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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 5,000,000 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> 22
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
