EXHIBIT 4
PAYMENT DATA SYSTEMS, INC.
AMENDED AND RESTATED
1999 EMPLOYEE COMPREHENSIVE STOCK PLAN
(as amended and restated by the Board of Directors on December 29, 2003)
1. PURPOSE. The purpose of this Amended and Restated 1999 Employee
Comprehensive Stock Plan (the "Plan") is to further the success of Payment Data
Systems, Inc., formerly billserv.com, Inc., and Billserv, Inc., a Nevada
corporation (the "Company"), and certain of its affiliates by making available
Common Stock of the Company to certain Employees and Consultants of the Company
and its affiliates, and thus to provide an additional incentive to such
individuals to continue in the service of the Company or its affiliates and to
give them a greater interest as stockholders in the success of the Company.
Subject to compliance with the provisions of the Plan and the Code, Incentive
Stock Options as authorized by Section 422 of the Code and stock options which
do not qualify under Section 422 of the Code are authorized and may be granted
under the Plan. Further, the Company may grant Restricted Stock, as defined
below.
2. DEFINITIONS. As used in this Plan the following terms shall have the
meanings indicated:
(a) "Award" means an award of stock options (including Incentive Stock
Options) or Restricted Stock, on a stand alone, combination or tandem basis, as
described in or granted under this Plan.
(b) "Award Agreement" means a written agreement setting forth the terms
of an Award, in the form prescribed by the Committee.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" shall mean, in the context of the termination of a
Participant, as determined by the Board, in the reasonable exercise of its
business judgment, the occurrence of one of the following events as they relate
(1) to an Employee: (i) conviction of or a plea of nolo contendere to a charge
of a felony (which, through lapse of time or otherwise, is not subject to
appeal); (ii) willful refusal without proper legal cause to perform, or gross
negligence in performing, Participant's duties and responsibilities; (iii)
material breach of fiduciary duty to the Company through the misappropriation of
Company funds or property or otherwise; or (iv) the unauthorized absence of
Participant from work (other than for sick leave or disability) for a period of
thirty working days or more during any period of forty-five working days, and
(2) to a Contractor: (i) conviction of or a plea of nolo contendere to a charge
of a felony (which, through lapse of time or otherwise, is not subject to
appeal), (ii) serious misconduct in connection with performance of his services
to the Company, a Parent, or any Subsidiary, or (iii) a material breach of any
contractual agreement or other arrangement between the Contractor and the
Company, its Parent, or any Subsidiary; provided, further, within one year
following a Change of Control, "Cause," with respect to an Employee, shall be
limited to the conviction of or a plea of nolo contendere to the charge of a
felony (which, through lapse of time or otherwise, is not subject to an appeal),
or a material breach of fiduciary duty to the Company through the
misappropriation of Company funds or property or otherwise.
(e) "Change of Control" shall be deemed to have occurred if (i) any
"Person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing more
than 40% of the combined voting power of the Company's then outstanding voting
securities, or (ii) at any time during the 24-month period after a tender offer,
merger, consolidation, sale of assets or contested election, or any combination
of such transactions, at least a majority of the Board shall cease to consist of
"continuing directors" (meaning directors of the Company who either were
directors prior to such transaction or who subsequently became directors and
whose election, or nomination for election by the Company's stockholders, was
approved by a vote of at least two thirds of the directors then still in office
who were directors prior to such transaction), or (iii) the stockholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation that would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 40% of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement of sale or disposition by the Company of all or
substantially all of the Company's assets.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the Committee administering the Plan described in
Section 3 hereof.
(h) "Common Stock" means the Company's common stock, par value $.001 per
share.
(i) "Consultant" means any person, except an Employee, engaged by the
Company or a Parent or any Subsidiary of the Company to render personal services
to such entity. The term "Consultant" as used in this Plan is limited to persons
eligible to receive Common Stock from the Company or a Parent or any Subsidiary
of the Company registered under Form S-8 of the Securities and Exchange
Commission. As provided in Rule 405 promulgated under the Securities Act of
1933, as amended from time to time, or other applicable law, Consultants must be
natural persons who provide bona fide services to the Company, which services
may not be in connection with the offer or sale of securities in a
capital-raising transaction or directly or indirectly related to promoting or
maintaining a market for the Company's securities.
(j) "Continuous Status as a Participant" means (1) for an Employee, that
the employment relationship with the Company or a Parent, or any Subsidiary of
the Company has not been terminated or interrupted, and (2) for a Consultant,
the absence of any interruption, expiration, or termination of such person's
consulting or advisory relationship with the Company or a Parent or any
Subsidiary of the Company or the occurrence of any termination event as set
forth in such person's Award Agreement.
(k) "Date of Grant" means the date on which an Award is granted under an
Award Agreement executed by the Company and a Participant pursuant to the Plan.
(l) "Disinterested Person" means a "disinterested person" as such term
is defined in Rule 16b-3 promulgated under the Exchange Act or any successor
provision.
(m) "Effective Date" means the effective date of this Plan specified in
Section 14 hereof.
(n) "Employee" means any person, including an officer, who is a common
law employee of, receives remuneration for personal services to, is reflected on
the official human resources database as an employee of, and is on the payroll
of the Company or a Parent or any Subsidiary of the Company. A person is on the
payroll if he is paid from the payroll department of the Company or a Parent or
any Subsidiary of the Company. Persons providing services to the Company or a
Parent or any Subsidiary of the Company pursuant to an agreement with a staff
leasing organization, temporary workers engaged through or employed by temporary
or leasing agencies, and workers who hold themselves out to the Company or a
Parent or any Subsidiary of the Company to which they are providing services as
being independent contractors, or as being employed by or engaged through
another company while providing the services to the Company or a Parent or any
Subsidiary of the Company are not Employees for purposes of the Plan, whether or
not such persons are, or may be, reclassified by the courts, the Internal
Revenue Service, the U.S. Department of Labor, or other person or entity as
common law employees of the Company or a Parent or any Subsidiary of the
Company, either solely or jointly with another person or entity.
(o) "Exchange Act" means the Securities Exchange Act of 1934, as it may
be amended from time to time.
(p) "Good Reason" shall mean the occurrence of any of the following
events: (a) removal from the principal office held by the Employee on the date
of the most recent Award, or a material reduction in the Employee's authority or
responsibility, including, without limitation, involuntary removal from the
Board, but not
including termination of the Employee for Cause; or (b) the Company otherwise
commits a material breach of this Plan or the Employee's employment agreement or
the Contractor's service agreement, if applicable; provided, however, that
within one year following a Change of Control, "Good Reason" shall mean (i)
removal from the principal office held by the Employee on the date of the most
recent Award, (ii) a material reduction in the Employee's authority or
responsibility, including, without limitation, involuntary removal from the
Board, but not including termination of the Employee for Cause; (iii) relocation
of the Company's headquarters from the San Antonio, Texas metropolitan area,
(iv) a material reduction of Employee's compensation, or (v) the Company
otherwise commits a material breach of this Plan or the Employee's employment
agreement or the Contractor's service agreement, if applicable.
(q) "Incentive Stock Option" means an option qualifying under Section
422 of the Code.
(r) "Parent" means a parent corporation of the Company as defined in
Section 424(e) of the Code.
(s) "Participants" means Employees or Consultants of the Company, its
Subsidiaries and its Parent (including those directors of the Company who are
also employees of the Company, its Parent or one or more of its Subsidiaries).
(t) "Restricted Period" shall mean the period designated by the
Committee during which Restricted Stock may not be sold, assigned, transferred,
pledged, or otherwise encumbered, which period shall not be more than two years
from the Date of Grant.
(u) "Restricted Stock" shall mean those shares of Common Stock issued
pursuant to an Award that remain subject to the Restricted Period.
(v) "Retained Distributions" shall mean any securities or other property
(other than cash dividends) distributed by the Company or otherwise received by
the holder in respect of Restricted Stock during any Restricted Period.
(w) "Retirement" shall mean retirement of an Employee from the employ of
the Company, its Parent, or its Subsidiaries, as the case may be, in accordance
with the then existing employment policies of any such employer.
(x) "Subsidiary" means a subsidiary corporation of the Company as
defined in Section 424(f) of the Code.
3. ADMINISTRATION OF THE PLAN. The Board shall appoint a committee (the
"Committee") comprised of two or more directors to administer the Plan. Only
directors who are Disinterested Persons shall be eligible to serve as members of
the Committee. The Committee shall report all action taken by it to the Board,
which shall review and ratify or approve those actions that are by law required
to be so reviewed and ratified or approved by the Board. The Committee shall
have full and final authority in its discretion, subject to the provisions of
the Plan, to make determinations with respect to the participation of
Participants in this Plan, to prescribe the form of Award Agreements embodying
Awards made under the Plan, and, except as otherwise required by law or this
Plan, to set the size and terms of Awards (which need not be identical or
consistent with respect to each Participant) including vesting schedules, price,
whether stock options granted hereunder shall constitute an Incentive Stock
Option, restriction or option period, post-retirement and termination rights,
payment alternatives such as cash, stock or other means of payment consistent
with the purposes of this Plan, and such other terms and conditions as the
Committee deems appropriate. Except as otherwise required by this Plan, the
Committee shall have authority to interpret and construe the provisions of this
Plan and the Award Agreements, to correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any Award Agreement in the manner
the Committee deems advisable for the administration of the Plan and make
determinations pursuant to any Plan provision or Award Agreement, which shall be
final and binding on all persons. The Committee may authorize any one or more of
their number or any officer of the Company to execute and deliver documents on
behalf of the Committee.
4. COMMON STOCK SUBJECT TO PROVISIONS OF THIS PLAN. Upon approval of
this Plan by the directors and shareholders of the Company, the total number of
shares to be subject to options under this Plan shall be 5,000,000 of the
authorized and unissued Common Stock of the Company. Thereafter, an amount of
additional shares to be subject to options shall automatically be available for
award under this Plan, such that at no time shall the total number of shares
subject to options under this Plan be less than five percent (5%) of the then
issued and outstanding Common Stock of the Company. In all events, the total
number of shares shall be subject to appropriate increase or decrease in the
event of a stock dividend, split or reclassification of shares subject to this
Plan.
5. ELIGIBILITY. Except as hereinafter provided, Awards may be granted to
any Participant as the Committee shall determine from time to time. In
determining the Participants to whom Awards shall be granted and the number of
shares to be covered by each such Award, the Committee may take into account the
nature of the services rendered by the respective Participants, their present
and potential contributions to the Company's success and such other factors as
the Committee in its sole discretion shall deem relevant. A Participant who has
been granted an Award under the Plan may be granted an additional Award or
Awards under the Plan, in the Committee's sole discretion.
6. AWARDS UNDER THIS PLAN. The Committee, in its sole discretion, may
make Awards of stock options (including Incentive Stock Options and stock
options that do not qualify as Incentive Stock Options) as described in Sections
7 and 8 hereof, and of Restrictive Stock, as described in Section 10 hereof.
7. OPTIONS AUTHORIZED. The options subject to Award under this Plan may
be Incentive Stock Options or stock options that do not qualify as Incentive
Stock Options (sometimes referred to herein as "nonqualified options" or
"nonqualified stock options"). The Committee shall have the full power and
authority to (i) determine which options shall be nonqualified stock options and
which shall be Incentive Stock Options, (ii) grant only Incentive Stock Options
or, alternatively, only nonqualified stock options, and (iii) in its sole
discretion, grant to the holder of an outstanding option, in exchange for the
surrender and cancellation of such option, a new option having a purchase price
lower than that provided in the option so surrendered and canceled and/or
containing such other terms and conditions as the Committee may prescribe in
accordance with the provisions of the Plan. Under no circumstances may
nonqualified stock options be granted where the exercise of such nonqualified
stock options may affect the exercise of Incentive Stock Options granted
pursuant to the Plan. In addition to any other limitations set forth herein, (1)
no Participant shall receive any grant of options, whether Incentive Stock
Options or nonqualified stock options, exercisable for more than five hundred
thousand (500,000) shares of Common Stock during any one fiscal year of the
Company, and (2) the aggregate fair market value (determined in accordance with
Paragraph 8(a) of the Plan as of the time the option is granted) of the Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by a Participant in any calendar year (under all plans of the Company
and of any Parent or Subsidiary) shall not exceed one hundred thousand dollars
($100,000.00).
8. TERMS AND CONDITIONS OF OPTIONS. The grant of an option under the
Plan shall be evidenced by an Award Agreement executed by the Company and the
applicable Participant and shall contain such terms and be in such form as the
Committee may from time to time approve, subject to the following limitations
and conditions:
(a) OPTION PRICE. The option exercise price per share with respect to
each option shall be determined by the Committee, but shall in no instance be
less than the par value of the shares subject to the option. In addition, the
option exercise price per share with respect to Incentive Stock Options granted
hereunder shall in no instance be less than the fair market value of the shares
subject to the option as determined by the Committee. For the purposes of this
Paragraph 8(a), fair market value shall be, where applicable, the closing price
of the Common Stock on the Date of Grant of such option as reported on any
national securities exchange on which the Common Stock may be listed. If the
Common Stock is not listed on a national securities exchange but is publicly
traded on the Nasdaq Stock Market's National Market or on another automated
quotation system, the fair market value shall be the closing price of the Common
Stock on the Date of Grant, or if traded on the Nasdaq Small Cap or Nasdaq
Over-The-Counter market, the fair market value shall be the mean between the
closing bid and ask prices on any such system or market. If the Common Stock was
not traded on the Date of Grant of such option, the nearest preceding date on
which there was a trade shall be substituted. Notwithstanding the foregoing,
however, fair market value shall be determined consistent with Code Section
422(b)(4) or any successor provisions. The Committee may permit the option
exercise price to be payable by transfer to the Company of Common Stock owned by
the option holder with a fair market value at the time of the exercise equal to
the option exercise price.
(b) PERIOD OF OPTION. The expiration date of each option shall be fixed
by the Committee, but notwithstanding any provision of the Plan to the contrary,
such expiration date shall not be more than ten (10) years from the Date of
Grant of the option.
(c) VESTING OF STOCKHOLDER RIGHTS. Neither the optionee nor his
successor in interest shall have any of the rights of a stockholder of the
Company until the shares relating to the option hereunder are issued by the
Company and are properly delivered to such optionee, or successor.
(d) EXERCISE OF OPTION. Each option shall be exercisable from time to
time (but not less than six (6) months after the Date of Grant) over such period
and upon such terms and conditions as the Committee shall determine, but not at
any time as to less than one hundred (100) shares unless the remaining shares
that have become so purchasable are less than twenty five (25) shares. After the
death of the optionee, an option may be exercised as provided in Section 9(c)
hereof.
(e) DISQUALIFYING DISPOSITION. The Award Agreement evidencing any
Incentive Stock Options granted under this Plan shall provide that if the
optionee makes a disposition, within the meaning of Section 424(c) of the Code
and regulations promulgated thereunder, of any share or shares of Common Stock
issued to him pursuant to exercise of the option within the two-year period
commencing on the day after the Date of Grant of such option or within the
one-year period commencing on the day after the date of issuance of the share or
shares to him pursuant to the exercise of such option, he shall, within ten (10)
days of such disposition date, notify the Company of the sales price or other
value ascribed to or used to measure the disposition of the share or shares
thereof and immediately deliver to the Company any amount of federal income tax
withholding required by law.
(f) LIMITATION ON GRANTS TO CERTAIN STOCKHOLDERS. An Incentive Stock
Option may be granted only to an Employee Participant, and only if such
Participant, at the time the option is granted, does not own, after application
of the attribution rules of Code Section 424, stock possessing more than ten
percent (10%) of the total combined voting power of all classes of Common Stock
of the Company or of its Parent or Subsidiaries. The preceding restrictions
shall not apply to an Employee Participant if at the time the option is granted
the option price is at least one hundred ten percent (110%) of the fair market
value (as defined in Section 8(a) above) of the Common Stock subject to the
option and such option by its terms is not exercisable after the expiration of
five (5) years from the Date of Grant.
(g) RESTRICTION ON ISSUING SHARES. The exercise of each option shall be
subject to the condition that if at any time the Company shall determine in its
discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any securities exchange or under
any state or federal law, or that the consent or approval of any regulatory
body, is necessary or desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of shares pursuant thereto, then in any
such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
(h) CONSISTENCY WITH CODE. Notwithstanding any other provision in this
Plan to the contrary, the provisions of all Award Agreements relating to
Incentive Stock Options pursuant to the Plan shall not violate the requirements
of the Code applicable to the Incentive Stock Options authorized hereunder.
9. EXERCISE OF OPTION.
(a) Any option granted hereunder shall be exercisable according to the
terms of the Plan and at such times and under such conditions as determined by
the Committee and set forth in the Award Agreement. An option
shall be deemed exercised when (i) the Company has received written notice of
such exercise in accordance with the terms of the Award Agreement, (ii) full
payment of the aggregate option exercise price of the shares as to which the
option is exercised has been made and (iii) arrangements that are satisfactory
to the Committee in its sole discretion have been made for the Participant's
payment to the Company of the amount, if any, that the Committee determines to
be necessary for the Company to withhold in accordance with applicable federal
or state income tax withholding requirements.
(b) Unless otherwise provided in the Award Agreement and as permitted by
applicable law, upon Retirement or other termination of the Participant's
Continuous Status as a Participant, other than (a) a termination that is either
(i) for Cause, or (ii) voluntary on the part of a Participant and without the
written consent of the Company, a Parent, or any Subsidiary, or (b) a
termination by reason of death, the Participant may (unless otherwise provided
in his Award Agreement) exercise his option at any time within three (3) months
after such termination of the Participant's Continuous Status as a Participant
(or within one (1) year after termination of the Participant's Continuous Status
as a Participant due to permanent and total disability within the meaning of
Code Section 22(e)(3)), or within such other time as the Committee shall
authorize, but in no event may the Participant exercise his Option after ten
(10) years from the Date of Grant thereof (or such lesser period as may be
specified in the Award Agreement), and only to the extent of the number of
shares for which his options were exercisable by him at the date of the
termination of the Participant's Continuous Status as a Participant. In the
event of the termination of the Continuous Status as a Participant of a
Participant to whom an option has been granted under the Plan that is either (i)
for Cause or (ii) voluntary on the part of the Participant and without written
consent, any option held by him under the Plan, to the extent not previously
exercised, shall forthwith terminate on the date of such termination of the
Participant's Continuous Status as a Participant. Options granted under the Plan
shall not be affected by any change of employment so long as the Employee holder
continues to be an Employee of the Company, a Subsidiary or a Parent. The Award
Agreement may contain such provisions as the Committee shall approve with
respect to the effect of approved leaves of absence.
(c) Unless otherwise provided in the Award Agreement and as permitted by
applicable law, in the event a Participant to whom an option has been granted
under the Plan dies during, or within three (3) months after the Retirement or
other termination of, the Participant's Continuous Status as a Participant, such
option (unless it shall have been previously terminated pursuant to the
provisions of the Plan or unless otherwise provided in his Award Agreement) may
be exercised (to the extent of the entire number of shares covered by the option
whether or not purchasable by the Participant at the date of his death) by the
executor or administrator of the optionee's estate or by the person or persons
to whom the optionee shall have transferred such option by will or by the laws
of descent and distribution, at any time within a period of one (1) year after
his death, but not after the exercise termination date set forth in the relevant
Award Agreement.
(d) If as of the date of termination of the Participant's Continuous
Status a Participant (other than as a result of the Participant's death) the
Participant is not entitled to exercise his or her entire options, the shares of
Common Stock covered by the unexercisable portion of the option shall revert to
the Plan. If the Participant (or his or her designee or estate as provided in
Section 9(c) above) does not exercise his or her options within the time
specified in the Plan and the Award Agreement, the unexercised options shall
terminate and the shares of Common Stock covered by such options shall revert to
the Plan.
10. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS.
(a) GENERAL. The Committee, in its sole discretion, may make Awards of
Restricted Stock to selected Participants, which Awards shall be evidenced by an
Award Agreement that contains such terms and conditions, including vesting, as
the Committee may determine. As a condition to any Award of Restricted Stock
hereunder, the Committee may require a Participant to pay to the Company the
amount (such as the par value of such shares) required to be received by the
Company in order to assure compliance with applicable state law. Any Award of
Restricted Stock for which such requirement is established shall automatically
expire if not purchased in accordance with the Committee's requirements within
sixty (60) days after the Date of Grant.
Subject to the terms and conditions of the respective Award Agreement,
the Participant, as the
owner of the Common Stock issued as Restricted Stock and any Retained
Distributions with respect thereto, shall have the rights of a stockholder,
including, but not limited to, voting rights as to such Common Stock and the
right to receive cash dividends or distributions thereon when, as and if paid.
Within the limits set forth in the Plan, an Award of Restricted Stock
may be subject to such vesting requirements as may be fixed by the Committee.
Vesting may be accelerated by a Change of Control. Vesting may also be
accelerated upon death, permanent disability or Retirement.
Unless otherwise provided in the Award Agreement, in the event that an
Award of Restricted Stock is made to a Participant whose employment or service
is subsequently terminated by reason of death, permanent disability or
Retirement or for such other reason as the Committee may provide, such
Participant (or his estate or beneficiary) will be entitled to receive such
additional portion of his Restricted Stock and any Retained Distributions with
respect thereto that the Participant would have received had the Participant
continued services or remained in the employment of the Company, Parent, or
Subsidiary, as applicable, through the date on which the next portion of the
shares of non-vested Restricted Stock subject to the Award of Restricted Shares
would have vested.
Unless otherwise provided in the Award Agreement, in the event an award
of Restricted Stock is made to a Participant whose Continuous Status as a
Participant is subsequently terminated by the Participant for Good Reason or by
the Company, Parent or Subsidiary as applicable, other than for Cause, then in
any such event, the Participant will be entitled to receive such additional
portion of his or her shares of Restricted Stock and any Retained Distributions
with respect thereto that the Participant would have received had the
Participant remained in Continuous Status as a Participant through the date on
which the next portion of the shares of unvested Restricted Stock subject to the
Award of Restricted Stock would have vested.
Unless otherwise provided in the Award Agreement, in the event that an
Award of Restricted Stock is made to a Participant whose Continuous Status as a
Participant is terminated by voluntary resignation or for Cause, then all such
Restricted Stock and any Retained Distributions with respect thereto as to which
the Restricted Period still applies shall be forfeited by such Participant and
shall again become available for grant under the Plan.
(b) TRANSFERABILITY. Restricted Stock and any Retained Distributions
with respect thereto may not be sold, assigned, transferred, pledged, or
otherwise encumbered during the Restricted Period, which shall be determined by
the Committee and shall not be more than two years from the date such Restricted
Stock was awarded. The Committee may, at any time, reduce the Restricted Period
with respect to any outstanding shares of Restricted Stock and any Retained
Distributions with respect thereto awarded under the Plan.
Shares of Restricted Stock, when issued, will be represented by a stock
certificate or certificates registered in the name of the Participant to whom
such Restricted Stock shall have been granted and shall bear a restrictive
legend to the effect that ownership of such Restricted Stock (and any related
Retained Distributions) and the enjoyment of all rights appurtenant thereto are
subject to the restrictions, terms and conditions provided in the Plan and the
applicable Award Agreement. Each certificate shall be deposited by the
Participant with the Company, together with stock powers or other instruments of
assignment, each endorsed in blank, which will permit transfer to the Company of
all or any portion of the Restricted Stock and any securities constituting
Retained Distributions that shall be forfeited or that shall not become vested
in accordance with the respective Award Agreement. The certificate or
certificates issued for the Restricted Stock may bear such legend or legends as
the Committee may, from time to time, deem appropriate to reflect the
restrictions under the Plan for such Restricted Stock.
(c) STOCK CERTIFICATES; ADDITIONAL RESTRICTIONS. Shares of Restricted
Stock shall constitute issued and outstanding shares of Common Stock for all
corporate purposes. Each Participant will have the right to vote the Restricted
Stock held by such Participant, to receive and retain all cash dividends and
distributions thereon and exercise all other rights, powers and privileges of a
holder of Common Stock with respect to such Restricted Stock, with the exception
that:
(i) the Participant will not be entitled to delivery of the stock
certificate or certificates
representing such Restricted Stock until the Restricted Period applicable to
such shares or portion thereof shall have expired and unless all other vesting
requirements with respect thereto shall have been fulfilled;
(ii) other than cash dividends and distributions and rights to
purchase stock which might be distributed to stockholders of the Company, the
Company will retain custody of all Retained Distributions made, paid, declared
or otherwise received by the holder thereof with respect to Restricted Stock
(and such Retained Distributions will be subject to the same restrictions, terms
and conditions as are applicable to the Restricted Stock with respect to which
they were made, paid or declared) until such time, if ever, as the Restricted
Period applicable to the shares with respect to which such Retained
Distributions shall have been made, paid, declared or received shall have
expired, and such Retained Distributions shall not bear interest or be
segregated in separate accounts; and
(iii) upon the breach of any restrictions, terms or conditions
provided in the Plan or the respective Award Agreement or otherwise established
by the Committee with respect to any Restricted Stock or Retained Distributions,
such Restricted Stock and any related Retained Distributions shall thereupon be
automatically forfeited.
(d) MERGERS AND OTHER CORPORATE CHANGES. Unless otherwise provided in
the Award Agreement, upon the occurrence of a Change of Control, all
restrictions imposed on the Participant's Restricted Stock and any Retained
Distributions shall automatically terminate and lapse and the Restricted Period
shall automatically terminate; provided, however, that if the Change of Control
occurs within six months of the Date of Grant the restrictions and Restricted
Period shall terminate on the six month anniversary of the Date of Grant.
11. ADJUSTMENTS. The Committee, in its discretion, may make such
adjustments in the option price, the number or kind of shares and other
appropriate provisions covered by outstanding Awards that are required to
prevent any dilution or enlargement of the rights of the holders of such options
that would otherwise result from any reorganization, recapitalization, stock
split, stock dividend, combination of shares, merger, consolidation, issuance of
rights or any other change in the capital structure of the Company. The
Committee, in its discretion, may also make such adjustments in the aggregate
number and class of shares that may be the subject of Awards which are
appropriate to reflect any transaction or event described in the preceding
sentence.
12. AMENDMENT, SUSPENSION, AND TERMINATION OF THE PLAN. The Board may at
any time suspend or terminate the Plan or may amend it from time to time in such
respects as the Board may deem advisable in order that the Awards granted
thereunder may conform to any changes in the law or in any other respect that
the Board may deem to be in the best interests of the Company; provided,
however, that without approval by the stockholders of the Company voting the
proper percentage of its voting power, no such amendment shall make any change
in the Plan for which stockholder approval is required in order to comply with
(i) Rule 16b-3, as amended, promulgated under the Exchange Act, (ii) the Code or
regulatory provisions dealing with Incentive Stock Options, (iii) any rules for
listed companies promulgated by any national stock exchange on which the
Company's Common Stock is traded or (iv) any other applicable rule or law.
Unless sooner terminated hereunder, the Plan shall terminate ten (10) years
after the Effective Date. No amendment, suspension, or termination of the Plan
shall, without a Participant's consent, impair or negate any of the rights or
obligations under any Award theretofore granted to such Participant under the
Plan.
13. TAX WITHHOLDING. The Company shall have the right to withhold from
any payments made under this Plan, or to collect as a condition of payment, any
taxes required by law to be withheld. At any time when a Participant is required
to pay to the Company an amount required to be withheld under applicable income
tax laws in connection with a distribution of shares of Common Stock pursuant to
this Plan, the Participant may satisfy this obligation in whole or in part by
electing to have the Company withhold from such distribution shares of Common
Stock having a value equal to the amount required to be withheld. The value of
the shares of Common Stock to be withheld shall be based on the fair market
value, as determined pursuant to Section 8(a) hereof, of the Common Stock on the
date that the amount of tax to be withheld shall be determined (the "Tax Date").
Any such election is subject to the following restrictions: (i) the election
must be made on or prior to the Tax Date; (ii) the election must be irrevocable;
and (iii) the election must be subject to the disapproval of the Committee. To
the extent required to comply with rules promulgated under Section 16 of the
Exchange Act, elections by Participants who are subject to
Section 16 of the Exchange Act are subject to the following additional
restrictions: (i) no election shall be effective for a Tax Date which occurs
within six (6) months of the grant of the Award; and (ii) the election must be
made either (a) six (6) months or more prior to the Tax Date or (b) during the
period beginning on the third business day following the date of release for
publication for the Company's quarterly or annual summary statements of sales
and earnings and ending on the twelfth business day following such date.
14. EFFECTIVE DATE OF THE PLAN. This Plan shall become effective on the
date (the "Effective Date") of the last to occur of (i) the adoption of the Plan
by the Board and (ii) the approval, within twelve (12) months of such adoption,
by a majority (or such other proportion as may be required by state law) of the
outstanding voting shares of the Company, voted either in person or by proxy, at
a duly held stockholders meeting or by written stockholder consent but in any
event not before the effectiveness of the Company's Form 10 Registration
Statement filed under the Exchange Act.
15. SPECIAL PROVISIONS REGARDING CHANGE OF CONTROL. The Board or the
Committee may, from time to time, make special provisions for one or more
Participants respecting a possible Change of Control of the Company, a
Subsidiary, or Parent, and, to the extent that any such special provisions made
with the consent of the affected Employee or Consultant may have the effect of
accelerating vesting of stock options granted under the Plan or removal of
restrictions on Restricted Stock allotted under the Plan or the effect of
preventing a termination or dilution of benefits, such special provisions shall
be controlling over and shall be deemed to be an amendment of any inconsistent
terms of the applicable Award Agreement.
16. MISCELLANEOUS PROVISIONS.
(a) If approved by the Board, the Company or any Parent or Subsidiary
may lend money or guarantee loans by third parties to an individual to finance
the exercise of any option granted under the Plan to continue to hold Common
Stock thereby acquired. No such loans to finance the exercise of an Incentive
Stock Option shall have an interest rate or other terms that would cause any
part of the principal amount to be characterized as interest for purposes of the
Code.
(b) This Plan is intended and has been drafted to comply in all respects
with Rule 16b-3, as amended, under the Exchange Act ("Rule 16b-3"). If any
provision of this Plan does not comply with Rule 16b-3, this Plan shall be
automatically amended to comply with Rule 16b-3.
(c) No person shall have any claim or right to be granted an Award, and
the grant of an Award shall not be construed as giving a Participant the right
to continue in service as an Employee or Consultant of or for the Company, a
Parent, or any Subsidiary for any period of specific duration. Nothing in this
Plan shall interfere with or limit in any way the right of the Company, a
Parent, any Subsidiary to terminate any Participant's service as an Employee or
Consultant at any time, with or without cause, nor confer upon any Participant
any right to continue service as an Employee or Consultant for the Company, a
Parent, or any Subsidiary.
(d) To the extent that federal laws do not otherwise control, this Plan
shall be construed in accordance with and governed by the laws of the State of
Nevada or the property laws of any particular state.
(e) In case any one or more of the provisions of this Plan shall be held
invalid, illegal or unenforceable in any respect under applicable law and
regulation (including Rule 16b-3), the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby
and the invalid, illegal or unenforceable provisions shall be deemed null and
void; however, to the extent permissible by law, any provision which could be
deemed null and void shall first be construed, interpreted or revised
retroactively to permit this Plan to be construed in compliance with all
applicable laws (including Rule 16b-3) so as to foster the intent of this Plan.
Notwithstanding anything in this Plan to the contrary, the Committee, in its
sole and absolute discretion, may bifurcate this Plan so as to restrict, limit
or condition the use of any provision of this Plan to Participants who are
subject to Section 16 of the Exchange Act without so restricting, limiting or
conditioning this Plan with respect to other Participants.
(f) None of a Participant's rights or interests under the Plan may be
assigned or transferred in whole or in part, either directly or by operation of
law or otherwise (except pursuant to a qualified domestic relations order or, in
the event of a Participant's death, by will or the laws of descent and
distribution), including, but not by way of limitation, execution, levy,
garnishment, attachment, pledge, bankruptcy or in any other manner, and no such
right or interest of any Participant in the Plan shall be subject to any
obligation or liability of such individual.
(g) No Restricted Stock or any Retained Distributions shall be issued
hereunder unless counsel for the Company shall be satisfied that such issuance
will be in compliance with applicable federal, state, or other securities laws.
(h) The expenses of the Plan shall be borne by the Company.
(i) By accepting any Award under the Plan, each Participant or
beneficiary claiming under or through him shall be conclusively deemed to have
indicated his acceptance ratification of, and consent to, any action taken under
the Plan by the Company, the Committee or the Board.
(j) Awards granted under the Plan shall be binding upon the Company, its
successors and assigns.
(k) The appropriate officers of the Company shall cause to be filed any
reports, returns, or other information regarding Awards hereunder or any Common
Stock issued pursuant hereto as may be required by Section 13 or 15(d) of the
Exchange Act, or any other applicable statute, rule or regulation.
(1) Nothing contained in this Plan shall prevent the Board of Directors
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required.