PREPAID TELECOM CORPORATION
2000 EMPLOYEE STOCK OPTION PLAN
ARTICLE I - PLAN
1.1 PURPOSE. This Plan is a plan for key Employees (including
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officers and employee directors) and Consultants of the Company and its
Affiliates and is intended to advance the best interests of the Company, its
Affiliates, and its stockholders by providing those persons who have substantial
responsibility for the management and growth of the Company and its Affiliates
with additional incentives and an opportunity to obtain or increase their
proprietary interest in the Company, thereby encouraging them to continue in the
employ of the Company or any of its Affiliates.
1.2 RULE 16B-3 PLAN. The Company is subject to the reporting
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requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and therefore the Plan is intended to comply with all applicable
conditions of Rule 16b-3 (and all subsequent revisions thereof) promulgated
under the 1934 Act. To the extent any provision of the Plan or action by the
Board of Directors or Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee. In
addition, the Board of Directors may amend the Plan from time to time as it
deems necessary in order to meet the requirements of any amendments to Rule
16b-3 without the consent of the shareholders of the Company.
1.3 EFFECTIVE DATE OF PLAN. The Plan shall be effective July 31,
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2000 (the "Effective Date"), provided that within one year of the Effective
Date, the Plan shall have been approved by at least a majority vote of
stockholders. No Incentive Option, Nonqualified Option, Stock Appreciation
Right, Restricted Stock Award or Performance Stock Award shall be granted
pursuant to the Plan ten years after the Effective Date.
ARTICLE II - DEFINITIONS
The words and phrases defined in this Article shall have the meaning
set out in these definitions throughout this Plan, unless the context in which
any such word or phrase appears reasonably requires a broader, narrower, or
different meaning.
2.1 "AFFILIATE" means any parent corporation and any subsidiary
corporation. The term "parent corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at the
time of the action or transaction, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain. The term
"subsidiary corporation" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
action or transaction, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.
2.2 "AWARD" means each of the following granted under this Plan:
Incentive Option, Nonqualified Option, Stock Appreciation Right, Restricted
Stock Award or Performance Stock Award.
2.3 "BOARD OF DIRECTORS" means the board of directors of the
Company.
2.4 "CHANGE IN CONTROL" shall mean and include the following
transactions or situations:
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(a) A sale, transfer, or other disposition by the Company
through a single transaction or a series of transactions of securities of the
Company representing thirty (30%) percent or more of the combined voting power
of the Company's then outstanding securities to any "Unrelated Person" or
"Unrelated Persons" acting in concert with one another. For purposes of this
definition, the term "Person" shall mean and include any individual,
partnership, joint venture, association, trust corporation, or other entity
(including a "group" as referred to in Section 13(d)(3) of the 1934 Act). For
purposes of this definition, the term "Unrelated Person" shall mean and include
any Person other than the Company, a wholly-owned subsidiary of the Company, or
an employee benefit plan of the Company; provided however, a sale to
underwriters in connection with a public offering of the Company's securities
pursuant to a firm commitment shall not be a Change of Control.
(b) A sale, transfer, or other disposition through a single
transaction or a series of transactions of all or substantially all of the
assets of the Company to an Unrelated Person or Unrelated Persons acting in
concert with one another.
(c) A change in the ownership of the Company through a single
transaction or a series of transactions such that any Unrelated Person or
Unrelated Persons acting in concert with one another become the "Beneficial
Owner," directly or indirectly, of securities of the Company representing at
least thirty (30%) percent of the combined voting power of the Company's then
outstanding securities. For purposes of this definition, the term "Beneficial
Owner" shall have the same meaning as given to that term in Rule 13d-3
promulgated under the 1934 Act, provided that any pledgee of voting securities
is not deemed to be the Beneficial Owner thereof prior to its acquisition of
voting rights with respect to such securities.
(d) Any consolidation or merger of the Company with or into
an Unrelated Person, unless immediately after the consolidation or merger the
holders of the common stock of the Company immediately prior to the
consolidation or merger are the beneficial owners of securities of the surviving
corporation representing at least fifty (50%) percent of the combined voting
power of the surviving corporation's then outstanding securities.
(e) During any period of two years, individuals who, at the
beginning of such period, constituted the Board of Directors of the Company
cease, for any reason, to constitute at least a majority thereof, unless the
election or nomination for election of each new director was approved by the
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of such period.
(f) A change in control of the Company of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the 1934 Act, or any successor regulation of
similar importance, regardless of whether the Company is subject to such
reporting requirement.
2.5 "CODE" means the Internal Revenue Code of 1986, as amended.
2.6 "COMMITTEE" means the Compensation Committee of the Board of
Directors or such other committee designated by the Board of Directors. The
Committee shall be comprised solely of at least two members who are both
Disinterested Persons and Outside Directors or by the Board of Directors in its
entirety.
2.7 "COMPANY" means Prepaid Telecom Corporation, a Nevada
corporation.
2.8 "CONSULTANT" means any person, including an advisor, engaged
by the Company or Affiliate to render services and who is compensated for such
services.
2.9 "DISINTERESTED PERSON" means a "disinterested person" as that
term is defined in Rule 16b-3 under the 1934 Act.
2.10 "ELIGIBLE PERSONS" shall mean, with respect to the Plan,
those persons who, at the time that an Award is granted, are (i) key personnel
(including officers and directors) of the Company or Affiliate, or (ii)
Consultants or independent contractors who provide valuable services to the
Company or Affiliate as determined by the Committee.
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2.11 "EMPLOYEE" means a person employed by the Company or any
Affiliate to whom an Award is granted.
2.12 "FAIR MARKET VALUE" of the Stock as of any date means (a) the
average of the high and low sale prices of the Stock on that date on the
principal securities exchange on which the Stock is listed; or (b) if the Stock
is not listed on a securities exchange, the average of the high and low sale
prices of the Stock on that date as reported on the Nasdaq National Market
System; or (c) if the Stock is not listed on the Nasdaq National Market System,
the average of the high and low bid quotations for the Stock on that date as
reported by the National Quotation Bureau Incorporated; or (d) if none of the
foregoing is applicable, an amount at the election of the Committee equal to
(x), the average between the closing bid and ask prices per share of Stock on
the last preceding date on which those prices were reported or (y) that amount
as determined by the Committee in good faith.
2.13 "INCENTIVE OPTION" means an option to purchase Stock granted
under this Plan which is designated as an "Incentive Option" and satisfies the
requirements of Section 422 of the Code.
2.14 "NONQUALIFIED OPTION" means an option to purchase Stock
granted under this Plan other than an Incentive Option.
2.15 "OPTION" means both an Incentive Option and a Nonqualified
Option granted under this Plan to purchase shares of Stock.
2.16 "OPTION AGREEMENT" means the written agreement by and between
the Company and an Eligible Person which sets out the terms of an Option.
2.17 "OUTSIDE DIRECTOR" means a member of the Board of Directors
serving on the Committee who satisfies Section 162(m) of the Code.
2.18 "PLAN" means the Prepaid Telecom Corporation 2000 Employee
Stock Option Plan, as set out in this document and as it may be amended from
time to time.
2.19 "PLAN YEAR" means the Company's fiscal year.
2.20 "PERFORMANCE STOCK AWARD" means an award of shares of Stock
to be issued to an Eligible Person if specified predetermined performance goals
are satisfied as described in Article VI.
2.21 "RESTRICTED STOCK" means Stock awarded or purchased under a
Restricted Stock Agreement entered into pursuant to this Plan, together with (i)
all rights, warranties or similar items attached or accruing thereto or
represented by the certificate representing the stock and (ii) any stock or
securities into which or for which the stock is thereafter converted or
exchanged. The terms and conditions of the Restricted Stock Agreement shall be
determined by the Committee consistent with the terms of the Plan.
2.22 "RESTRICTED STOCK AGREEMENT" means an agreement between the
Company or any Affiliate and the Eligible Person pursuant to which the Eligible
Person receives a Restricted Stock Award subject to Article VI.
2.23 "RESTRICTED STOCK AWARD" means an Award of Restricted Stock.
2.24 "RESTRICTED STOCK PURCHASE PRICE" means the purchase price,
if any, per share of Restricted Stock subject to an Award. The Restricted Stock
Purchase Price shall be determined by the Committee. It may be greater than or
less than the Fair Market Value of the Stock on the date of the Stock Award.
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2.25 "STOCK" means the common stock of the Company, $.001 par
value or, in the event that the outstanding shares of common stock are later
changed into or exchanged for a different class of stock or securities of the
Company or another corporation, that other stock or security.
2.26 "STOCK APPRECIATION RIGHT" and "SAR" means the right to
receive the difference between the Fair Market Value of a share of Stock on the
grant date and the Fair Market Value of the share of Stock on the exercise date.
2.27 "10% STOCKHOLDER" means an individual who, at the time the
Option is granted, owns Stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any Affiliate. An
individual shall be considered as owning the Stock owned, directly or
indirectly, by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors, and lineal descendants; and Stock owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust, shall be
considered as being owned proportionately by or for its stockholders, partners,
or beneficiaries.
ARTICLE III - ELIGIBILITY
The individuals who shall be eligible to receive Awards shall be those
Eligible Persons of the Company or any of its Affiliates as the Committee shall
determine from time to time. However, no member of the Committee shall be
eligible to receive any Award or to receive Stock, Options, Stock Appreciation
Rights or any Performance Stock Award under any other plan of the Company or any
of its Affiliates, if to do so would cause the individual not to be a
Disinterested Person or Outside Director. The Board of Directors may designate
one or more individuals who shall not be eligible to receive any Award under
this Plan or under other similar plans of the Company.
ARTICLE IV - GENERAL PROVISIONS RELATING TO AWARDS
4.1 AUTHORITY TO GRANT AWARDS. The Committee may grant to those
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Eligible Persons of the Company or any of its Affiliates as it shall from time
to time determine, Awards under the terms and conditions of this Plan. Subject
only to any applicable limitations set out in this Plan, the number of shares of
Stock to be covered by any Award to be granted to an Eligible Person shall be
determined by the Committee.
4.2 DEDICATED SHARES. The total number of shares of Stock with
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respect to which Awards may be granted under the Plan shall be 500,000 shares.
The shares may be treasury shares or authorized but unissued shares. The
maximum number of shares subject to options or stock appreciation rights which
may be issued to any eligible person under the plan during each plan year shall
be determined by the compensation committee. The maximum number of shares
subject to restricted stock awards which may be granted to any eligible person
under the plan during each plan year shall be determined by the compensation
committee. The maximum number of shares subject to performance stock awards
which may be granted to any eligible person during each plan year shall be
determined by the compensation committee. The number of shares stated in this
Section 4.2 shall be subject to adjustment in accordance with the provisions of
Section 4.5. In the event that any outstanding Award shall expire or terminate
for any reason or any Award is surrendered, the shares of Stock allocable to the
unexercised portion of that Award may again be subject to an Award under the
Plan.
4.3 NON-TRANSFERABILITY. Awards shall not be transferable by the
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Eligible Person otherwise than by will or under the laws of descent and
distribution, and shall be exercisable, during the Eligible Person's lifetime,
only by him. Restricted Stock shall be purchased by and/or become vested under a
Restricted Stock Agreement during the Eligible Person's lifetime, only by him.
Any attempt to transfer an Award other than under the terms of the Plan and the
Agreement shall terminate the Award and all rights of the Eligible Person to
that Award.
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4.4 REQUIREMENTS OF LAW. The Company shall not be required to
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sell or issue any Stock under any Award if issuing that Stock would constitute
or result in a violation by the Eligible Person or the Company of any provision
of any law, statute, or regulation of any governmental authority. Specifically,
in connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option or pursuant to any
Award, the Company shall not be required to issue any Stock unless the Committee
has received evidence satisfactory to it to the effect that the holder of that
Option or Award will not transfer the Stock except in accordance with applicable
law, including receipt of an opinion of counsel satisfactory to the Company to
the effect that any proposed transfer complies with applicable law. The
determination by the Committee on this matter shall be final, binding and
conclusive. The Company may, but shall in no event be obligated to, register any
Stock covered by this Plan pursuant to applicable securities laws of any country
or any political subdivision. In the event the Stock issuable on exercise of an
Option or pursuant to an Award is not registered, the Company may imprint on the
certificate evidencing the Stock any legend that counsel for the Company
considers necessary or advisable to comply with applicable law. The Company
shall not be obligated to take any other affirmative action in order to cause
the exercise of an Option or vesting under an Award, or the issuance of shares
pursuant thereto, to comply with any law or regulation of any governmental
authority.
4.5 CHANGES IN THE COMPANY'S CAPITAL STRUCTURE.
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(a) The existence of outstanding Options or Awards shall not
affect in any way the right or power of the Company or its stockholders to make
or authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Stock or its rights, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise. If the Company shall effect a
subdivision or consolidation of shares or other capital readjustment, the
payment of a Stock dividend, or other increase or reduction of the number of
shares of the Stock outstanding, without receiving compensation for it in money,
services or property, then (a) the number, class, and per share price of shares
of Stock subject to outstanding Options under this Plan shall be appropriately
adjusted in such a manner as to entitle an Eligible Person to receive upon
exercise of an Option, for the same aggregate cash consideration, the equivalent
total number and class of shares he would have received had he exercised his
Option in full immediately prior to the event requiring the adjustment; and (b)
the number and class of shares of Stock then reserved to be issued under the
Plan shall be adjusted by substituting for the total number and class of shares
of Stock then reserved, that number and class of shares of Stock that would have
been received by the owner of an equal number of outstanding shares of each
class of Stock as the result of the event requiring the adjustment.
(b) If the Company is merged or consolidated with another
corporation and the Company is not the surviving corporation, or if the Company
is liquidated or sells or otherwise disposes of substantially all its assets
while unexercised Options remain outstanding under this Plan:
(i) subject to the provisions of clause (c) below, after
the effective date of the merger, consolidation, liquidation, sale or other
disposition, as the case may be, each holder of an outstanding Option shall be
entitled, upon exercise of the Option, to receive, in lieu of shares of Stock,
the number and class or classes of shares of stock or other securities or
property to which the holder would have been entitled if, immediately prior to
the merger, consolidation, liquidation, sale or other disposition, the holder
had been the holder of record of a number of shares of Stock equal to the number
of shares as to which the Option shall be so exercised;
(ii) the Board of Directors may waive any limitations
set out in or imposed under this Plan so that all Options, from and after a date
prior to the effective date of the merger, consolidation, liquidation, sale or
other disposition, as the case may be, specified by the Board of Directors,
shall be exercisable in full; and
(iii) all outstanding Options may be canceled by the
Board of Directors as of the effective date of any merger, consolidation,
liquidation, sale or other disposition, if (i) notice of cancellation shall be
given to each holder of an Option and (ii) each holder of an Option shall have
the right to exercise that Option in full (without regard to any limitations set
out in or imposed under this Plan or the Option Agreement granting that Option)
during a period set by the Board of Directors preceding the effective date of
the merger, consolidation, liquidation, sale or other disposition and, if in the
event all outstanding Options may not be exercised in full under applicable
securities laws without registration of the shares of Stock issuable on exercise
of the Options, the Board of Directors may limit the exercise of the Options to
the number of shares of Stock, if any, as may be issued without registration.
The method of choosing which Options may be exercised, and the number of shares
of Stock for which Options may be exercised, shall be solely within the
discretion of the Board of Directors.
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(c) After a merger of one or more corporations into the
Company or after a consolidation of the Company and one or more corporations in
which the Company shall be the surviving corporation, each Eligible Person shall
be entitled to have his Restricted Stock and shares earned under a Performance
Stock Award appropriately adjusted based on the manner the Stock was adjusted
under the terms of the agreement of merger or consolidation.
(d) In each situation described in this Section 4.5, the
Committee will make similar adjustments, as appropriate, in outstanding Stock
Appreciation Rights.
(e) The issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, for cash or
property, or for labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe for them, or upon conversion of shares or
obligations of the Company convertible into shares or other securities, shall
not affect, and no adjustment by reason of such issuance shall be made with
respect to, the number, class, or price of shares of Stock then subject to
outstanding Awards.
4.6 ELECTION UNDER SECTION 83(B) OF THE CODE. No Employee shall
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exercise the election permitted under Section 83(b) of the Code without written
approval of the Committee. Any Employee doing so shall forfeit all Awards
issued to him under this Plan.
ARTICLE V - OPTIONS AND STOCK APPRECIATION RIGHTS
5.1 TYPE OF OPTION. The Committee shall specify at the time of
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grant whether a given Option shall constitute an Incentive Option or a
Nonqualified Option. Incentive Stock Options may only be granted to Employees.
5.2 OPTION PRICE. The price at which Stock may be purchased under
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an Incentive Option shall not be less than the greater of: (a) 100% of the Fair
Market Value of the shares of Stock on the date the Option is granted or (b) the
aggregate par value of the shares of Stock on the date the Option is granted.
The Committee in its discretion may provide that the price at which shares of
Stock may be purchased under an Incentive Option shall be more than 100% of Fair
Market Value. In the case of any 10% Stockholder, the price at which shares of
Stock may be purchased under an Incentive Option shall not be less than 110% of
the Fair Market Value of the Stock on the date the Incentive Option is granted.
The price at which shares of Stock may be purchased under a Nonqualified Option
shall be such price as shall be determined by the Committee in its sole
discretion but in no event lower than the par value of the shares of Stock on
the date the Option is granted.
5.3 DURATION OF OPTIONS AND SARS. No Option or SAR shall be
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exercisable after the expiration of ten (10) years from the date the Option or
SAR is granted. In the case of a 10% Stockholder, no Incentive Option shall be
exercisable after the expiration of five years from the date the Incentive
Option is granted.
5.4 AMOUNT EXERCISABLE -- INCENTIVE OPTIONS. Each Option may be
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exercised from time to time, in whole or in part, in the manner and subject to
the conditions the Committee, in its sole discretion, may provide in the Option
Agreement, as long as the Option is valid and outstanding, and further provided
that no Option may be exercisable within six (6) months of the date of grant,
unless otherwise stated in the Option Agreement. To the extent that the
aggregate Fair Market Value (determined as of the time an Incentive Option is
granted) of the Stock with respect to which Incentive Options first become
exercisable by the optionee during any calendar year (under this Plan and any
other incentive stock option plan(s) of the Company or any Affiliate) exceeds
$100,000, the portion in excess of $100,000 of the Incentive Option shall be
treated as a Nonqualified Option. In making this determination, Incentive
Options shall be taken into account in the order in which they were granted.
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5.5 EXERCISE OF OPTIONS. Each Option shall be exercised by the
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delivery of written notice to the Committee setting forth the number of shares
of Stock with respect to which the Option is to be exercised, together with:
(a) cash, certified check, bank draft, or postal or express
money order payable to the order of the Company for an amount equal to the
option price of the shares,
(b) Stock at its Fair Market Value on the date of exercise,
(if approved in advance by the Committee),
(c) an election to make a cashless exercise through a
registered broker-dealer (if approved in advance by the Committee),
(d) an election to have shares of Stock, which otherwise
would be issued on exercise, withheld in payment of the exercise price (if
approved in advance by the Committee), and/or
(e) any other form of payment which is acceptable to the
Committee, including without limitation, payment in the form of a promissory
note, and specifying the address to which the certificates for the shares are to
be mailed.
As promptly as practicable after receipt of written notification and
payment, the Company shall deliver to the Eligible Person certificates for the
number of shares with respect to which the Option has been exercised, issued in
the Eligible Person's name. If shares of Stock are used in payment, the
aggregate Fair Market Value of the shares of Stock tendered must be equal to or
less than the aggregate exercise price of the shares being purchased upon
exercise of the Option, and any difference must be paid by cash, certified
check, bank draft, or postal or express money order payable to the order of the
Company. Delivery of the shares shall be deemed effected for all purposes when
a stock transfer agent of the Company shall have deposited the certificates in
the United States mail, addressed to the Eligible Person, at the address
specified by the Eligible Person.
Whenever an Option is exercised by exchanging shares of Stock owned by
the Eligible Person, the Eligible Person shall deliver to the Company
certificates registered in the name of the Eligible Person representing a number
of shares of Stock legally and beneficially owned by the Eligible Person, free
of all liens, claims, and encumbrances of every kind, accompanied by stock
powers duly endorsed in blank by the record holder of the shares represented by
the certificates (with signature guaranteed by a commercial bank or trust
company or by a brokerage firm having a membership on a registered national
stock exchange). The delivery of certificates upon the exercise of Options is
subject to the condition that the person exercising the Option provide the
Company with the information the Company might reasonably request pertaining to
exercise, sale or other disposition.
5.6 STOCK APPRECIATION RIGHTS. All Eligible Persons shall be
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eligible to receive Stock Appreciation Rights. The Committee shall determine
the SAR to be awarded from time to time to any Eligible Person. The grant of an
SAR to be awarded from time to time shall neither entitle such person to, nor
disqualify such person, from participation in any other grant of awards by the
Company, whether under this Plan or any other plan of the Company. If granted
as a stand-alone SAR Award, the terms of the Award shall be provided in a Stock
Appreciation Rights Agreement.
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5.7 STOCK APPRECIATION RIGHTS IN TANDEM WITH OPTIONS. Stock
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Appreciation Rights may, at the discretion of the Committee, be included in each
Option granted under the Plan to permit the holder of an Option to surrender
that Option, or a portion of the part which is then exercisable, and receive in
exchange, upon the conditions and limitations set by the Committee, an amount
equal to the excess of the Fair Market Value of the Stock covered by the Option,
or the portion of it that was surrendered, determined as of the date of
surrender, over the aggregate exercise price of the Stock. The payment may be
made in shares of Stock valued at Fair Market Value, in cash, or partly in cash
and partly in shares of Stock, as the Committee shall decide in its sole
discretion. Stock Appreciation Rights may be exercised only when the Fair
Market Value of the Stock covered by the Option surrendered exceeds the exercise
price of the Stock. In the event of the surrender of an Option, or a portion of
it, to exercise the Stock Appreciation Rights, the shares represented by the
Option or that part of it which is surrendered, shall not be available for
reissuance under the Plan. Each Stock Appreciation Right issued in tandem with
an Option (a) will expire not later than the expiration of the underlying
Option, (b) may be for no more than 100% of the difference between the exercise
price of the underlying Option and the Fair Market Value of a share of Stock at
the time the Stock Appreciation Right is exercised, (c) is transferable only
when the underlying Option is transferable, and under the same conditions, and
(d) may be exercised only when the underlying Option is eligible to be
exercised.
5.8 CONDITIONS OF STOCK APPRECIATION RIGHTS. All Stock
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Appreciation Rights shall be subject to such terms, conditions, restrictions or
limitations as the Committee deems appropriate, including by way of illustration
but not by way of limitation, restrictions on transferability, requirement of
continued employment, individual performance, financial performance of the
Company or payment of any applicable employment or withholding taxes.
5.9 PAYMENT OF STOCK APPRECIATION RIGHTS. The amount of payment
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to which the Eligible Person who reserves an SAR shall be entitled upon the
exercise of each SAR shall be equal to the amount, if any by which the Fair
Market Value of the specified shares of Stock on the exercise date exceeds the
Fair Market Value of the specified shares of Stock on the date of grant of the
SAR. The SAR shall be paid in either cash or Stock, as determined in the
discretion of the Committee as set forth in the SAR agreement. If the payment
is in Stock, the number of shares to be paid shall be determined by dividing the
amount of such payment by the Fair Market Value of Stock on the exercise date of
such SAR.
5.10 EXERCISE ON TERMINATION OF EMPLOYMENT. Unless it is
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expressly provided otherwise in the Option or SAR agreement, Options and SAR
granted to Employees shall terminate one day less than three months after
severance of employment of the Employee from the Company and all Affiliates for
any reason, with or without cause, other than death, retirement under the then
established rules of the Company, or severance for disability. Whether
authorized leave of absence or absence on military or government service shall
constitute severance of the employment of the Employee shall be determined by
the Committee at that time.
5.11 DEATH. If, before the expiration of an Option or SAR, the
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Eligible Person, whether in the employ of the Company or after he has retired or
was severed for disability, or otherwise dies, the Option or SAR shall continue
until the earlier of the Option's or SAR's expiration date or one year following
the date of his death, unless it is expressly provided otherwise in the Option
or SAR agreement. After the death of the Eligible Person, his executors,
administrators or any persons to whom his Option or SAR may be transferred by
will or by the laws of descent and distribution shall have the right, at any
time prior to the Option's or SAR's expiration or termination, whichever is
earlier, to exercise it, to the extent to which he was entitled to exercise it
immediately prior to his death, unless it is expressly provided otherwise in the
Option or SAR's agreement.
5.12 RETIREMENT. Unless it is expressly provided otherwise in the
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Option Agreement, before the expiration of an Incentive Option, the Employee
shall be retired in good standing from the employ of the Company under the then
established rules of the Company, the Incentive Option shall terminate on the
earlier of the Option's expiration date or one day less than one year after his
retirement; provided, if an Incentive Option is not exercised within specified
time limits prescribed by the Code, it will become a Nonqualified Option by
operation of law. Unless it is expressly provided otherwise in the Option
Agreement, if before the expiration of a Nonqualified Option, the Employee shall
be retired in good standing from the employ of the Company under the then
established rules of the Company, the Nonqualified Option shall terminate on the
earlier of the Nonqualified Option's expiration date or one day less than one
year after his retirement. In the event of retirement, the Employee shall have
the right prior to the termination of the Nonqualified Option to exercise the
Nonqualified Option, to the extent to which he was entitled to exercise it
immediately prior to his retirement, unless it is expressly provided otherwise
in the Option Agreement. Upon retirement, an SAR shall continue to be
exercisable for the remainder of the term of the SAR agreement.
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5.13 DISABILITY. If, before the expiration of an Option or SAR,
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the Employee shall be severed from the employ of the Company for disability, the
Option or SAR shall terminate on the earlier of the Option's or SAR's expiration
date or one day less than one year after the date he was severed because of
disability, unless it is expressly provided otherwise in the Option or SAR
agreement. In the event that the Employee shall be severed from the employ of
the Company for disability, the Employee shall have the right prior to the
termination of the Option or SAR to exercise the Option, to the extent to which
he was entitled to exercise it immediately prior to his retirement or severance
of employment for disability, unless it is expressly provided otherwise in the
Option Agreement.
5.14 SUBSTITUTION OPTIONS. Options may be granted under this Plan
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from time to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the Company
or any Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or any Affiliate, or the acquisition by the Company
or any Affiliate of the assets of the employing corporation, or the acquisition
by the Company or any Affiliate of stock of the employing corporation as the
result of which it becomes an Affiliate of the Company. The terms and
conditions of the substitute Options granted may vary from the terms and
conditions set out in this Plan to the extent the Committee, 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.
5.15 RELOAD OPTIONS. Without in any way limiting the authority of
--------------
the Board of Directors or Committee to make or not to make grants of Options
hereunder, the Board of Directors or Committee shall have the authority (but not
an obligation) to include as part of any Option Agreement a provision entitling
the Eligible Person to a further Option (a "Reload Option") in the event the
Eligible Person exercises the Option evidenced by the Option Agreement, in whole
or in part, by surrendering other shares of Stock in accordance with this Plan
and the terms and conditions of the Option Agreement. Any such Reload Option
(a) shall be for a number of shares equal to the number of shares surrendered as
part or all of the exercise price of such Option; (b) shall have an expiration
date which is the greater of (i) the same expiration date of the Option the
exercise of which gave rise to such Reload Option or (ii) one year from the date
of grant of the Reload Option; and (c) shall have an exercise price which is
equal to one hundred percent (100%) of the Fair Market Value of the Stock
subject to the Reload Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Reload Option which is an Incentive Option and
which is granted to a 10% Stockholder, shall have an exercise price which is
equal to one hundred ten percent (110%) of the Fair Market Value of the Stock
subject to the Reload Option on the date of exercise of the original Option and
shall have a term which is no longer than five (5) years.
Any such Reload Option may be an Incentive Option or a Nonqualified
Option, as the Board of Directors or Committee may designate at the time of the
grant of the original Option; provided, however, that the designation of any
Reload Option as an Incentive Option shall be subject to the one hundred
thousand dollar ($100,000) annual limitation on exercisability of Incentive
Stock Options described in the Plan and in Section 422(d) of the Code. There
shall be no Reload Options on a Reload Option. Any such Reload Option shall be
subject to the availability of sufficient shares under Section 4.2 herein and
shall be subject to such other terms and conditions as the Board of Directors or
Committee may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.
5.16 NO RIGHTS AS STOCKHOLDER. No Eligible Person shall have any
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rights as a stockholder with respect to Stock covered by his Option until the
date a stock certificate is issued for the Stock.
ARTICLE VI - RESTRICTED STOCK AWARDS
6.1 RESTRICTED STOCK AWARDS. The Committee may issue shares of
-------------------------
Stock to an Eligible Person subject to the terms of a Restricted Stock
Agreement. The Restricted Stock may be issued for no payment by the Eligible
Person or for a payment below the Fair Market Value on the date of grant.
Restricted Stock shall be subject to restrictions as to sale, transfer,
alienation, pledge or other encumbrance and generally will be subject to vesting
over a period of time specified in the Restricted Stock Agreement. The
Committee shall determine the period of vesting, the number of shares, the
price, if any, of Stock included in a Restricted Stock Award, and the other
terms and provisions which are included in a Restricted Stock Agreement.
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6.2 RESTRICTIONS. Restricted Stock shall be subject to the terms
------------
and conditions as determined by the Committee, including without limitation, any
or all of the following:
(a) a prohibition against the sale, transfer, alienation,
pledge or other encumbrance of the shares of Restricted Stock, such prohibition
to lapse (i) at such time or times as the Committee shall determine (whether in
annual or more frequent installments, at the time of the death, disability or
retirement of the holder of such shares, or otherwise);
(b) a requirement that the holder of shares of Restricted
Stock forfeit, or in the case of shares sold to an Eligible Person, resell back
to the Company at his cost, all or a part of such shares in the event of
termination of the Eligible Person's employment during any period in which the
shares remain subject to restrictions;
(c) a prohibition against employment of the holder of
Restricted Stock by any competitor of the Company or its Affiliates, or against
such holder's dissemination of any secret or confidential information belonging
to the Company or an Affiliate;
(d) unless stated otherwise in the Restricted Stock
Agreement,
(i) if restrictions remain at the time of severance of
employment with the Company and all Affiliates, other than for reason of
disability or death, the Restricted Stock shall be forfeited; and
(ii) if severance of employment is by reason of
disability or death, the restrictions on the shares shall lapse and the Eligible
Person or his heirs or estate shall be 100% vested in the shares subject to the
Restricted Stock Agreement.
6.3 STOCK CERTIFICATE. Shares of Restricted Stock shall be
------------------
registered in the name of the Eligible Person receiving the Restricted Stock
Award and deposited, together with a stock power endorsed in blank, with the
Company. Each such certificate shall bear a legend in substantially the
following form:
The transferability of this certificate and the shares of
Stock represented by it is restricted by and subject to the
terms and conditions (including conditions of forfeiture)
contained in the GuideLocator.com, Inc. 1999 Stock Option
Plan, and an agreement entered into between the registered
owner and the Company. A copy of the Plan and agreement is
on file in the office of the Secretary of the Company.
6.4 RIGHTS AS STOCKHOLDER. Subject to the terms and conditions of
---------------------
the Plan, each Eligible Person receiving a certificate for Restricted Stock
shall have all the rights of a stockholder with respect to the shares of Stock
included in the Restricted Stock Award during any period in which such shares
are subject to forfeiture and restrictions on transfer, including without
limitation, the right to vote such shares. Dividends paid with respect to
shares of Restricted Stock in cash or property other than Stock in the Company
or rights to acquire stock in the Company shall be paid to the Eligible Person
currently. Dividends paid in Stock in the Company or rights to acquire Stock in
the Company shall be added to and become a part of the Restricted Stock.
6.5 LAPSE OF RESTRICTIONS. At the end of the time period during
-----------------------
which any shares of Restricted Stock are subject to forfeiture and restrictions
on sale, transfer, alienation, pledge, or other encumbrance, such shares shall
vest and will be delivered in a certificate, free of all restrictions, to the
Eligible Person or to the Eligible Person's legal representative, beneficiary or
heir; provided the certificate shall bear such legend, if any, as the Committee
determines is reasonably required by applicable law. By accepting a Stock Award
and executing a Restricted Stock Agreement, the Eligible Person agrees to remit
when due any federal and state income and employment taxes required to be
withheld.
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6.6 RESTRICTION PERIOD. No Restricted Stock Award may provide for
------------------
restrictions continuing beyond ten (10) years from the date of grant.
ARTICLE VII - PERFORMANCE STOCK AWARDS
7.1 AWARD OF PERFORMANCE STOCK. The Committee may award shares of
--------------------------
Stock, without any payment for such shares, to designated Eligible Persons if
specified performance goals established by the Committee are satisfied. The
terms and provisions herein relating to these performance based awards are
intended to satisfy Section 162(m) of the Code and regulations issued
thereunder. The designation of an employee eligible for a specific Performance
Stock Award shall be made by the Committee in writing prior to the beginning of
the period for which the performance is measured (or within such period as
permitted by IRS regulations). The Committee shall establish the maximum number
of shares of Stock to be issued to a designated Employee if the performance goal
or goals are met. The Committee reserves the right to make downward adjustments
in the maximum amount of an Award if in its discretion unforeseen events make
such adjustment appropriate.
7.2 PERFORMANCE GOALS. Performance goals determined by the
------------------
Committee may be based on specified increases in cash flow, net profits, Stock
price, Company, segment or Affiliate sales, market share, earnings per share,
return on assets, and/or return on stockholders' equity.
7.3 ELIGIBILITY. The employees eligible for Performance Stock
-----------
Awards are the senior officers (i.e., chief executive officer, president, vice
presidents, secretary, treasurer, and similar positions) of the Company and its
Affiliates, and such other employees of the Company and its Affiliates as may be
designated by the Committee.
7.4 CERTIFICATE OF PERFORMANCE. The Committee must certify in
----------------------------
writing that a performance goal has been attained prior to issuance of any
certificate for a Performance Stock Award to any Employee. If the Committee
certifies the entitlement of an Employee to the Performance Stock Award, the
certificate will be issued to the Employee as soon as administratively
practicable, and subject to other applicable provisions of the Plan, including
but not limited to, all legal requirements and tax withholding. However,
payment may be made in shares of Stock, in cash, or partly in cash and partly in
shares of Stock, as the Committee shall decide in its sole discretion. If a
cash payment is made in lieu of shares of Stock, the number of shares
represented by such payment shall not be available for subsequent issuance under
this Plan.
ARTICLE VIII - ADMINISTRATION
The Plan shall be administered by the Committee. All questions of
interpretation and application of the Plan and Awards shall be subject to the
determination of the Committee. A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members shall be as effective as if it had been made
by a majority vote at a meeting properly called and held. This Plan shall be
administered in such a manner as to permit the Options which are designated to
be Incentive Options to qualify as Incentive Options. In carrying out its
authority under this Plan, the Committee shall have full and final authority and
discretion, including but not limited to the following rights, powers and
authorities, to:
(a) determine the Eligible Persons to whom and the time or
times at which Options or Awards will be made,
(b) determine the number of shares and the purchase price of
Stock covered in each Option or Award, subject to the terms of the Plan,
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(c) determine the terms, provisions and conditions of each
Option and Award, which need not be identical,
(d) accelerate the time at which any outstanding Option or
SAR may be exercised, or Restricted Stock Award will vest,
(e) define the effect, if any, on an Option or Award of the
death, disability, retirement, or termination of employment of the Employee,
(f) prescribe, amend and rescind rules and regulations
relating to administration of the Plan, and
(g) make all other determinations and take all other actions
deemed necessary, appropriate, or advisable for the proper administration of
this Plan.
The actions of the Committee in exercising all of the rights, powers,
and authorities set out in this Article and all other Articles of this Plan,
when performed in good faith and in its sole judgment, shall be final,
conclusive and binding on all parties.
ARTICLE IX - AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Company may amend, terminate or suspend
this Plan at any time, in its sole and absolute discretion; provided, however,
that to the extent required to qualify this Plan under Rule 16b-3 promulgated
under Section 16 of the Securities Exchange Act of 1934, as amended, no
amendment that would (a) materially increase the number of shares of Stock that
may be issued under this Plan, (b) materially modify the requirements as to
eligibility for participation in this Plan, or (c) otherwise materially increase
the benefits accruing to participants under this Plan, shall be made without the
approval of the Company's stockholders; provided further, however, that to the
extent required to maintain the status of any Incentive Option under the Code,
no amendment that would (a) change the aggregate number of shares of Stock which
may be issued under Incentive Options, (b) change the class of employees
eligible to receive Incentive Options, or (c) decrease the Option price for
Incentive Options below the Fair Market Value of the Stock at the time it is
granted, shall be made without the approval of the Company's stockholders.
Subject to the preceding sentence, the Board of Directors shall have the power
to make any changes in the Plan and in the regulations and administrative
provisions under it or in any outstanding Incentive Option as in the opinion of
counsel for the Company may be necessary or appropriate from time to time to
enable any Incentive Option granted under this Plan to continue to qualify as an
incentive stock option or such other stock option as may be defined under the
Code so as to receive preferential federal income tax treatment.
ARTICLE X - MISCELLANEOUS
10.1 NO ESTABLISHMENT OF A TRUST FUND. No property shall be set
----------------------------------
aside nor shall a trust fund of any kind be established to secure the rights of
any Eligible Person under this Plan. All Eligible Persons shall at all times
rely solely upon the general credit of the Company for the payment of any
benefit which becomes payable under this Plan.
10.2 NO EMPLOYMENT OBLIGATION. The granting of any Option or
--------------------------
Award shall not constitute an employment contract, express or implied, nor
impose upon the Company or any Affiliate any obligation to employ or continue to
employ any Eligible Person. The right of the Company or any Affiliate to
terminate the employment of any person shall not be diminished or affected by
reason of the fact that an Option or Award has been granted to him.
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10.3 FORFEITURE. Notwithstanding any other provisions of this
----------
Plan, if the Committee finds by a majority vote after full consideration of the
facts that an Eligible Person, before or after termination of his employment
with the Company or an Affiliate for any reason (a) committed or engaged in
fraud, embezzlement, theft, commission of a felony, or proven dishonesty in the
course of his employment by the Company or an Affiliate, which conduct damaged
the Company or Affiliate, or disclosed trade secrets of the Company or an
Affiliate, or (b) participated, engaged in or had a material, financial or other
interest, whether as an employee, officer, director, consultant, contractor,
stockholder, owner, or otherwise, in any commercial endeavor in the United
States which is competitive with the business of the Company or an Affiliate
without the written consent of the Company or Affiliate, the Eligible Person
shall forfeit all outstanding Options and all outstanding Awards, and including
all exercised Options and other situations pursuant to which the Company has not
yet delivered a stock certificate. Clause (b) shall not be deemed to have been
violated solely by reason of the Eligible Person's ownership of stock or
securities of any publicly owned corporation, if that ownership does not result
in effective control of the corporation.
The decision of the Committee as to the cause of an Employee's
discharge, the damage done to the Company or an Affiliate, and the extent of an
Eligible Person's competitive activity shall be final. No decision of the
Committee, however, shall affect the finality of the discharge of the Employee
by the Company or an Affiliate in any manner.
10.4 TAX WITHHOLDING. The Company or any Affiliate shall be
----------------
entitled to deduct from other compensation payable to each Eligible Person any
sums required by federal, state, or local tax law to be withheld with respect to
the grant or exercise of an Option or SAR, lapse of restrictions on Restricted
Stock, or award of Performance Stock. In the alternative, the Company may
require the Eligible Person (or other person exercising the Option, SAR or
receiving the Stock) to pay the sum directly to the employer corporation. If the
Eligible Person (or other person exercising the Option or SAR or receiving the
Stock) is required to pay the sum directly, payment in cash or by check of such
sums for taxes shall be delivered within 10 days after the date of exercise or
lapse of restrictions. The Company shall have no obligation upon exercise of any
Option or lapse of restrictions on Stock until payment has been received, unless
withholding (or offset against a cash payment) as of or prior to the date of
exercise or lapse of restrictions is sufficient to cover all sums due with
respect to that exercise. The Company and its Affiliates shall not be obligated
to advise an Eligible Person of the existence of the tax or the amount which the
employer corporation will be required to withhold.
10.5 WRITTEN AGREEMENT. Each Option and Award shall be embodied
------------------
in a written agreement which shall be subject to the terms and conditions of
this Plan and shall be signed by the Eligible Person and by a member of the
Committee on behalf of the Committee and the Company or an executive officer of
the Company, other than the Eligible Person, on behalf of the Company. The
agreement may contain any other provisions that the Committee in its discretion
shall deem advisable which are not inconsistent with the terms of this Plan.
10.6 INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. With
------------------------------------------------------------
respect to administration of this Plan, the Company shall indemnify each present
and future member of the Committee and the Board of Directors against, and each
member of the Committee and the Board of Directors shall be entitled without
further act on his part to indemnity from the Company for, all expenses
(including attorney's fees, the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of litigation, other
than amounts paid to the Company itself) reasonably incurred by him in
connection with or arising out of any action, suit, or proceeding in which he
may be involved by reason of his being or having been a member of the Committee
and/or the Board of Directors, whether or not he continues to be a member of the
Committee and/or the Board of Directors at the time of incurring the expenses,
including, without limitation, matters as to which he shall be finally adjudged
in any action, suit or proceeding to have been found to have been negligent in
the performance of his duty as a member of the Committee or the Board of
Directors. However, this indemnity shall not include any expenses incurred by
any member of the Committee and/or the Board of Directors in respect of matters
as to which he shall be finally adjudged in any action, suit or proceeding to
have been guilty of gross negligence or willful misconduct in the performance of
his duty as a member of the Committee and the Board of Directors. In addition,
no right of indemnification under this Plan shall be available to or enforceable
by any member of the Committee and the Board of Directors unless, within 60 days
after institution of any action, suit or proceeding, he shall have offered the
Company, in writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the benefit of the heirs,
executors or administrators of each member of the Committee and the Board of
Directors and shall be in addition to all other rights to which a member of the
Committee and the Board of Directors may be entitled as a matter of law,
contract, or otherwise.
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10.7 GENDER. If the context requires, words of one gender when
------
used in this Plan shall include the others and words used in the singular or
plural shall include the other.
10.8 HEADINGS. Headings of Articles and Sections are included for
--------
convenience of reference only and do not constitute part of the Plan and shall
not be used in construing the terms of the Plan.
10.9 OTHER COMPENSATION PLANS. The adoption of this Plan shall
--------------------------
not affect any other stock option, incentive or other compensation or benefit
plans in effect for the Company or any Affiliate, nor shall the Plan preclude
the Company from establishing any other forms of incentive or other compensation
for employees of the Company or any Affiliate.
10.10 OTHER OPTIONS OR AWARDS. The grant of an Option or Award
--------------------------
shall not confer upon the Eligible Person the right to receive any future or
other Options or Awards under this Plan, whether or not Options or Awards may be
granted to similarly situated Eligible Persons, or the right to receive future
Options or Awards upon the same terms or conditions as previously granted.
10.11 GOVERNING LAW. The provisions of this Plan shall be
--------------
construed, administered, and governed under the laws of the State of Texas.
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