Network Systems International, Inc. and Subsidiaries
Long-Term Stock Incentive Plan
ARTICLE I GENERAL
1.01. Purpose.
The purposes of this Long-Term Stock Incentive Plan (the
"Plan") are to: (1) closely associate the interests of the
key associates (management and certain other employees) of
Network Systems International, Inc., a Nevada corporation,
and its adopting Subsidiaries (the "Company") with the
stockholders by reinforcing the relationship between
participants' rewards and stockholder gains; (2) provide key
associates with an equity ownership in the Company
commensurate with Company performance, as reflected in
increased stockholder value; (3) maintain competitive
compensation levels; and (4) provide an incentive to key
associates for continuous employment with the Company.
1.02. Administration.
(a) The Plan shall be administered by a Committee (the
"Committee"), appointed by the Board of Directors of Network
Systems International, Inc. (the "Board"), which shall
consist of at least three members, all of whom shall be
members of the Board.
(b) The Committee shall have the authority, in its sole
discretion and from time to time to:
(i) designate the key associates or classes of key
associates eligible to participate in the Plan;
(ii) grant awards provided in the Plan in such form and
amount as the Committee shall determine;
(iii)impose such limitations, restrictions and
conditions upon any such award as the Committee shall
deem appropriate; and
(iv) interpret the Plan, adopt, amend and rescind rules
and regulations relating to the Plan, and make all other
determinations and take all other action necessary or
advisable for the implementation and administration of
the Plan.
(c) Decisions and determinations of the Committee on all
matters relating to the Plan shall be in its sole discretion
and shall be conclusive so long as such decisions shall
conform to applicable federal and state law. No member of
the Committee shall be liable for any action taken or
decision made in good faith relating to the Plan or any
award thereunder.
1.03. Eligibility for Participation.
Participants in the Plan shall be selected by the
Committee from the executive officers, management, and other
employees (collectively "associates") of the Company who
have the capability of making a substantial contribution to
the success of the Company. In making this selection and in
determining the form and amount of awards, the Committee
shall consider any factors deemed relevant, including the
individual's functions, responsibilities, value of services
to the Company and past and potential contributions to the
Company's profitability and sound growth. The Committee's
determinations need not be uniform and may be made by the
Committee selectively among the persons who receive, or are
eligible to receive, Options under the Plan, whether or not
such persons are similarly situated.
1.04. Types of Awards Under Plan.
Awards under the Plan may be in the form of any one or
more of the following:
(i) Stock Options, as described in Article II; and
(ii) Incentive Stock Options, as described in Article III.
1.05. Aggregate Limitation on Awards.
(a) Shares of stock which may be issued under the Plan
shall be authorized Common Stock of Network Systems
International, Inc. a Nevada corporation, par value $.001
per share ("Common Stock"). The maximum number of shares of
Common Stock which may be issued under the Plan shall be
five hundred thousand.
(b) For purposes of calculating the maximum number of
shares of Common Stock which may be issued under the Plan:
(i) all the shares issued (including the shares, if any,
withheld for tax withholding requirements) shall be
counted when cash is used as full payment for shares
issued upon exercise of a Stock Option or Incentive Stock
Option; and only the net shares issued (including the
shares, if any, withheld for tax withholding
requirements) shall be counted when shares of Common
Stock are used as full or partial payment for shares
issued upon exercise of a Stock Option or Incentive Stock
Option.
(c) Shares tendered by a participant as payment for
shares issued upon exercise of a Stock Option or Incentive
Stock Option shall be available for issuance under the Plan.
Any shares of Common Stock subject to a Stock Option or
Incentive Stock Option which for any reason is terminated
unexercised or expires shall again be available for issuance
under the Plan.
1.06. Effective Date and Term of Plan.
The Plan shall become effective on the date approved by
the Board and shall remain in effect for a period of ten
years from such date.
ARTICLE II STOCK OPTIONS
2.01. Award of Stock Options.
The Committee may from time to time, and subject to the
provisions of the Plan and such other terms and conditions
as the Committee may grant to any person eligible to
participate in the Plan one or more options to purchase for
cash or shares the number of shares of Common Stock ("Stock
Options") allotted by the Committee. The date a Stock Option
is granted shall mean the date selected by the Committee as
of which the Committee allots a specific number of shares to
a participant pursuant to the Plan.
2.02. Stock Option Agreements.
The grant of a Stock Option shall be evidenced by a
written Stock Option Agreement ("Stock Option Agreement"),
executed by the Company and the holder of a Stock Option
(the "Optionee"), stating the number of shares of Common
Stock subject to the Stock Option evidenced thereby, and in
such form as the Committee may from time to time determine.
2.03. Stock Option Price.
The option price per share of Common Stock deliverable
upon the exercise of a Stock Option shall be, at least, 100%
of the fair market value of a share of Common Stock on the
date the Stock Option is granted.
2.04. Term and Exercise.
Each Stock Option shall be fully exercisable as set forth
in the Stock Option Agreement, but in any event not sooner
than one year from the date of its grant, and unless a
shorter period is provided by the Committee or by another
Section of this Plan, may be exercised during a period of
ten years from the date of grant thereof (the "option
term"). No Stock Option shall be exercisable after the
expiration of its option term.
2.05. Manner of Payment.
Each Stock Option Agreement shall set forth the procedure
governing the exercise of the Stock Option granted
thereunder, and shall provide that, upon such exercise in
respect of any shares of Common Stock subject thereto, the
Optionee shall pay to the Company, in full, the option price
for such shares with cash or with previously owned Common
Stock at the discretion of the Company.
2.06. Death of Optionee.
(a) Upon the death of the Optionee, any rights to the
extent exercisable on the date of death may be exercised by
the Optionee's estate, or by a person who acquires the right
to exercise such Stock Option by bequest or inheritance or
by reason of the death of the Optionee, provided that such
exercise occurs within both the remaining effective term of
the Stock Option and twelve months after the Optionee's
death.
(b) The provisions of this Section shall apply
notwithstanding the fact that the Optionee's employment may
have terminated prior to death, but only to the extent of
any rights exercisable on the date of death.
2.07 Retirement or Disability.
Upon termination of the Optionee's employment by reason
of retirement or permanent disability (as each is determined
by the Committee), the Optionee may, within 12 months from
the date of termination, exercise any Stock Options to the
extent such options are exercisable during such 12-month
period.
2.08. Termination for Other Reasons.
Except as provided in Sections 2.06 and 2.07, or except
as otherwise determined by the Committee, all Stock Options
shall terminate sixty (60) days after the termination of the
Optionee's employment for any other reason.
ARTICLE III INCENTIVE STOCK OPTIONS
3.01. Award of Incentive Stock Options.
The Committee may, from time to time and subject to the
provisions of the Plan and such other terms and conditions
as the Committee may prescribe, grant to any employee of the
Company who is eligible to participate in the Plan one or
more "incentive stock options" (intended to qualify as such
under the provisions of section 422 of the Internal Revenue
Code of 1986, as amended ("Incentive Stock Options") to
purchase for cash or shares the number of shares of Common
Stock allotted by the Committee. The date an Incentive Stock
Option is granted shall mean the date selected by the
Committee as of which the Committee allots a specific number
of shares to a participant pursuant to the Plan.
Notwithstanding the foregoing, Incentive Stock Options shall
not be granted to any owner of 10% or more of the total
combined voting power of the Company and its subsidiaries.
3.02. Incentive Stock Option Agreements.
The grant of an Incentive Stock Option shall be evidenced
by a written Incentive Stock Option Agreement, executed by
the Company and the grantee of an Incentive Stock Option
(the "Optionee"), stating the number of shares of Common
Stock subject to the Incentive Stock Option evidenced
thereby, and in such form as the Committee may from time to
time determine.
3.03. Incentive Stock Option Price.
The option price per share of Common Stock deliverable
upon the exercise of an Incentive Stock Option shall be at
least 100% of the fair market value of a share of Common
Stock on the date the Incentive Stock Option is granted.
3.04. Term and Exercise.
Each Incentive Stock Option shall be fully exercisable as
set forth in the Long Term Incentive Stock Option Agreement,
but in any event not sooner than one year from the date of
grant and in compliance with current IRS guidelines.
Options may be exercised during a period of ten years from
the date of grant (the "option term"). No Incentive Stock
Option shall be exercisable after the expiration of its
option term.
3.05. Maximum Amount of Incentive Stock Option Grant.
No Optionee may be granted an Incentive Stock Option in
any calendar year if the aggregate fair market value
(determined as of the date the Option is granted) of the
Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by such Optionee during
any calendar year, under this and all other incentive stock
option plans (as defined in Section 422 of the Internal
Revenue Code) of the Company, would exceed One Hundred
Thousand Dollars ($100,000).
3.06. Death of Optionee.
(a) Upon the death of the Optionee, any Incentive Stock
Option exercisable on the date of death may be exercised by
the Optionee's estate or by a person who acquires the right
to exercise such Incentive Stock Option by bequest or
inheritance or by reason of the death of the Optionee,
provided that such exercise occurs within both the remaining
option term of the Incentive Stock Option and one year after
the Optionee's death.
(b) The provisions of this Section shall apply
notwithstanding the fact that the Optionee's employment may
have terminated prior to death, but only to the extent of
any Incentive Stock Options exercisable on the date of
death.
3.07. Retirement or Disability.
Upon the termination of the Optionee's employment by
reason of permanent disability or retirement at age 65 (or
at such other times as each shall be determined by the
Committee), the Optionee may exercise Incentive Stock
Options to the extent such Incentive Stock Options were
exercisable at the date of such termination of employment.
In addition, these options can only be exercised up to the
end of the time periods set forth in Section 422 of the
Internal Revenue Code of 1986, which states that exercise of
an Incentive Stock Option will not be available to an
Optionee who exercises any Incentive Stock Options more than
(i) 12 months after the date of termination of employment
due to permanent disability or (ii) three months after the
date of termination of employment due to retirement.
3.08. Termination for Other Reasons.
Except as provided in Sections 3.06 and 3.07 or except as
otherwise determined by the Committee, all Incentive Stock
Options shall terminate sixty (60) days after the
termination of the Optionee's employment with the Company.
3.09. Applicability of Stock Options Section.
Section 2.05, Manner of Payment applicable to Stock
Options, shall apply equally to Incentive Stock Options.
Said Section is incorporated by reference in this Article
III as though fully set forth herein.
ARTICLE IV MISCELLANEOUS
4.01. General Restriction.
Each award under the Plan shall be subject to the
requirement that, if at any time the Committee shall
determine that (i) the listing, registration or
qualification of the shares of Common Stock subject or
related thereto upon any securities exchange or under any
state or Federal law, or (ii) the consent or approval of any
government regulatory body, or (iii) an agreement by the
Optionee of an award with respect to the disposition of
shares of Common Stock, is necessary or desirable as a
condition of, or in connection with, the granting of such
award or the issue or purchase of shares of Common Stock
thereunder, such award may not be consummated in whole or in
part unless such listing, registration, qualification,
consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the
Committee.
4.02. Non-Assignability.
No award under the Plan shall be assignable or
transferable by the recipient thereof, except by will or by
the laws of descent and distribution, nor shall any award
under the Plan be subject to attachment, execution or other
similar process. During the life of the recipient, such
award shall be exercisable only by such person or by such
person's guardian or legal representative.
4.03. Withholding Taxes.
Whenever the Company proposes or is required to issue or
transfer shares of Common Stock under the Plan, the Company,
if required to withhold taxes upon issuance or transfer of
shares, will have the right to require the Optionee to remit
to the Company an amount sufficient to satisfy any Federal,
state and/or local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares.
Alternatively, the Company may issue or transfer such shares
of Common Stock net of the number of shares sufficient to
satisfy the withholding tax requirements. For withholding
tax purposes, the shares of Common Stock shall be valued on
the date the withholding obligation is incurred.
4.04. Right to Terminate Employment.
Nothing in the Plan or in any agreement entered into
pursuant to the Plan shall confer upon any Optionee or
stockholder any right to continue in the employment of the
Company or affect any right which the Company may have to
terminate the employment of any Optionee or stockholder.
4.05. Rights as a Stockholder.
An Optionee shall have no rights as a stockholder with
respect to shares of Common Stock subject to an option
granted to the Optionee unless and until certificates for
shares of Common Stock are issued to the Optionee pursuant
to such option.
4.06. Definitions.
In this Plan the following definitions shall apply:
(a) "Subsidiary" means any corporation of which, at the
time more than 50% of the shares entitled to vote generally
in an election of directors are owned directly or indirectly
by Network Systems International, Inc., a Nevada
corporation, or any Subsidiary thereof.
(b) "Fair market value" as of any date and in respect of
any share of Common Stock means the closing bid price on
such date or on the next business day, if such date is not a
business day, of a share of Common Stock reflected in the
consolidated trading tables of The Wall Street Journal
(presently the NASDAQ) or any other publication selected by
the Committee, provided that, if shares of Common Stock
shall not have been traded on the NASDAQ market for more
than 10 days immediately preceding such date or if deemed
appropriate by the Committee for any other reason, the fair
market value of shares of Common Stock shall be as
determined by the Committee in such other manner as it may
deem appropriate.
(d) "Option" means Stock Option or Incentive Stock
Option.
(e) "Option price" means the purchase price per share of
Common Stock deliverable upon the exercise of a Stock Option
or Incentive Stock Option.
4.07 Leaves of Absence.
The Committee shall be entitled to make such rules,
regulations and determinations, consistent with any
applicable laws, as it deems appropriate under the Plan in
respect of any leave of absence taken by the recipient of
any award. Without limiting the generality of the foregoing,
the Committee shall be entitled to determine (i) whether or
not any such leave of absence shall constitute a termination
of employment within the meaning of the Plan and (ii) the
impact, if any, of any such leave of absence on awards under
the Plan theretofore made to any recipient who takes such
leave of absence.
4.08. Newly Eligible Employees.
The Committee shall be entitled to make such
determinations and awards as it deems appropriate in respect
of any employee who becomes eligible to participate in the
Plan or any portion thereof after the commencement of an
award or incentive period.
4.09. Adjustments of and Changes in Stock of Network.
In any event of any change in the outstanding Common
Stock by reason of a stock dividend or distribution,
recapitalization, merger, consolidation, split-up,
combination, exchange of shares or the like, the Committee
may appropriately adjust the number of shares of Common
Stock which may be issued under the Plan, the number of
shares of Common Stock subject to Options theretofore
granted under the Plan, the option price of Options
theretofore granted under the Plan, and any and all other
matters deemed appropriate by the Committee. In the event
of a "Change in Control" of the Company any Option
previously granted under the Plan to an Optionee shall be
immediately exercisable in full on such date, without regard
to any times of exercise established under Section 2.04 or
3.04 hereof and any Sections outlined in the Stock Option
Agreement or Long Term Incentive Stock Option Agreement, as
the case may be. The term "Change in Control" shall mean
the occurrence, at any time during the specified term of an
Option granted under the Plan, of any of the following
events:
(a) The Company is merged or consolidated or reorganized
into or with or shares of stock of the Company are exchanged
for stock or securities of, another corporation or other
legal person and as a result of such, merger, consolidation,
reorganization or exchange less than 51% of the outstanding
voting securities or other capital interests of the
surviving, resulting or acquiring corporation or other legal
person are owned in the aggregate by the stockholders of the
Company immediately prior to such merger, consolidation,
reorganization or exchange;
(b) The Company sells all or substantially all of its
business and/or assets to any other corporation or other
legal person, less than 51% of the outstanding voting
securities or other capital interests of which are owned in
the aggregate by the stockholders of the Company, directly
or indirectly, immediately prior to or after such sale;
(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), as promulgated
pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), disclosing that any person
or group (as the terms "person" and "group" are used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act and
the rules and regulations promulgated thereunder) has become
the beneficial owner (as the term "beneficial owner" is
defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of 20% or more of the
issued and outstanding shares of voting securities of the
Company; or
(d) During any period of two consecutive years, individuals
who at the beginning of any such period constitute the
directors of the Company cease for any reason to constitute
at least a majority thereof unless the election, or
nomination for election by the Company's stockholders of
each new director of the Company was approved by a vote of
at least two-thirds of such directors of the Company then
still in office who were directors of the Company at the
beginning of any such period.
4.10. Amendment of the Plan.
(a) The Committee may, without further action by the
stockholders of the Company and without receiving further
consideration from the participants or paying further
consideration to participants, amend this Plan or condition
or modify awards under this Plan in response to changes in
securities or other laws or rules, regulations or regulatory
interpretations thereof applicable to this Plan or to comply
with stock exchange rules or requirements.
(b) The Committee may at any time and from time to time
terminate or modify or amend the Plan in any respect, except
that without stockholder approval the Committee may not (i)
increase the maximum number of shares of Common Stock which
may be issued under the Plan (other than increases pursuant
to Section 4.09), (ii) extend the period during which any
award may be granted or exercised, (iii) extend the term of
the Plan, or (iv) change the associates/employees or group
of associates/employees eligible to receive Incentive Stock
Options. The termination or any modification or amendment of
the Plan, except as provided in subsection (a), shall not,
without the consent of a participant, affect his or her
rights under an award previously granted to him or her.
4.11. Effective Date of the Plan.
Effectiveness of the Plan is subject to approval by the
stockholders of the Company within twelve (12) months from
the date the Plan is adopted by the Board. Notwithstanding
any other provision hereof, options may be granted under the
Plan prior to obtaining stockholder approval, however no
Option granted hereunder may be exercised prior to approval
of the Plan by the stockholders of the Company and, in the
event the stockholders do not approve the Plan within one
year from the adoption of the Plan by the Board, all Options
granted hereunder shall be void ab initio.