and (iv) contain such other terms as the Board or the
Committee shall reasonably require.
5.1.4 EVENTS CAUSING IMMEDIATE EXERCISE. Unless otherwise provided in any
option, each outstanding option shall become immediately fully exercisable:
5.1.4.1 if there occurs any transaction (which shall include a series
of transactions occurring within sixty (60) days or occurring pursuant to a
plan), that has the result that stockholders of the Company immediately before
such transaction cease to own at least 51 percent (51%) of the voting stock of
the Company or of any entity that results from the participation of the Company
in a reorganization, consolidation, merger, liquidation or any other form of
corporate transaction;
5.1.4.2 if the stockholders of the Company shall approve a plan of
merger, consolidation, reorganization, liquidation or dissolution in which the
Company does not survive (unless the approved merger, consolidation,
reorganization, liquidation or dissolution is subsequently abandoned); or
5.1.4.3 if the stockholders of the Company shall approve a plan for the
sale, lease, exchange or other disposition of all or substantially all the
property and assets of the Company (unless such plan is subsequently abandoned).
The Board or the Committee may accelerate the date on which any option may be
exercised and may accelerate the vesting of any shares of Common Stock subject
to any option, subject to the limitations of Section 16(b) of the Act.
5.1.5 PURCHASE PRICE. The purchase price per share of the Common Stock under
each option shall be not less than the fair market value of the Common Stock on
the date the option is granted.
For the purpose of the Plan, the "fair market value" per share of Common Stock
on any date of reference shall be the Closing Price of the Common Stock of the
Company which is referred to in either clause (i), (ii) or (iii) below, on the
business day immediately preceding such date, or if not referred to in either
clause (i), (ii) or (iii) below, "fair market value" per share of Common Stock
shall be such value as shall be determined by the Board or the Committee, unless
the Board or the Committee in its sole discretion shall determine otherwise in a
fair and uniform manner. For this purpose, the Closing Price of the Common Stock
or on any business day shall be (i) if the Common Stock is listed or admitted
for trading on any United States national securities exchange, or if actual
transactions are otherwise reported on a consolidated transaction reporting
system, the last reported sale price of Common Stock on such exchange or
reporting system, as reported in any newspaper of general circulation, (ii) if
the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), or any similar system of automated
dissemination of quotations of securities prices in common use, the mean between
the closing high bid and low asked quotations for such day of Common Stock on
such system, or (iii) if neither clause (i) or (ii) is applicable, the mean
between the high bid and low asked quotations for the Common Stock as reported
by the National Quotation Bureau, Incorporated if at least two securities
dealers have inserted both bid and asked quotations for Common Stock on at least
five (5) of the ten (10) preceding days.
5.1.6 TRANSFERABILITY OF OPTIONS. Options granted under the Plan and the
rights and privileges conferred thereby may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than by will or by applicable laws of descent and distribution or pursuant
to a qualified domestic relations order as defined by the Internal Revenue Code
of 1986, as amended, or Title I of the Employee Retirement Income Security Act
or Rules thereunder. Upon any attempt so to transfer, assign, pledge,
hypothecate or otherwise dispose of any option under the Plan or any night or
privilege conferred hereby, contrary to the provisions of the Plan, or upon the
sale or levy or any attachment or similar process upon the rights and privileges
conferred hereby, such option shall thereupon terminate and become null and
void.
5.1.7 TERMINATION OF SERVICE OR DEATH OF OPTIONEE. Except as may be
otherwise expressly provided in the terms and conditions of the option granted
to an Optionee, options granted hereunder shall terminate on the earlier to
occur of:
5.1.7.1 the date of removal from the Board;
5.1.7.2 the date of the expiration of the term thereof (the "Expiration
Date"); or
5.1.7.3 the termination of the Optionee as a member of the Board by
reason of voluntary resignation by the Optionee or the expiration of the
Optionee's elected or appointed term and other than the case of death of the
Optionee or disability of the Optionee within the meaning of Section 22(e)(3) of
the Code ("disability"), the Optionee shall have the fight, within three (3)
months after the date on which Optionee shall have ceased to be a member of the
Board, to exercise the unexercised portion of the options granted to the extent,
if any, that such options were exercisable by the Optionee on the date of such
termination.
In the event of the death of an Optionee while a member of the Board or within
three (3) months after the term of the Optionee as a member of the Board, except
for termination pursuant to Section 5.1.7.1 above, such option shall become
immediately fully exercisable and shall terminate on the earlier of the
Expiration Date thereof or one year following the date of such death. After the
death of the Optionee, his executors, administrators or any person or persons to
whom his option may be transferred by will or by laws of descent and
distribution, shall have the right, at any time during such period, to exercise
the option.
If an Optionee's service on the Board terminates because of a disability, the
Optionee's option shall become immediately fully exercisable and shall terminate
on the earlier of the Expiration Date thereof or one year following the
termination of service on the Board.
5.1.8 RIGHTS OF OPTIONEES. No Optionee shall be deemed for any purpose to be
the owner of any shares of Common Stock subject to any option unless and until
(i) the option shall have been exercised pursuant to the terms thereof, (ii) the
Company shall have issued and delivered the shares to the Optionee, and (iii)
the Optionee's name shall have been entered as a stockholder of record on the
books to the Company. Thereupon the Optionee shall have full voting, dividend
and other ownership rights with respect to such shares of Common Stock. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such shares of Common Stock are issued,
except as expressly provided in Section 6 hereof.
SECTION 6. ADJUSTMENT OF SHARES OF COMMON STOCK
6.1 INCREASE OR DECREASE OF OUTSTANDING SHARES. If at any time while the
Plan is in effect or unexercised options are outstanding, there shall be any
increase or decrease in the number of issued and outstanding shares of Common
Stock through the declaration of a stock dividend or through any
recapitalization resulting in a stock split-up, combination or exchange of
shares of Common Stock, then and in such event (i) appropriate adjustment shall
be made in the maximum number of shares of Common Stock available for grant
under the Plan, so that the same percentage of the Company's issued and
outstanding shares of Common Stock shall continue to be subject to being so
optioned, (ii) appropriate adjustment shall be made in the number of shares and
the exercise price per share of Common Stock thereof then subject to any
outstanding option, so that the same percentage of the Company's issued and
outstanding shares of Common Stock shall remain subject to purchase at the same
aggregate exercise price, and (iii) appropriate adjustment shall be made as to
the number of shares of Common Stock to be subject to each future grant under
the Plan, so that the same percentage of the Company's number of shares of
Common Stock available under the Plan shall continue to be subject to each
option granted.
6.2 CONVERSION OF SHARES. Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with direct sale or upon the exercise of rights or warrants to
subscribe therefore, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect and no
adjustment by reason thereof shall be made with respect to the number of or
exercise price of shares of Common Stock then subject to outstanding options
granted under the Plan.
6.3 GENERAL. Without limiting the generality of the foregoing, the existence
of outstanding options granted under the Plan shall not affect in any manner the
night or power of the Company to make, authorize or consummate (1) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the shares subject to outstanding
options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
SECTION 7. AMENDMENT OF THE PLAN
The Board may not amend the Plan more than once every six months. In addition,
no amendment shall be effective unless approved by the stockholders of the
Company in accordance with applicable law and regulations at an annual or
special meeting held within 12 months before or after the date of adoption of
such amendment, in any instance in which such amendment would materially: (i)
increase the benefits of the Plan; (ii) increase the number of shares of Common
Stock as to which options may be granted under the Plan; or (iii) change in
substance the provisions of Section IV hereof relating to eligibility to
participate in the Plan.
In the event of a conflict between any option agreement and the Plan, the
terms and conditions of the Plan shall prevail.
Rights and obligations under any option granted before any amendment of the Plan
shall not be altered or impaired by such amendment, except with the consent of
the Optionee.
SECTION 8. NON-EXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor the approval of the Plan by
the stockholders of the Company shall be construed as creating any limitations
on the power of the Board to adopt such other incentive arrangements as it may
deem desirable, including without limitation the granting the stock options
otherwise than under the Plan, and such arrangements may be either applicable
generally or only in specific cases.
SECTION 9. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW
The obligation of the Company to sell and deliver shares of Common Stock with
respect to options granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by government agencies
as may be deemed necessary or appropriate by the Board or the Committee. If
necessary, all shares sold under the Plan shall bear appropriate legends. The
Plan shall be governed by and construed in accordance with the laws of the State
of Nevada.
SECTION 1O. EFFECTIVE DATE OF PLAN
The effective date of the Plan shall be the later date on which it is approved
by the Board or by the stockholders of the Company.
SECTION 11. TERMINATION DATE OF PLAN
The Plan shall terminate on the ten-year anniversary of the effective date of
the Plan, and no options may be granted under the Plan thereafter.
