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EXHIBIT 10.1
PNW CAPITAL, INC.
2000 NONQUALIFIED STOCK OPTION PLAN
ARTICLE I
Purpose of Plan
This 2000 NONQUALIFIED STOCK OPTION PLAN (the "Plan") of PNW
CAPITAL, INC. (the "Company") for persons employed or associated with
the Company, including without limitation any employee, director,
general partner, officer, attorney, accountant, consultant or
advisor, is intended to advance the best interests of the Company by
providing additional incentive to those persons who have a
substantial responsibility for its management, affairs, and growth by
increasing their proprietary interest in the success of the Company,
thereby encouraging them to maintain their relationships with the
Company. Further, the availability and offering of Stock Options
under the Plan supports and increases the Company's ability to
attract, engage and retain individuals of exceptional talent upon
whom, in large measure, the sustained progress growth and
profitability of the Company for the shareholders depends.
ARTICLE II
Definitions
For Plan purposes, except where the context might clearly
indicate otherwise, the following terms shall have the meanings set
forth below:
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
"Committee" shall mean the Compensation Committee, or such other
committee appointed by the Board, which shall be designated by the
Board to administer the Plan. The Company shall be composed of two
or more persons as from time to time are appointed to serve by the
Board and may be members of the Board or the entire Board.
"Common Shares" shall mean the Company's Common Shares $0.001
par value per share, or, in the event that the outstanding Common
Shares are hereafter changed into or exchanged for different shares
or securities of the Company, such other shares or securities.
"Company" shall mean PNW Capital, Inc., a Delaware corporation,
and any parent or subsidiary corporation of PNW Capital, Inc., as
such terms are defined in Section 425(e) and 425(f), respectively of
the Code.
"Optionee" shall mean any person employed or associated with the
affairs of the Company who has been granted one or more Stock Options
under the Plan.
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"Stock Option" or "NQSO" shall mean a stock option granted
pursuant to the terms of the Plan.
"Stock Option Agreement" shall mean the agreement between the
Company and the Optionee under which the Optionee may purchase Common
Shares hereunder.
ARTICLE III
Administration of the Plan
1. The Committee shall administer the plan and accordingly, it
shall have full power to grant Stock Options, construe and interpret
the Plan, establish rules and regulations and perform all other acts,
including the delegation of administrative responsibilities, it
believes reasonable and proper.
2. The determination of those eligible to receive Stock
Options, and the amount, price, type and timing of each Stock Option
and the terms and conditions of the respective stock option
agreements shall rest in the sole discretion of the Committee,
subject to the provisions of the Plan.
3. The Committee may cancel any Stock Options awarded under
the Plan if an Optionee conducts himself in a manner which the
Committee determines to be inimical to the best interest of the
Company and its shareholders as set forth more fully in paragraph 8
of Article X of the Plan.
4. The Board, or the Committee, may correct any defect, supply
any omission or reconcile any inconsistency in the Plan or in any
granted Stock Option, in the manner and to the extent it shall deem
necessary to carry it into effect.
5. Any decision made, or action taken, by the Committee or the
Board arising out or in connection with the interpretation and
administration of the Plan shall be final and conclusive.
6. Meetings of the Committee shall be held at such times and
places as shall be determined by the Committee. A majority of the
members of the Committee shall constitute a quorum for the
transaction of business, and the vote of a majority of those members
present at any meeting shall decide any question brought before that
meeting. In addition, the Company may take any action otherwise
proper under the Plan by the affirmative vote, taken without a
meeting, of a majority of its members.
7. No member of the Committee shall be liable for any act or
omission of any other member of the Committee or for any act or
omission on his own part, including, but not limited to, the exercise
of any power or discretion given to him under the Plan except those
resulting form his own gross negligence or willful misconduct.
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8. The Company, through its management, shall supply full and
timely information to the Committee on all matters relating to the
eligibility of Optionees, their duties and performance, and current
information on any Optionee's death, retirement, disability or other
termination of association with the Company, and such other pertinent
information as the Committee may require. The Company shall furnish
the Committee with such clerical and other assistance as is necessary
in the performance of its duties hereunder.
ARTICLE IV
Shares Subject to the Plan
1. The total number of shares of the Company available for
grants of Stock Options under the Plan shall be 10,000,000 Common
Shares, subject to adjustment as herein provided, which shares may be
either authorized but unissued or reacquired Common Shares of the
Company.
2. If a Stock Option or portion thereof shall expire or
terminate for any reason without having been exercised in full, the
unpurchased shares covered by such NQSO shall be available for future
grants of Stock Options.
ARTICLE V
Stock Option Terms and Conditions
1. Consistent with the Plan's purpose, Stock Options may be
granted to any person who is performing or who has been engaged to
perform services of special importance to management in the
operation, development and growth of the Company.
2. Determination of the option price per share for any stock
option issues hereunder shall rest in the sole and unfettered
discretion of the Committee.
3. All Stock Options granted under the Plan shall be evidenced
by agreements which shall be subject to applicable provisions of the
Plan, and such other provisions as the Committee may adopt, including
the provisions set forth in paragraphs 2 through 11 of this Article
V.
4. All Stock Options granted hereunder must be granted within
ten years from the date this Plan is adopted.
5. No Stock Option granted hereunder shall be exercisable
after the expiration of ten years from the date such NQSO is granted.
The Committee, in its discretion, may provide that an option shall be
exercisable during such ten year period or during any lesser period
of time. The Committee may establish installment exercise terms for
a Stock Option such that the NQSO becomes fully exercisable in a
series of cumulating portions. If an Optionee shall not, in any
given installment period, purchase all the Common Shares which such
Optionee is entitled to purchase within such installment period, such
Optionee's right to purchase any Common Shares not purchased in such
installment period shall continue until the expiration or sooner
termination of such NQSO. The Committee may also accelerate the
exercise of any NQSO.
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6. A Stock Option, or portion thereof, shall be exercised by
deliver of (i) a written notice of exercise to the Company specifying
the number of Common Shares to be purchased, and (ii) payment of the
full price of such Common Shares, as fully set forth in paragraph 7
of this Article V. No NQSO or installment thereof shall be reusable
except with respect to whole shares, and fractional share interests
shall be disregarded. Not less than 100 Common Shares may be
purchased at one time unless the number purchased is the total number
at the time available for purchase under the NQSO. Until the Common
Shares represented by an exercised NQSO are issued to an Optionee, he
shall have none of the rights of a shareholder.
7. The exercise price of a Stock Option, or portion thereof,
may be paid:
A. In United States dollars, in cash or by cashier's
check, certified check, bank draft or money order, payable to
the order of the Company in an amount equal to the option price;
or,
B. At the discretion of the Committee, through the
delivery of fully paid and nonassessable Common Shares, with an
aggregate fair market value (determined as the average of the
highest and lowest reported sales prices on the Common Shares as
of the date of exercise of the NQSO, as reported by such
responsible reporting service as the Committee may select, or if
there were not transactions in the Common Shares on such day,
then the last preceding day on which transactions took place),
as of the date of the NQSO exercise equal to the option price,
provided such tendered shares, or any derivative security
resulting in the issuance of Common Shares, have been owned by
he Optionee for at least 30 days prior to such exercise; or,
C. By a combination of both A and B above.
8. The Committee shall determine acceptable methods for
tendering Common Shares as payment upon exercise of a Stock Option
and may impose such limitations and prohibitions on the use of Common
Shares to exercise an NQSO as it deems appropriate.
9. With the Optionee's consent, the Committee may cancel any
Stock Option issued under this Plan and issue a new NQSO to such
Optionee.
10. Except by will, the laws of descent and distribution, or
with the written consent of the Committee, no right or interest in
any Stock Option granted under the Plan shall be assignable or
transferable, and no right or interest of any Optionee shall be
liable for, or subject to, any lien, obligation or liability of the
Optionee. Upon petition to, and thereafter with the written consent
of the Committee, an Optionee may assign or transfer all or a portion
of the Optionee's rights and interest in any stock option granted
hereunder. Stock Options shall be exercisable during the Optionee's
lifetime only by the Optionee or assignees, or the duly appointed
legal representative of an incompetent Optionee, including following
an assignment consented to by the Committee herein.
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11. No NQSO shall be exercisable while there is outstanding any
other NQSO which was granted to the Optionee before the grant of such
option under the Plan or any other plan which gives the right to the
Optionee to purchase stock in the Company or in a corporation which
is a parent corporation (as defined in Section 425(e) of the Code) of
the Company, or any predecessor corporation of any of such
corporations at the time of the grant. An NQSO shall be treated as
outstanding until it is either exercised in full or expires by reason
of lapse of time.
12. Any Optionee who disposes of Common Shares acquired on the
exercise of a NQSO by sale or exchange either (i) within two years
after the date of the grant of the NQSO under which the stock was
acquired, or (ii) within one year after the acquisition of such
Shares, shall notify the Company of such disposition and of the
amount realized upon such disposition. The transfer of Common Shares
may also be restricted by applicable provisions of the Securities Act
of 1933, as amended.
ARTICLE VI
Adjustments or Changes in Capitalization
1. In the event that the outstanding Common Shares of the
Company are hereafter changed into or exchanged for a different
number of kinds of shares or other securities of the Company by
reason of merger, consolidation, other reorganization,
recapitalization, reclassification, combination of shares, stock
split-up or stock dividend:
A. Prompt, proportionate, equitable, lawful and adequate
adjustment shall be made of the aggregate number and kind of
shares subject to Stock Options which may be granted under the
Plan, such that the Optionee shall have the right to purchase
such Common Shares as may be issued in exchange for the Common
Shares purchasable on exercise of the NQSO had such merger,
consolidation, other reorganization, recapitalization,
reclassification, combination of shares, stock split-up or stock
dividend not taken place;
B. Rights under unexercised Stock Options or portions
thereof granted prior to any such change, both as to the number
or kind of shares and the exercise price per share, shall be
adjusted appropriately, provided that such adjustments shall be
made without change in the total exercise price applicable to
the unexercised portion of such NQSO's but by an adjustment in
the price for each share covered by such NQSO's; or,
C. Upon any dissolution or liquidation of the Company or
any merger or combination in which the Company is not a
surviving corporation, each outstanding Stock Option granted
hereunder shall terminate, but the Optionee shall have the
right, immediately prior to such dissolution, liquidation,
merger or combination, to exercise his NQSO in whole or in part,
to the extent that it shall not have been exercised, without
regard to any installment exercise provisions in such NQSO.
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2. The foregoing adjustment and the manner of application of
the foregoing provisions shall be determined solely by the Committee,
whose determination as to what adjustments shall be made and the
extent thereof, shall be final, binding and conclusive. No
fractional Shares shall be issued under the Plan on account of any
such adjustments.
ARTICLE VII
Merger, Consolidation or Tender Offer
1. If the Company shall be a party to a binding agreement to
any merger, consolidation or reorganization or sale of substantially
all the assets of the Company, each outstanding Stock Option shall
pertain and apply to the securities and/or property which a
shareholder of the number of Common Shares of the Company subject to
the NQSO would be entitled to receive pursuant to such merger,
consolidation or reorganization or sale of assets.
2. In the event that:
A. Any person other than the Company shall acquire more
than 20% of the Common Shares of the Company through a tender
offer, exchange offer or otherwise;
B. A change in the "control" of the Company occurs, as
such term is defined in Rule 405 under the Securities Act of
1933;
C. There shall be a sale of all or substantially all of
the assets of the Company; any then outstanding Stock Option
held by an Optionee, who is deemed by the Committee to be a
statutory officer ("insider") for purposes of Section 16 of the
Securities Exchange Act of 1934 shall be entitled to receive,
subject to any action by the Committee revoking such an
entitlement as provided for below, in lieu of exercise of such
Stock Option, to the extent that it is then exercisable, a cash
payment in an amount equal to the difference between the
aggregate exercise price of such NQSO, or portion thereof, and,
(i) in the event of an offer or similar event, the final offer
price per share paid for Common Shares, or such lower price as
the Committee may determine to conform an option to preserve its
Stock Option status, times the number of Common Shares covered
by the NQSO or portion thereof, or (ii) in the case of an event
covered by B or C above, the aggregate fair market value of the
Common Shares covered by the Stock Option, as determined by the
Committee at such time.
3. Any payment which the Company is required to make pursuant
to paragraph 2 of this Article VII, shall be made within 15 business
days, following the event which results in the Optionee's right to
such payment. In the event of a tender offer in which fewer than all
the shares which are validity tendered in compliance with such offer
are purchased or exchanged, then only that portion of the shares
covered by an NQSO as results from multiplying such shares by a
fraction, the numerator of which is the number of Common Shares
acquired purchase to the offer and the denominator of which is the
number of Common Shares
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tendered in compliance with such offer, shall be used to determine
the payment thereupon. To the extent that all or any portion of a
Stock Option shall be affected by this provision, all or such portion
of the NQSO shall be terminated.
4. Notwithstanding paragraphs 1 and 3 of this Article VII, the
Company may, by unanimous vote and resolution, unilaterally revoke
the benefits of the above provisions; provided, however, that such
vote is taken no later than ten business days following public
announcement of the intent of an offer of the change of control,
whichever occurs earlier.
ARTICLE VIII
Amendment and Termination of Plan
1. The Board may at any time, and from time to time, suspend
or terminate the Plan in whole or in part or amend it from time to
time in such respects as the Board may deem appropriate and in the
best interest of the Company.
2. No amendment, suspension or termination of this Plan shall,
without the Optionee's consent, alter or impair any of the rights or
obligations under any Stock Option theretofore granted to him under
the Plan.
3. The Board may amend the Plan, subject to the limitations
cited above, in such manner as it deems necessary to permit the
granting of Stock Options meeting the requirements of future
amendments or issued regulations, if any, to the Code.
4. No NQSO may be granted during any suspension of the Plan or
after termination of the Plan.
ARTICLE IX
Government and Other Regulations
The obligation of the Company to issue, transfer and deliver
Common Shares for Stock Options exercised under the Plan shall be
subject to all applicable laws, regulations, rules, orders and
approval which shall then be in effect and required by the relevant
stock exchanges on which the Common Shares are traded and by
government entities as set forth below or as the Committee in its
sole discretion shall deem necessary or advisable. Specifically, in
connection with the Securities Act of 1933, as amended, upon exercise
of any Stock Option, the Company shall not be required to issue
Common Shares unless the Committee has received evidence satisfactory
to it to the effect that the Optionee will not transfer such shares
except pursuant to a registration statement in effect under such Act
or unless an opinion of counsel satisfactory to the Company has been
received by the Company to the effect that such registration is not
required. Any determination in this connection by the Committee
shall be final, binding and
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conclusive. The Company may, but shall in no event be obligated to
take any other affirmative action in order to cause the exercise of a
Stock Option or the issuance of Common Shares purchase thereto to
comply with any law or regulation of any government authority.
ARTICLE X
Miscellaneous Provisions
1. No person shall have any claim or right to be granted a
Stock Option under the Plan, and the grant of an NQSO under the Plan
shall not be construed as giving an Optionee the right to be retained
by the Company. Furthermore, the Company expressly reserves the
right at any time to terminate its relationship with an Optionee with
or without cause, free from any liability, or any claim under the
Plan, except as provided herein, in an option agreement, or in any
agreement between the Company and the Optionee.
2. Any expenses of administering this Plan shall be borne by
the Company.
3. The payment received from Optionee from the exercise of
Stock Options under the Plan shall be used for the general corporate
purposes of the Company.
4. The place of administration of the Plan shall be in the
State of Delaware, and the validity, contraction, interpretation,
administration and effect of the Plan and its rules and regulations,
and rights relating to the Plan, shall be determined solely in
accordance with the laws of the State of Delaware.
5. Without amending the Plan, grants may be made to persons
who are foreign nationals or employed outside the United States, or
both, on such terms and conditions, consistent with the Plan's
purpose, different from those specified in the Plan as may, in the
judgment of the Committee, be necessary or desirable to create
equitable opportunities given differences in tax laws in other
countries.
6. In addition to such other rights of indemnification as they
may have as members of the Board or Committee, the members of the
Committee shall be indemnified by the Company against all costs and
expenses reasonably incurred by them in connection with any action,
suite or proceeding to which they or any of them may be party by
reason of any action taken or failure to act under or in connection
with the Plan or any Stock Option granted thereunder, an against all
amount paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or
paid by them in satisfaction of a judgment in any such action, suit
or proceeding, except a judgment based upon a finding of bad faith;
provided that upon the institution of any such action, suit or
proceeding a Committee member shall in writing, give the Company
notice thereof and an opportunity, at its own expense, to handle and
defend the same before such Committee member undertakes to handle and
defend it on his own behalf.
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7. Stock Options may be granted under this Plan form time to
time, in substitution for stock options held by employees of other
corporations who are about to become employees of the Company as the
result of a merger or consolidation of the employing corporation with
the Company or the acquisition by the Company of the assets of the
employing corporation or the acquisition by the Company of stock of
the employing corporation as a result of which it become a subsidiary
of the Company. The terms and conditions of such substitute stock
options so granted my vary from the terms and conditions set forth in
this Plan to such extent as the Board of Director of the Company at
the time of grant may deem appropriate to conform, in whole or in
part, to the provisions of the stock options in substitution for
which they are granted, but no such variations shall be such as to
affect the status of any such substitute stock options as a stock
option under Section 422A of the Code.
8. Notwithstanding anything to the contrary in the Plan, if
the Committee finds by a majority vote, after full consideration of
the facts presented on behalf of both the Company the Optionee, that
the Optionee has been engaged in fraud, embezzlement, theft,
commission of a felony or proven dishonesty in the course of his
association with the Company or any subsidiary corporation which
damaged the Company or any subsidiary corporation, or for disclosing
trade secrets of the Company or any subsidiary corporation, the
Optionee shall forfeit all unexercised Stock Options and all
exercised NQSO's under which the Company has not yet delivered the
certificates and which have been earlier granted the Optionee by the
Committee. The decision of the Committee as to the case of an
Optionee's discharge and the damage done to the Company shall be
final. No decision of the Committee, however, shall affect the
finality of the discharge of such Optionee by the Company or any
subsidiary corporation in any manner. Further, if Optionee
voluntarily terminates employment with the Company, the Optionee
shall forfeit all unexercised stock options.
ARTICLE XI
Written Agreement
Each Stock Option granted hereunder shall be embodied in a
written Stock Option Agreement which shall be subject to the terms
and conditions prescribed above and shall be signed by the Optionee
and by the President or any Vice President of the Company, for and in
the name and on behalf of the Company. Such Stock Option Agreement
shall contain such other provisions as the Committee, in its
discretion shall deem advisable.
ARTICLE XII
Effective Date
This Plan shall become unconditionally effective as of the
effective date of approval of the Plan by the Board of Directors of
the Company. No Stock Option may be granted later than ten (10)
years from the effective date of the Plan; provided, however, that
the Plan and all outstanding Stock Options shall remain in effect
until such NQSO's have expired or until such options are cancelled.
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Number of Shares: _______________ Date of Grant: _______________
NON QUALIFYING STOCK OPTION AGREEMENT
AGREEMENT made this _____ day of __________________, 20____,
between ____________________________ (the "Optionee"), and PNW
Capital, Inc., a Delaware corporation (the "Company").
1. Grant of Option. The Company, pursuant to the provisions
of the 2000 PNW Capital, Inc. Nonqualified Stock Option Plan (the
"2000 Plan"), set forth as Attachment A hereto, hereby grants to the
Optionee, subject to the terms and conditions set forth or
incorporated herein, an Option and Purchase from the Company all or
any part of an aggregate of _______________ Common Shares, as such
Common Shares are now constituted, at the purchase price of $
_______________ per share. The provisions of the 2000 Plan governing
the terms and conditions of the Option granted hereby are
incorporated in full herein by reference.
2. Exercise. The Option evidenced hereby shall be exercisable
in whole or in part (but only in multiples of 100 Shares unless such
exercise is as to the remaining balance of this Option) on or after
__________________, 20___ and on or before _________________, 20___,
provided that the cumulative number of Common Shares as to which this
Option may be exercised (except as provided in paragraph 1 of Article
VI of this 2000 Plan) shall not exceed the following amounts:
Cumulative Number Prior to Date
of Shares (Not Inclusive of)
The Option evidenced hereby shall be exercisable by the deliver to
and receipt by the Company of (i) a written notice of election to
exercise, in the form set forth in Attachment B hereto, specifying
the number of shares to be purchased; (ii) accompanied by payment of
the full purchase price thereof in case or certified check payable to
the order of the Company, or by fully-paid and nonassessable Common
Shares of the Company properly endorsed over to the Company, or by a
combination thereof; and, (iii) by return of this Stock Option
Agreement for endorsement of exercise by the Company on Schedule I
hereof. In the event fully paid and nonassessable Common Shares are
submitted as whole or partial payment for Shares to be purchased
hereunder, such Common Shares will be valued at their Fair Market
Value (as defined in the 2000 Plan) on the date such Shares are
received by the Company and applied to payment of the exercise price.
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3. Transferability. The Option evidenced hereby is NOT
assignable or transferable by the Optionee other than by the
Optionee's will, by the laws of descent and distribution, as provided
in paragraph 9 of Article V of the 2000 Plan. The Option shall be
exercisable only by the Optionee during his lifetime.
PNW CAPITAL, INC.
BY: ______________________________
Wayne Miller, President
ATTEST:
________________________________________
Secretary
Optionee hereby acknowledges receipt of a copy of the 2000 Plan,
attached hereto and accepts this Option subject to each and every
term and provision of such Plan. Optionee hereby agrees to accept as
binding, conclusive and final, all decisions or interpretations of
the Compensation Committee of the Board of Directors administering
the 2000 Plan on any questions arising under such Plan. Optionee
recognizes that if Optionee's employment with the Company or any
subsidiary thereof shall be terminated with cause, or by the
Optionee, all of the Optionee's rights hereunder shall thereupon
terminate; and that, pursuant to paragraph 10 of Article V of the
2000 Plan, this Option may not be exercised while there is
outstanding to Optionee any unexercised Stock Option, granted to
Optionee before the date of grant of this Option, to purchase Common
Shares of the Company or any parent or subsidiary thereof.
Dated: _________________________________
___________________________________
Optionee
___________________________________
Type or Print Name
___________________________________
Address
___________________________________
Social Security No.
<PAGE> 21
Attachment B
Date:
Secretary,
PNW CAPITAL, INC.
409 Granville Street
Suite 1010
Vancouver, British Columbia
Canada V6C 1V2
Dear Sir:
In accordance with paragraph 2 of the Nonqualified Stock Option
Agreement evidencing the Option granted to me on
_____________________ under the 2000 PNW Capital, Inc. Nonqualified
Stock Option Plan, I hereby elect to exercise this Option to the
extent of __________________ Common Shares.
Enclosed are (i) Certificate(s) No.(s) ____________________
representing fully-paid common shares of PNW Capital, Inc. endorsed
to the Company with signature guaranteed, and/or a certified check
payable to the order of PNW Capital, Inc. in the amount of
$_______________ as the balance of the purchase price of
$______________ for the Shares which I have elected to purchase and
(ii) the original Stock Option Agreement for endorsement by the
Company as to exercise on Schedule I thereof. I acknowledge that the
Common Shares (if any) submitted as part payment for the exercise
price due hereunder will be valued by the Company at their Fair
Market Value (as defined in the 2000 Plan) on the date this Option
exercise is effected by the Company. In the event I hereafter sell
any Common Shares issued pursuant to this option exercise within one
year from the date of exercise or within two years after the date of
grant of this Option, I agree to notify the Company promptly of the
amount of taxable compensation realized by me by reason of such sale
for federal income tax purposes.
When the certificate for Common Shares which I have elected to
purchase has been issued, please deliver it to me, along with my
endorsed Stock Option Agreement in the event there remains an
unexercised balance of Shares under the Option, at the following
address:
Include Optionee's address here.
__________________________________
Signature of Optionee
__________________________________
Type or Print Name
