U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): September 1, 1999
SUNBELT EXPLORATION INC.
(Exact Name of Registrant as Specified in Charter)
NEVADA
(State or Other Jurisdiction of
Incorporation or Organization)
2-65800 75-1667097
(Commission File Number) (I.R.S. Employer Identification No.)
4301 WINDFERN, HOUSTON, TEXAS 77041
(Address of principal executive offices including zip code)
(281) 600-4000
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
In connection with the acquisition described in Item 2 below, Mr. Hunter
Carr was issued 2,250,000 shares of Company common stock (10.8%), Jack Tompkins
was issued 6,000,000 shares (28.7%), Morris Chapman was issued 3,000,000 shares
(14.4%), Jonathan Gilchrist was issued 2,250,000 shares (10.8%), Don Sapaugh was
issued 2,250,000 shares (10.8%) and Agrosource was issued 1,500,000 shares
(7.2%). Collectively, Messrs. Carr, Tompkins, Chapman, Gilchrist and Sapaugh,
and Agrosource own approximately 82.7% of the shares of Company common stock
issued and outstanding. The consideration paid for the shares was all of the
issued and outstanding stock of iExalt, Inc., of which Messrs. Carr, Tompkins,
Chapman, Gilchrist and Sapaugh, and Agrosource owned approximately 93.8%.
To the best of the Company's knowledge, there are no known arrangements
which may at a subsequent date result in a change of control of the Company.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective September 1, 1999, Sunbelt Exploration, Inc., a Nevada
corporation ("Company"), acquired all of the issued and outstanding stock of
iExalt, Inc., a Texas corporation in the business of providing Internet service
and content targeted towards the Christian community. In connection with such
acquisition, the Company issued an aggregate of 18,393,666 shares authorized but
unissued common stock to the shareholders of iExalt, in exchange for all of the
outstanding shares of iExalt common stock, which constituted upon closing
approximately 88% of the issued and outstanding common stock of the Company.
Upon the closing of the transaction, there were 20,874,166 shares of common
stock issued and outstanding.
In connection with the reorganization, the shareholders (a) adopted and
approved Amended and Restated Articles of Incorporation which authorized
changing the name of Sunbelt Exploration, Inc. to iExalt, Inc. and authorized
20,000,000 shares of preferred stock, par value $.001; (b) elected Jack
Tompkins, Hunter Carr, Don Sapaugh, Jonathan Gilchrist and Morris Chapman as
directors of the Company; and (c) approved the Company's 1999 Directors' Stock
Option Plan and Employees' 1999 Stock Option Plan.
The transaction was accounted for as a purchase. The acquisition of iExalt
was deemed "significant," accordingly, separate historical and pro forma
financial statements will be filed no later than seventy-five days after the
consummation of the acquisition.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Inapplicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Inapplicable.
ITEM 5. OTHER EVENTS
Inapplicable.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTOR
Inapplicable.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
The appropriate financial statements will be filed with the
Securities and Exchange Commission no later than seventy-five days
after the consummation of the acquisition.
(b) Pro Forma Financial Information.
The appropriate pro forma financial information relating to the
acquisition will be filed with the Securities and Exchange
Commission no later than seventy-five days after the consummation of
the acquisition.
ITEM 8. CHANGE IN FISCAL YEAR
Inapplicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SUNBELT EXPLORATION, INC.
By: /s/ JONATHAN GILCHRIST
Jonathan Gilchrist, Secretary
DATE: September 14, 1999
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EXHIBITS
EXHIBIT
NO. PAGE
- --------- --------
1.1 Exchange Agreement between Sunbelt Exploration, Inc.
and iExalt, Inc. ....................................... A-1
2.1 1999 Directors' Stock Option Plan ........................ B-1
2.2 Employees' 1998 Stock Option Plan ........................ C-1
EXHIBIT 1.1
EXCHANGE AGREEMENT
BETWEEN
SUNBELT EXPLORATION, INC.,
A NEVADA CORPORATION,
IEXALT, INC.,
A TEXAS CORPORATION,
AND
THE SHAREHOLDERS OF IEXALT, INC.
DATED AUGUST _____, 1999
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TABLE OF CONTENTS
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ARTICLES PAGE
ARTICLE I REPRESENTATIONS, COVENANTS, AND
WARRANTIES OF iEXALT AND THE iEXALT PRINCIPAL
1.01 Organization 1
1.02 Capitalization 1
1.03 Subsidiaries and Predecessor Corporations 2
1.04 Financial Statements 2
1.05 Information 2
1.06 Options and Warrants 3
1.07 Absence of Certain Changes or Events 3
1.08 Title and Related Matters 3
1.09 Litigation and Proceedings 4
1.10 Contracts 4
1.11 Material Contract Defaults 5
1.12 No Conflict With Other Instruments 5
1.13 Governmental Authorizations 5
1.14 Compliance With Laws and Regulations 5
1.15 Insurance 5
1.16 Approval of Agreement 5
1.17 Material Transactions or Affiliations 5
1.18 Labor Relations 6
1.19 iExalt Schedules 6
ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES
OF iEXALT SHAREHOLDERS
2.01 Ownership of iExalt Shares 7
ARTICLE III REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF SUNBELT AND SUNBELT PRINCIPAL
3.01 Organization 8
3.02 Capitalization 8
3.03 Subsidiaries and Predecessor Corporations 8
3.04 Financial Statements 8
3.05 Information 9
3.06 Options and Warrants 9
3.07 Absence of Certain Changes or Events 9
3.08 Title and Related Matters 9
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ARTICLES PAGE
3.09 Litigation and Proceedings 9
3.10 Contracts 9
3.11 No Conflict With Other Instruments 10
3.12 Governmental Authorizations 10
3.13 Compliance With Laws and Regulations 10
3.14 Insurance 10
3.15 Approval of Agreement 10
3.16 Material Transactions or Affiliations 10
3.17 Employment Matters 10
3.18 Periodic Reports 10
3.19 Sunbelt Schedules 11
ARTICLE IV
[RESERVED]
ARTICLE V PLAN OF EXCHANGE
5.01 The Exchange 11
5.02 Anti-Dilution 11
5.03 Appointment of New Directors 12
5.04 Closing 12
5.05 Closing Events 12
5.06 Termination 12
ARTICLE VI SPECIAL COVENANTS
6.01 Stockholder Meeting of Sunbelt 13
6.02 Access to Properties and Records 13
6.03 Delivery of Books and Records 14
6.04 Special Covenants and Representations
Regarding the Exchanged Sunbelt Stock 14
6.05 Third Party Consents and Certificates 14
6.06 Actions Prior to Closing 14
6.07 Indemnification 15
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS
OF SUNBELT EXPLORATION, INC.
7.01 Accuracy of Representations 15
7.02 Officer's Certificates 15
7.03 No Material Adverse Change 16
7.04 Good Standing 16
7.05 Other Items 16
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ARTICLES PAGE
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF
iEXALT AND THE iEXALT SHAREHOLDERS
8.01 Accuracy of Representation 16
8.02 Stockholder Approval 16
8.03 Officer's Certificate 17
8.04 No Material Adverse Change 17
8.05 Good Standing 17
8.06 Other Items 17
ARTICLE IX MISCELLANEOUS
9.01 Governing Law 17
9.02 Notices 17
9.03 Attorneys' Fees 18
9.04 Confidentiality 18
9.05 Schedules; Knowledge 18
9.06 Third Party Beneficiaries 18
9.07 Entire Agreement 18
9.08 Survival; Termination 18
9.09 Counterparts 18
9.10 Amendment or Waiver 18
EXHIBITS
Exhibit "A" Letter of Representation
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EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement"), is
entered into as of this ______ day of August, 1999, by and among Sunbelt
Exploration, Inc., a Nevada corporation (hereinafter referred to as "Sunbelt");
iExalt, Inc., a Texas corporation (hereinafter referred to as "iExalt"); those
persons identified in Schedule A-1 attached hereto who are the beneficial owners
of 100% of the outstanding capital stock of iExalt,(the iExalt Shareholders"),
Hunter M. A. Carr, officers and shareholders of iExalt (the "iExalt Principal"),
and Roger Lund, an officer of Sunbelt (the "Sunbelt Principal"), upon the
following premises:
PREMISES
This Agreement provides for the acquisition by Sunbelt of all of the
issued and outstanding shares of iExalt solely in exchange for voting shares of
Sunbelt, on the terms and conditions hereinafter provided, all for the purpose
of effecting a so-called "tax-free" reorganization pursuant to Sections
368(a)(1)(B) of the Internal Revenue Code of 1954, as amended.
AGREEMENT
NOW THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF IEXALT
AND THE IEXALT PRINCIPAL
As an inducement to, and to obtain the reliance of, Sunbelt, iExalt and
the iExalt Principal make the following representations and warranties, as
modified by the iExalt Schedule (as hereinafter defined), which iExalt
represents as accurate and complete in all material respects:
Section 1.01 ORGANIZATION. iExalt is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Texas, iExalt has
the corporate power and is duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, including qualification
to do business as a foreign corporation in the states in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification. Included in the iExalt Schedules are complete and
correct copies of the articles of incorporation, as amended, and bylaws of
iExalt as in effect on the date hereof. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof will not, violate any
provision of iExalt's articles of incorporation or bylaws. iExalt has taken all
action required by laws, its articles of incorporation, its bylaws, or otherwise
to authorize the execution and delivery of this Agreement. iExalt has full
power, authority, and legal right and has taken all action required by law, its
certificate of incorporation, bylaws, and otherwise to consummate the
transactions herein contemplated.
Section 1.02 CAPITALIZATION. The authorized capitalization of iExalt
consists of 50,000,000 shares of common stock, par value $0.001 per share, of
which 18,393,666 shares are currently issued and
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outstanding, and 2,000,000 shares are reserved for issuance pursuant to a
private placement offering currently being undertaken, and certain asset
acquisitions which are in progress. All issued and outstanding shares are
legally issued, fully paid, and non-assessable and not issued in violation of
the pre-emptive or other rights of any person.
Section 1.03 SUBSIDIARIES AND PREDECESSOR CORPORATIONS. iExalt does not
have any subsidiaries and does not own, beneficially or of record, any shares of
any other corporation.
Section 1.04 FINANCIAL STATEMENTS.
(a) Included in the iExalt Schedules is the unaudited balance sheet
of iExalt at July 31, 1999, together with an unaudited statement of
operations from inception through July 31, 1999.
(b) All such financial statements have been prepared in accordance
with generally accepted accounting principles. The iExalt balance sheet
presents fairly as of its date the financial condition of iExalt. IExalt
did not have, as of the date of such balance sheet, except as and to the
extent reflected or reserved against therein, any liabilities or
obligations (absolute or contingent) which should be reflected in a
balance sheet or the notes thereto, prepared in accordance with generally
accepted accounting principles, and all assets reflected therein are
properly reported and present fairly the value of the assets of iExalt in
accordance with generally accepted accounting principles. The statements
of income, stockholders' equity, and changes in financial condition
reflect fairly the information required to be set forth therein by
generally accepted accounting principles.
(c) iExalt has filed all state, federal, and local income tax
returns required to be filed by it from inception to the date hereof.
Included in the iExalt Schedules are true and correct copies of the
federal income tax returns of iExalt filed since the date of inception.
None of such federal income tax returns have been examined by the Internal
Revenue Service. Each of such income tax returns reflects the taxes due
for the period covered thereby, except for amounts which, in the
aggregate, are immaterial.
(d) iExalt does not owe any unpaid federal, state, county, local, or
other taxes (including any deficiencies, interest, or penalties) through
June 30, 1999, for which iExalt may be liable in its own right or as a
transferee of the assets of, or as a successor to, any other corporation
or entity. Furthermore, except as accruing in the normal course of
business, iExalt does not own any accrued and unpaid taxes to date of this
Agreement.
(e) The books and records, financial and otherwise, of iExalt are in
all material respects complete and correct and have been maintained in
accordance with good business and accounting practices.
(f) iExalt has good and marketable title to its assets and, except
as set forth in the iExalt Schedules or the financial statements of iExalt
or the notes thereto, has no material contingent liabilities, direct or
indirect, matured or unmatured.
Section 1.05 INFORMATION. The information concerning iExalt set forth in
this Agreement and in the iExalt Schedules is complete and accurate in all
material respects and does not contain any untrue
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statement of a material fact or omit to state a material fact required to make
the statements made, in light of the circumstances under which they were made,
not misleading.
Section 1.06 OPTIONS OR WARRANTS. Except as set forth in the iExalt
Schedules, there are no existing options, warrants, calls, or commitments of any
character relating to the authorized and unissued iExalt common stock, except
options, warrants, calls or commitments, if any, to which iExalt is not a party
and by which it is not bound.
Section 1.07 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
this Agreement or the iExalt Schedules, since July 31, 1999:
(a) there has not been (i) any material adverse change in the
business, operations, properties, assets, or condition of iExalt; or (ii)
any damage, destruction, or loss to iExalt (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets, or condition of iExalt;
(b) iExalt has not (i) amended its certificate of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any payment
of dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed, or agreed to purchase or redeem,
any of its capital stock; (iii) waived any rights of value which in the
aggregate are extraordinary or material considering the business of
iExalt; (iv) made any material change in its method of management,
operation, or accounting; (v) entered into any other material transaction;
(vi) made any accrual or arrangement for payment of bonuses or special
compensation of any kind or any severance or termination pay to any
present or former officer or employee; (vii) increased the rate of
compensation payable or to become payable by it to any of its officers or
directors or any of its employees whose monthly compensation exceeds
$5,000; or (viii) made any increase in any profit sharing, bonus, deferred
compensation, insurance, pension, retirement, or other employee benefit
plan, payment, or arrangement made to, for, or with its officers,
directors, or employees;
(c) iExalt has not (i) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability
(absolute or contingent) except liabilities incurred in the ordinary
course of business; (ii) paid any material obligation or liability
(absolute or contingent) other than current liabilities reflected in or
shown on the most recent iExalt balance sheet, and current liabilities
incurred since that date in the ordinary course of business; (iii) sold or
transferred, or agreed to sell or transfer, any of its assets, properties,
or rights (except assets, properties, or rights not used or useful in its
business which, in the aggregate have a value of less than $5,000), or
canceled, or agreed to cancel, any debts or claims (except debts or claims
which in the aggregate are of a value of less than $5,000); (iv) made or
permitted any amendment or termination of any contract, agreement, or
license to which it is a party if such amendment or termination is
material, considering the business of iExalt; or (v) issued, delivered, or
agreed to issue or deliver any stock, bonds or other corporate securities
including debentures (whether authorized and unissued or held as treasury
stock); and
(d) to the best knowledge of iExalt, iExalt has not become subject
to any law or regulation which materially and adversely affects, or in the
future may adversely affect, the business, operations, properties, assets,
or condition of iExalt.
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Section 1.08 TITLE AND RELATED MATTERS. iExalt has good and marketable
title to all of its properties, inventory, interests in properties, and assets,
real and personal, which are reflected in the most recent iExalt balance sheet
or acquired after that date (except properties, interests in properties, and
assets sold or otherwise disposed of since such date in the ordinary course of
business), free and clear of all liens, pledges, charges, or encumbrances except
(a) statutory liens or claims not yet delinquent; (b) such imperfections of
title and easements as do not and will not materially detract from or interfere
with the present or proposed use of the properties subject thereto or affected
thereby or otherwise materially impair present business operations on such
properties; and (c) as described in the iExalt Schedules. Except as set forth in
the iExalt Schedules, iExalt owns, free and clear of any liens, claims,
encumbrances, royalty interests, or other restrictions or limitations of any
nature whatsoever, any and all products it is currently manufacturing, including
the underlying technology and data, and all procedures, techniques, marketing
plans, business plans, methods of management, or other information utilized in
connection with iExalt's business. Except as set forth in the iExalt Schedules,
no third party has any right to, and iExalt has not received any notice of
infringement of or conflict with asserted rights of others with respect to any
product, technology, data, trade secrets, know-how, proprietary techniques,
trademarks, service marks, tradenames, or copyrights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling, or finding, would
have a materially adverse affect on the business, operations, financial
condition, income, or business prospects of iExalt or any material portion of
its properties, assets, or rights.
Section 1.09 LITIGATION AND PROCEEDINGS. There are no actions, suits,
proceedings, or investigations pending or, to the knowledge of iExalt after
reasonable investigation, threatened by or against iExalt or affecting iExalt or
its properties, at law or in equity, before any court or other governmental
agency or instrumentality, domestic or foreign, or before any arbitrator of any
kind. iExalt does not have any knowledge of any default on its part with respect
to any judgment, order, writ, injunction, decree, award, rule, or regulation of
any court, arbitrator, or governmental agency or instrumentality or of any
circumstances which, after reasonable investigation, would result in the
discovery of such a default.
Section 1.10 CONTRACTS.
(a) Except as included or described in the iExalt Schedules, there
are no material contracts, agreements, franchises, license agreements, or
other commitments to which iExalt is a party or by which it or any of its
assets, products, technology, or properties are bound;
(b) All contracts, agreements, franchises, license agreements, and
other commitments to which iExalt is a party or by which its properties
are bound and which are material to the operations of iExalt taken as a
whole are valid and enforceable by iExalt in all respects, except as
limited by bankruptcy and insolvency laws and by other laws affecting the
rights of creditors generally;
(c) iExalt is not a party to or bound by, and the properties of
iExalt are not subject to, any contract, agreement, other commitment or
instrument; any charter or other corporate restriction; or any judgment,
order, writ, injunction, decree, or award which materially and adversely
affects, or in the future may (as far as iExalt can now foresee)
materially and adversely affect, the business, operations, properties,
assets, or condition of iExalt; and
(d) Except as included or described in the iExalt Schedules or
reflected in the most
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recent iExalt balance sheet, iExalt is not a party to any oral or written
(i) contract for the employment of any officer or employee which is not
terminable on 30 days or less notice; (ii) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension benefit or retirement
plan, agreement, or arrangement covered by Title IV of the Employee
Retirement Income Security Act, as amended; (iii) agreement, contract, or
indenture relating to the borrowing of money; (iv) guaranty of any
obligation, other than one on which iExalt is a primary obligor, for the
borrowing of money or otherwise, excluding endorsements made for
collection and other guaranties of obligations, which, in the aggregate do
not exceed more than one year or providing for payments in excess of
$5,000 in the aggregate; (vi) collective bargaining agreement; (vii)
agreement with any present or former officer or director of iExalt; or
(viii) contract, agreement, or other commitment involving payments by it
of more than $5,000 in the aggregate.
Section 1.11 MATERIAL CONTRACT DEFAULTS. iExalt is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
or other commitment which is material to the business, operations, properties,
assets, or condition of iExalt and there is no event of default in any material
respect under any such contract, agreement, lease, or other commitment in
respect of which iExalt has not taken adequate steps to prevent such a default
from occurring.
Section 1.12 NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust, or other material contract, agreement, or instrument to which iExalt is a
party or to which any of its properties or operations are subject.
Section 1.13 GOVERNMENTAL AUTHORIZATIONS. iExalt has all licenses,
franchises, permits, and other governmental authorizations that are legally
required to enable it to conduct its business in all material respects as
conducted on the date hereof. Except for compliance with federal and state
securities and corporation laws, as hereinafter provided, no authorization,
approval, consent, or order of, or registration, declaration, or filing with,
any court or other governmental body is required in connection with the
execution and delivery by iExalt of this Agreement and the consummation by
iExalt of the transactions contemplated hereby.
Section 1.14 COMPLIANCE WITH LAWS AND REGULATIONS. iExalt has complied
with all applicable statutes and regulations of any federal, state, or other
governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations, properties,
assets, or condition of iExalt or except to the extent that noncompliance would
not result in the incurrence of any material liability for iExalt.
Section 1.15 INSURANCE. All the insurable properties of iExalt are
insured in their full replacement value against all risks customarily insured
against by persons operating similar properties in localities where such
properties are located and under valid and enforceable policies by insurers of
recognized responsibility. Such policy or policies containing substantially
equivalent coverage will be outstanding on the date of consummation of the
transactions contemplated by this Agreement.
Section 1.16 APPROVAL OF AGREEMENT. The board of directors of iExalt has
authorized the execution and delivery of this Agreement by iExalt, has approved
the transactions contemplated hereby, and approved the submission of this
Agreement and the transactions contemplated hereby to the
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shareholders of iExalt for their approval with the recommendation that the
reorganization be accepted.
Section 1.17 MATERIAL TRANSACTIONS OR AFFILIATIONS. Set forth in the
iExalt Schedules is a description of every material contract, agreement, or
arrangement between iExalt and any predecessor and any person who was at the
time of such contract, agreement, or arrangement an officer, director, or person
owning of record, or known by iExalt to own beneficially, 5% or more of the
issued and outstanding common stock of iExalt and which is to be performed in
whole or in part after the date hereof or which was entered into not more than
three years prior to the date hereof. In all of such transactions, the amount
paid or received, whether in cash, in services, or in kind, is, had been during
the full term thereof, and is required to be during the unexpired portion of the
term thereof, no less favorable to iExalt than terms available from otherwise
unrelated parties in arm's length transactions. Except as disclosed in the
iExalt Schedules or otherwise disclosed herein, no officer, director, or 5%
shareholder of iExalt has, or has had since inception of iExalt, any interest,
direct or indirect, in any material transaction with iExalt. There are no
commitments by iExalt, whether written or oral, to lend any funds to, borrow any
money from, or enter into any other material transaction with, any such
affiliated person.
Section 1.18 LABOR RELATIONS. iExalt has not had a work stoppage resulting
from labor problems. To the knowledge of iExalt, no union or other collective
bargaining organization is organizing or attempting to organize any employee of
iExalt.
Section 1.19 IEXALT SCHEDULES. iExalt has delivered to Sunbelt the
following schedules, which are collectively referred to as the "iExalt
Schedules" and which consist of separate schedules dated as of the date of
execution of this Agreement and instruments and data as of such date, all
certified by the chief executive officer of iExalt as complete, true, and
correct:
(a) a schedule containing complete and correct copies of the
certificate of incorporation, as amended, and bylaws of iExalt in effect
as of the date of this Agreement;
(b) a schedule containing the financial statements of iExalt
identified in paragraph 1.04(c);
(c) a schedule containing the federal income tax returns of iExalt
identified in paragraph 1.04(c);
(d) a schedule containing a list indicating the name and address of
each shareholder of iExalt together with the number of shares owned by him
or her;
(e) a schedule containing a description of all real property owned
by iExalt, together with a description of every mortgage, deed of trust,
pledge, lien, agreement, encumbrance, claim, or equity interest of any
nature whatsoever in such real property;
(f) a schedule containing true and correct copies of all contracts,
agreements, or other instruments to which iExalt is a party or by which it
or its properties are bound, together with a description of all contracts,
leases, agreements, and other instruments, whether or not deemed material,
including oral agreements, to which iExalt is a party or by which it or
its properties are bound, specifically including all contracts,
agreements, or arrangements referred to in section 1.17;
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(g) copies of all licenses, permits, and other governmental
authorizations (or requests or applications therefor) pursuant to which
iExalt carries on or proposes to carry on its business (except those
which, in the aggregate, are immaterial to the present or proposed
business of iExalt);
(h) a schedule listing the accounts receivable and notes and other
obligations receivable of iExalt as of July 31, 1999, or that arose
thereafter other than in the ordinary course of business of iExalt,
indicating the debtor and amount, and classifying the accounts to show in
reasonable detail the length of time, if any, overdue, and stating the
nature and amount of any refunds, set offs, reimbursements, discounts, or
other adjustments which are in the aggregate material and due to or
claimed by such creditor;
(i) a schedule listing the accounts payable and notes and other
obligations payable of iExalt as of July 31, 1999, or that arose
thereafter other than in the ordinary course of the business of iExalt,
indicating the creditor and amount, classifying the accounts to show in
reasonable detail the length of time, if any, overdue, and stating the
nature and amount of any refunds, setoffs, reimbursements, discounts, or
other adjustments, which in the aggregate are material and due or payable
to iExalt respecting such obligations;
(j) a schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets, or
condition of iExalt since July 31, 1999, required to be provided pursuant
to section 1.07 hereof;
(k) a schedule containing a copy of the board of directors' and
shareholders' minutes of iExalt since inception; and
(l) a schedule setting forth any other information, together with
any required copies of documents, required to be disclosed in the iExalt
Schedules by sections 1.01 through 1.18.
iExalt shall cause the iExalt Schedules and the instruments and data
delivered to Sunbelt hereunder to be updated after the date hereof up to and
including the Closing Date.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF IEXALT SHAREHOLDERS
As an inducement to, and to obtain reliance of Sunbelt, the iExalt
Shareholders represent and warrant as follows:
Section 2.01 OWNERSHIP OF IEXALT SHARES. Each iExalt shareholder is, to
the best of the iExalt Principals' knowledge, the legal and beneficial owner of
the number of iExalt shares set forth opposite its name at the foot of this
agreement, free and clear of any claims, charges, equities, liens, security
interests, and encumbrances whatsoever, and each such shareholder has full
right, power, and authority to transfer, assign, convey, and deliver its iExalt
shares; and delivery of such shares at the closing will convey to Sunbelt good
and marketable title to such shares free and clear of any claims, charges,
equities, liens, security interests, and encumbrances whatsoever.
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ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF
SUNBELT AND SUNBELT PRINCIPAL
As an inducement to, and to obtain the reliance of iExalt and the iExalt
Shareholders, Sunbelt and the Sunbelt Principal make the following
representations and warranties, as modified by the Sunbelt Schedules (as
hereinafter defined), which Sunbelt represents and warrants as accurate and
complete in all material respects:
Section 3.01 ORGANIZATION. Sunbelt is a corporation duly organized,
validly existing, and in good standing under the laws of the state of Nevada,
and has the corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, and there is no
jurisdiction in which it is not qualified in which the character and location of
the assets owned by it or the nature of the business transacted by it requires
qualification. Included in the Sunbelt Schedules (as hereinafter defined) are
complete and correct copies of the articles of incorporation and bylaws of
Sunbelt as in effect on the date hereof. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated hereby
will not, violate any provision of Sunbelt's articles of incorporation or
bylaws. Sunbelt has taken all action required by law, its articles of
incorporation, its bylaws, or otherwise to authorize the execution and delivery
of this Agreement, and Sunbelt has full power, authority, and legal right and
has taken all action required by law, its articles of incorporation, bylaws, or
otherwise to consummate the transactions herein contemplated.
Section 3.02 CAPITALIZATION. Sunbelt's authorized capitalization consists
of 100,000,000 shares of common stock, par value $.001, of which 24,805,000
shares are issued and outstanding. All issued and outstanding shares are legally
issued, fully paid, and non-assessable and not issued in violation of the
pre-emptive or other rights of any person.
Section 3.03 SUBSIDIARIES. Sunbelt does not have any subsidiaries and does
not own, beneficially or of record, any shares of any other corporation.
Section 3.04 FINANCIAL STATEMENTS.
(a) Included in the Sunbelt Schedules are the audited balance sheets
of Sunbelt as of August 31, 1998 and 1997, and the related audited
statements of operations, stockholders' equity, and changes in financial
position for the two fiscal years ended August 31, 1998 together with the
notes to such statements and the opinion of Jones, Jensen & Company,
independent certified public accountants, with respect thereto, and the
unaudited balance sheet of Sunbelt as of May 31, 1999, and the related
statement of operations for the nine months ended May 31, 1999;
(b) All such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved. The Sunbelt balance sheets present fairly
as of their respective dates the financial condition of Sunbelt. Sunbelt
did not have as of the date of any such Sunbelt balance sheet, except as
and to the extent reflected or reserved against therein, any liabilities
or obligations (absolute or contingent) which should be reflected in a
balance sheet or the notes thereto prepared in accordance with generally
accepted accounting principles, and all assets reflected therein are
properly reported and present fairly the value of the assets of Sunbelt,
in accordance with generally accepted accounting principles. The
statements of operations, stockholders' equity, and changes in financial
position reflect fairly the
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information required to be set forth therein by generally accepted
accounting principles.
(c) Sunbelt has no liabilities with respect to the payment of any
federal, state, county, local, or other taxes (including any deficiencies,
interest, or penalties), except for taxes accrued but not yet due and
payable.
(d) Sunbelt has filed all state, federal, or local income tax
returns required to be filed by it from inception to the date hereof.
Included in the Sunbelt Schedules are true and correct copies of the
federal income tax returns of Sunbelt filed since the date of inception.
None of such federal income tax returns have been examined by the Internal
Revenue Service. Each of such income tax returns reflects the taxes due
for the period covered thereby, except for amounts which, in the
aggregate, are immaterial.
(e) The books and records, financial and otherwise, of Sunbelt are
in all material respects complete and correct and have been maintained in
accordance with good business and accounting practices.
(f) Sunbelt has good and marketable title to its assets and, except
as set forth in the Sunbelt Schedules or the Financial Statements of
Sunbelt or the notes thereto, has no material contingent liabilities,
direct or indirect, matured or unmatured.
Section 3.05 INFORMATION. The information concerning Sunbelt set forth in
this Agreement and the Sunbelt Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading.
Section 3.06 OPTIONS OR WARRANTS. There are no existing options, warrants,
calls, or commitments of any character relating to authorized and unissued stock
of Sunbelt.
Section 3.07ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as described
herein or in the Sunbelt Schedules, since the date of the most recent Sunbelt
balance sheet, there has not been any change in the business, operations,
properties, assets, or condition of Sunbelt (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets, or condition of Sunbelt.
Section 3.08 TITLE AND RELATED MATTERS. Sunbelt has good and marketable
title to all of its properties, interest in properties, and assets, real and
personal, which are reflected in the Sunbelt balance sheet or acquired after
that date (except properties, interest in properties, and assets sold or
otherwise disposed of since such date in the ordinary course of business), free
and clear of all liens, pledges, charges, or encumbrances except (a) statutory
liens or claims not yet delinquent; (b) such imperfections of title and
easements as do not and will not materially detract from or interfere with the
present or proposed use of the properties subject thereto or affected thereby or
otherwise materially impair present business operations on such properties; and
(c) as described in the Sunbelt Schedules.
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Section 3.09 LITIGATION AND PROCEEDINGS. There are no actions, suits, or
proceedings pending or, to the knowledge of Sunbelt, threatened by or against or
affecting Sunbelt, at law or in equity, before any court or other governmental
agency or instrumentality, domestic or foreign, or before any arbitrator of any
kind. Sunbelt does not have any knowledge of any default on its part with
respect to any judgment, order, writs, injunction, decree, award, rule, or
regulation of any court, arbitrator, or governmental agency or instrumentality.
Section 3.10 CONTRACTS. Sunbelt is not a party to any material contract,
agreement, or other commitment.
Section 3.11 NO CONFLICT WITH OTHER INSTRUMENTS. The consummation of the
transactions contemplated by this Agreement will not result in the breach of any
term or provision of, or constitute a default under, any indenture, mortgage,
deed of trust, or other material agreement or instrument to which Sunbelt is a
party or to which it or any of its assets or operations are subject.
Section 3.12 GOVERNMENTAL AUTHORIZATIONS. Sunbelt has all licenses,
franchises, permits, and other government authorizations, that are legally
required to enable it to conduct its business operations in all material
respects as conducted on the date hereof. Except for compliance with federal and
state securities or corporation laws, as hereinafter provided, no authorization,
approval, consent, or order of, or registration, declaration, or filing with,
any court or other governmental body is required in connection with the
execution and delivery by Sunbelt of this Agreement and the consummation by
Sunbelt of the transactions contemplated hereby.
Section 3.13 COMPLIANCE WITH LAWS AND REGULATIONS. During the past two
years, Sunbelt has complied with all applicable statutes and regulations of any
federal, state, or other applicable governmental entity or agency thereof,
except to the extent that noncompliance would not materially and adversely
affect the business, operations, properties, assets, or conditions of Sunbelt or
except to the extent that noncompliance would not result in the incurrence of
any material liability.
Section 3.14 INSURANCE. Sunbelt owns no insurable properties and carries
no casualty or liability insurance.
Section 3.15 APPROVAL OF AGREEMENT. The board of directors of Sunbelt has
authorized the execution and delivery of this Agreement by Sunbelt and has
approved this Agreement and the transactions contemplated hereby.
Section 3.16 MATERIAL TRANSACTIONS OF AFFILIATIONS. Set forth in the
Sunbelt Schedules is a description of every material contract, agreement, or
arrangement between Sunbelt and any predecessor and any person who was at the
time of such contract, agreement, or arrangement an officer, director, or person
owning of record, or known by Sunbelt to own beneficially, 5% or more of the
issued and outstanding common stock of Sunbelt and which is to be performed in
whole or in part after the date hereof or which was entered into not more than
three years prior to the date hereof. In all of such transactions, the amount
paid or received, whether in cash, in services, or in kind, is, had been during
the full term thereof, and is required to be during the unexpired portion of the
term thereof, no less favorable to Sunbelt than terms available from otherwise
unrelated parties in arm's length transactions. Except as disclosed in the
Sunbelt Schedules or otherwise disclosed herein, no officer, director, or 5%
shareholder of Sunbelt has, or has had since inception of Sunbelt, any interest,
direct or indirect, in any material transaction with
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Sunbelt. There are no commitments by Sunbelt, whether written or oral, to lend
any funds to, borrow any money from, or enter into any other material
transaction with, any such affiliated person.
Section 3.17 EMPLOYMENT MATTERS. Sunbelt has no employees other than its
executive officers.
Section 3.18 PERIODIC REPORTS. Sunbelt has made all filings under the
Securities Exchange Act of 1934, as amended, for the period from May 31, 1998 to
the present, and all such filings are accurate and complete in all material
respects. There have been no material changes in the business, or assets of
Sunbelt since May 31, 1999.
Section 3.19 SUNBELT SCHEDULES. Sunbelt has delivered to iExalt the
following schedules, which are collectively referred to as the "Sunbelt
Schedules," which are dated the date of this Agreement, all certified by an
officer to be complete, true, and accurate:
(a) a schedule containing complete and accurate copies of the
articles of incorporation and bylaws of Sunbelt as in effect as of the
date of this Agreement;
(b) a schedule containing a copy of the federal income tax returns
of Sunbelt identified in paragraph 3.04(d);
(c) a schedule setting forth the description of any material adverse
change in the business, operations, property, assets, or condition of
Sunbelt since May 31, 1999, required to be provided pursuant to section
3.07 hereof; and
(d) a schedule setting forth any other information, together with
any required copies of documents, required to be disclosed in the Sunbelt
Schedules by sections 3.01 through 3.18.
Sunbelt shall cause the Sunbelt Schedules and the instruments and data
delivered to iExalt hereunder to be updated after the date hereof up to and
including the Closing Date.
ARTICLE IV
[RESERVED]
ARTICLE V
PLAN OF EXCHANGE
Section 5.01 THE EXCHANGE. On the terms and subject to the conditions set
forth in this Agreement, on the Closing Date (as defined in Section 5.04), each
of the iExalt Shareholders hereby agrees to assign, transfer, and deliver to
Sunbelt, free and clear of all liens, pledges, encumbrances, charges,
restrictions, or known claims of any kind, nature, or description, the number of
shares of common stock of iExalt set after his signature at the foot of this
Agreement, in the aggregate constituting all of the issued and outstanding
shares of common stock of iExalt, or 18,393,666 shares, and Sunbelt agrees to
acquire such shares on such date by issuing and delivering in exchange therefor
solely shares of Sunbelt restricted common stock, par value $0.001, in the
amount of one (1) share of Sunbelt for each outstanding share of iExalt, after
giving effect to a reverse split of the Sunbelt stock described in Section 6.01
below, or an aggregate amount of 18,393,666 shares of Sunbelt common stock, or
approximately 88% of the 20,874,166
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shares of Sunbelt common stock to be issued and outstanding on the Closing Date
(after such reverse split) (the "Exchanged Sunbelt Stock.") At the Closing, each
of the iExalt Shareholders shall, on surrender of his certificate or
certificates representing such iExalt shares to the registrar and transfer
agent, be entitled to receive a certificate or certificates evidencing shares of
the Exchanged Sunbelt Stock as provided herein. Upon the consummation of the
transaction contemplated herein, all shares of capital stock of iExalt shall be
held by Sunbelt.
Section 5.02 ANTI-DILUTION. The number of shares of Exchanged Sunbelt
Stock shall be appropriately adjusted to take into account any other stock
split, stock dividend, reverse stock split, recapitalization, or similar change
in the Sunbelt common stock, par value $0.001, which may occur between the date
of the execution of this Agreement and the date of delivery of such shares.
Section 5.03 APPOINTMENT OF NEW DIRECTORS. In connection with the Closing
of the transactions contemplated by this Agreement, the existing directors of
Sunbelt shall resign, seriatim, and shall appoint the designers of iExalt as
directors to fill the vacancies created thereby, to serve until the next annual
stockholders' meeting of Sunbelt and their successors shall have been elected
and qualified.
Section 5.04 CLOSING. The closing ("Closing") of the transactions
contemplated by this Agreement shall be on a date and at such time as the
parties may agree ("Closing Date"), within ten (10) days from the date of
Sunbelt Shareholders' meeting, described in Section 6.01 below. Such Closing
shall take place at a mutually agreeable time and place.
Section 5.05 CLOSING EVENTS. At the Closing, each of the respective
parties hereto shall execute, acknowledge, and deliver (or shall cause to be
executed, acknowledged, and delivered) any and all certificates, opinions,
financial statements, schedules, agreements, resolutions, rulings, or other
instruments required by this Agreement to be so delivered at or prior to the
Closing, together with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby.
Section 5.06 TERMINATION.
(a) This Agreement may be terminated by the board of directors of
either Sunbelt or iExalt at any time prior to the Closing Date if:
(i) there shall be any actual or threatened action or
proceeding before any court or any governmental body which shall
seek to restrain, prohibit, or invalidate the transactions
contemplated by this Agreement and which, in the judgment of such
board of directors, made in good faith and based on the advice of
its legal counsel, makes it inadvisable to proceed with the exchange
contemplated by this Agreement;
(ii) any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is required
to consummate such transactions or in the judgment of such board of
directors, made in good faith and based on the advice of counsel,
there is substantial likelihood that any such approval will not be
obtained or will be obtained only on a condition or conditions which
would be unduly burdensome, making it inadvisable to proceed with
the exchange; or
(iii) there shall have been any change after the date of the
latest balance sheets of Sunbelt and iExalt, respectively, in the
assets, properties, business, or financial
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condition of Sunbelt or iExalt, which could have a materially
adverse affect on the value of the business of Sunbelt or iExalt
respectively, except any changes disclosed in the Sunbelt or iExalt
Schedules, as the case may be, dated as of the date of execution of
this Agreement.
In the event of termination pursuant to this paragraph (a) of section 5.06, no
obligation, right, or liability shall arise hereunder, and each party shall bear
all of the expenses incurred by it in connection with the negotiation, drafting,
and execution of this Agreement and the transactions herein contemplated.
(b) This Agreement may be terminated at any time prior to the
Closing by action of the board of directors of Sunbelt if iExalt shall
fail to comply in any material respect with any of its covenants or
agreements contained in this Agreement or if any of the representations or
warranties of iExalt contained herein shall be inaccurate in any material
respect. If this Agreement is terminated pursuant to this paragraph (b) of
section 5.06 this Agreement shall be of no further force or effect, and no
obligation, right, or liability shall arise hereunder, except that iExalt
shall bear its own costs as well as the costs incurred by Sunbelt in
connection with the negotiation, preparation, and execution of this
Agreement and qualifying the offer and sale of securities contemplated
hereby for exemption from the registration requirements of state and
federal securities laws.
(c) This Agreement and the Plan of Exchange may be terminated at any
time prior to the Closing by action of the board of directors of iExalt if
Sunbelt shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of the
representations or warranties of Sunbelt contained herein shall be
inaccurate in any material respect. If this Agreement is terminated
pursuant to this paragraph (c) of section 5.06, this Agreement shall be of
no further force or effect, and no obligation, right, or liability shall
arise hereunder, except that Sunbelt shall bear its own costs as well as
the costs of iExalt incurred in connection with the negotiation,
preparation, and execution of this Agreement.
ARTICLE VI
SPECIAL COVENANTS
Section 6.01 STOCKHOLDER MEETING OF SUNBELT. As soon as practicable
following the execution of this Agreement, and prior to the Closing, Sunbelt
shall call a special meeting of its shareholders to approve the following
proposals:
(a) the authorization and approval of this Agreement and the
transactions contemplated thereby;
(b) the election of Jack Tompkins, Hunter Carr, Don Sapaugh,
Jonathan C. Gilchrist, and Morris Chapman, as directors of Sunbelt;
(c) the adoption of amended and restated articles of incorporation
of Sunbelt, to change its name to "iExalt, Inc." or such name as may be
deemed appropriate, to change the authorized capitalization of Sunbelt,
and to make such other changes as deemed appropriate by the parties;
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(d) to approve a recapitalization, or reverse split, of the issued
and outstanding shares of Sunbelt, for the purpose of reducing the issued
and outstanding shares of Sunbelt to approximately 2,480,500 shares;
(e) to approve Sunbelt's 1998 Stock Option Plan and Directors' Stock
Option Plan; and
(f) to take such other actions as the directors may determine are
appropriate.
Section 6.02 ACCESS TO PROPERTIES AND RECORDS. Sunbelt and iExalt will
each afford to the officers and authorized representatives of the other full
access to the properties, books, and records of Sunbelt or iExalt as the case
may be, in order that each may have full opportunity to make such reasonable
investigation as it shall desire to make of the affairs of the other, and each
will furnish the other with such additional financial and operating data and
other information as to the business and properties of Sunbelt or iExalt, as the
case may be, as the other shall from time to time reasonably request.
Section 6.03 DELIVERY OF BOOKS AND RECORDS. At the Closing, Sunbelt shall
deliver to iExalt the originals of the corporate minute books, books of account,
contracts, records, and all other books or documents of Sunbelt now in the
possession of Sunbelt or its representatives.
Section 6.04 SPECIAL COVENANTS AND REPRESENTATIONS REGARDING THE EXCHANGED
SUNBELT STOCK. The consummation of this Agreement and the transactions herein
contemplated, including the issuance of the Exchanged Stock to the shareholders
of iExalt as contemplated hereby, constitutes the offer and sale of securities
under the Securities Act and applicable state statutes. Such transaction shall
be consummated in reliance on exemptions from the registration and prospectus
delivery requirements of such statutes which depend, INTER ALIA, upon the
circumstances under which the iExalt shareholders acquire such securities. In
connection with reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing, iExalt shall cause
to be delivered, and the shareholders shall deliver to Sunbelt, letters of
representation in the form attached hereto as Exhibit "A."
Section 6.05 THIRD PARTY CONSENTS AND CERTIFICATES. Sunbelt and iExalt
agree to cooperate with each other in order to obtain any required third party
consents to this Agreement and the transactions herein and therein contemplated.
Section 6.06 ACTIONS PRIOR TO CLOSING.
(a) From and after the date of this Agreement until the Closing Date
and except as set forth in the Sunbelt or iExalt Schedules or as permitted
or contemplated by this Agreement, Sunbelt and iExalt respectively, will
each:
(i) carry on its business in substantially the same manner as
it has heretofore;
(ii) maintain and keep its properties in states of good repair
and condition as at present, except for depreciation due to ordinary
wear and tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable
in amount and in scope of coverage to that now maintained by it;
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(iv) perform in all material respects all of its obligation
under material contracts, leases, and instruments relating to or
affecting its assets, properties, and business;
(v) use its best efforts to maintain and preserve its business
organization intact, to retain its key employees, and to maintain
its relationship with its material suppliers and customers; and
(vi) fully comply with and perform in all material respects
all obligations and duties imposed on it by all federal and state
laws and all rules, regulations, and orders imposed by federal or
state governmental authorities.
(b) From and after the date of this Agreement until the Closing
Date, neither Sunbelt nor iExalt will:
(i) make any change in their articles of incorporation or
bylaws, except as provided herein;
(ii) take any action described in section 1.07 in the case of
iExalt, or in section 3.07, in the case of Sunbelt (all except as
permitted therein or as disclosed in the applicable party's
schedules); or
(iii) enter into or amend any contract, agreement, or other
instrument of any of the types described in such party's schedules,
except that a party may enter into or amend any contract, agreement,
or other instrument in the ordinary course of business involving the
sale of goods or services.
Section 6.07 INDEMNIFICATION.
(a) iExalt and the iExalt Principals hereby agree to indemnify
Sunbelt and each of the officers, agents and directors of Sunbelt as of
the date of execution of this Agreement against any loss, liability,
claim, damage, or expense (including, but not limited to, any and all
expense whatsoever reasonably incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever), to which it or they may become subject arising out of or
based on any inaccuracy appearing in or misrepresentation made under
Article I of this Agreement. The indemnification provided for in this
paragraph shall survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement.
(b) Sunbelt and the Sunbelt Principal hereby agree to indemnify
iExalt and each of the officers, agents and directors of iExalt as of the
date of execution of this Agreement against any loss, liability, claim,
damage, or expense (including, but not limited to, any and all expense
whatsoever reasonably incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever),
to which it or they may become subject arising out of or based on any
inaccuracy appearing in or misrepresentation made under Article III of
this Agreement. The indemnification provided for in this paragraph shall
survive the Closing and consummation of the transactions contemplated
hereby and termination of this Agreement.
(c) All obligations under this Section shall terminate after
December 31, 1999.
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ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SUNBELT
The obligations of Sunbelt under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 7.01 ACCURACY OF REPRESENTATIONS. The representations and
warranties made by iExalt and the iExalt Shareholders in this Agreement were
true when made and shall be true at the Closing Date with the same force and
effect as if such representations and warranties were made at and as of the
Closing Date (except for changes therein permitted by this Agreement), and
iExalt and the iExalt Shareholders shall have performed or complied with all
covenants and conditions required by this Agreement to be performed or complied
with by iExalt and the iExalt Shareholders prior to or at the Closing. Sunbelt
shall be furnished with a certificate, signed by a duly authorized officer of
iExalt and dated the Closing Date, to the foregoing effect.
Section 7.02 OFFICER'S CERTIFICATES. Sunbelt shall have been furnished
with a certificate dated the Closing Date and signed by a duly authorized
officer of iExalt to the effect that no litigation, proceeding, investigation,
or inquiry is pending or, to the best knowledge of iExalt threatened, which
might result in an action to enjoin or prevent the consummation of the
transactions contemplated by this Agreement, or, to the extent not disclosed in
the iExalt Schedules, by or against iExalt which might result in any material
adverse change in any of the assets, properties, business, or operations of
iExalt.
Section 7.03 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business, or operations of iExalt nor shall any event have occurred which, with
the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business, or operations of iExalt.
Section 7.04 GOOD STANDING. Sunbelt shall have received a certificate of
good standing from the Secretary of State of the state of Texas or other
appropriate office, dated as of a date within ten days prior to the Closing Date
certifying that iExalt, Inc., is in good standing as a corporation in the state
of Texas and has filed all tax returns required to have been filed by it to date
and has paid all taxes reported as due thereon.
Section 7.05 OTHER ITEMS.
(a) Sunbelt shall have received uniform commercial code certificates
from the appropriate state of local authority or agency for each county
and state in which any personal property of iExalt with a value in excess
$5,000 is situated, dated as of the Closing Date, to the effect that there
are no liens on such personal property, other than those disclosed in the
iExalt Schedules.
(b) Sunbelt shall have received a shareholders list of iExalt
containing the name, address, and number of shares held by each iExalt
shareholder as of the date of Closing certified by an executive officer of
iExalt as being true, complete, and accurate.
(c) Sunbelt shall have received such further documents,
certificates, or instruments relating to the transactions contemplated
hereby as Sunbelt may reasonably request.
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ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF IEXALT
AND THE IEXALT SHAREHOLDERS
The obligations of iExalt and the iExalt Shareholders under this Agreement
are subject to the satisfaction, at or before the Closing Date, of the following
conditions:
Section 8.01 ACCURACY OF REPRESENTATIONS. The representations and
warranties made by Sunbelt in this Agreement were true when made and shall be
true as of the Closing Date (except for changes therein permitted by this
Agreement) with the same force and effect as if such representations and
warranties were made at and as of the Closing Date, and Sunbelt shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed or complied with by Sunbelt prior to or at the
Closing. iExalt shall have been furnished with a certificate, signed by a duly
authorized executive officer of Sunbelt and dated the Closing Date, to the
foregoing effect.
Section 8.02 STOCKHOLDER APPROVAL. The stockholders of Sunbelt shall have
approved this Agreement, the transactions contemplated hereby, and the other
matters described in Section 5.01.
Section 8.03 OFFICER'S CERTIFICATE. iExalt shall have been furnished with
a certificate dated the Closing Date and signed by a duly authorized executive
officer of Sunbelt to the effect that no litigation, proceeding, investigation,
or inquiry is pending or, to the best knowledge of Sunbelt threatened, which
might result in an action to enjoin or prevent the consummation of the
transactions contemplated by this Agreement.
Section 8.04 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business, or operations of Sunbelt nor shall any event have occurred which, with
the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business, or operations of Sunbelt.
Section 8.05 GOOD STANDING. iExalt shall have received a certificate of
good standing from the Secretary of State of the state of Nevada or other
appropriate office, dated as of a date within ten days prior to the Closing Date
certifying that Sunbelt is in good standing as a corporation in the state of
Nevada and has filed all tax returns required to have been filed by it to date
and has paid all taxes reported as due thereon.
Section 8.06 OTHER ITEMS.
(a) iExalt shall have received a shareholders list of Sunbelt,
current at least ten (10) days prior to Closing, containing the name,
address and number of shares held by each such Sunbelt Shareholder
certified by an executive officer of Sunbelt as being true, complete and
accurate.
(b) iExalt shall have received such further documents, certificates,
or instruments relating to the transactions contemplated hereby as iExalt
may reasonably request.
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ARTICLE IX
MISCELLANEOUS
Section 9.01 GOVERNING LAW. This Agreement shall be governed by, enforced,
and construed under and in accordance with the laws of the United States of
America and, with respect to matters of state law, with the laws of Nevada.
Section 9.02 NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to it or
sent by registered mail or certified mail, postage prepaid, or by prepaid
telegram addressed as follows:
If to Sunbelt, to: Sunbelt Exploration, Inc.
2612 East Kentucky Avenue
Salt Lake City, UT 84117
With copies to: James C. Lewis, Esq.
Lewis Law Offices
10 West 100 South, Suite 600
Salt Lake City, UT 84101
If to iExalt, to: iExalt, Inc.
4301 Windfern
Houston, Texas 77041
With copies to: Thomas C. Pritchard, Esq.
Brewer & Pritchard
1111 Bagby, Suite 2450
Houston, Texas 77002
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed, or
telegraphed.
Section 9.03 ATTORNEY'S FEES. In the event that any party institutes any
action or suit to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the breaching party or parties shall reimburse the
nonbreaching party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
Section 9.04 CONFIDENTIALITY. Each party hereto agrees with the other
parties that, unless and until the transactions contemplated by this Agreement
have been consummated, it and its representatives will hold in strict confidence
all data and information obtained with respect to another party or any
subsidiary thereof from any representative, officer, director, or employee, or
from any books or records or from personal inspection, os such other party, and
shall not use such data or information or disclose the same to others, except
(i) to the extent such data or information is published, is a matter of public
knowledge, or is required by law to be published; and (ii) to the extent that
such data or information must be used or disclosed in order to consummate the
transactions contemplated by this Agreement.
Section 9.05 SCHEDULES; KNOWLEDGE. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
18
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Section 9.06 THIRD PARTY BENEFICIARIES. This contract is solely between
Sunbelt and iExalt, and, except as specifically provided, no director, officer,
stockholder, employee, agent, independent contractor, or any other person or
entity shall be deemed to be a third party beneficiary of this Agreement.
Section 9.07 ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof, including
This Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations, or warranties, written or oral,
except as set forth herein.
Section 9.08 SURVIVAL; TERMINATION. The representations, warranties, and
covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated.
Section 9.09 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 9.10 AMENDMENT OR WAIVER. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether conferred herein,
at law, or in equity, and may be enforced concurrently herewith, and no waiver
by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be
waived or the time for performance hereof may be extended by a writing signed by
the party or parties for whose benefit the provision is intended.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
as of the date first above-written.
SUNBELT EXPLORATION, INC.
ATTEST:
___________________________________ By _________________________________
Secretary or Assistant Secretary Roger Lund, President
IEXALT, INC.
ATTEST:
___________________________________ By _________________________________
Secretary or Assistant Secretary Don Sapaugh, President
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AGREEMENT OF IEXALT PRINCIPALS
In witness whereof, the iExalt Principals hereby agrees to Article II of
the Agreement.
____________________________________
Hunter M. A. Carr
AGREEMENT OF SUNBELT PRINCIPAL
In witness whereof, the iExalt Principal hereby agrees to Article IV of
the Agreement.
____________________________________
Roger Lund
20
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IEXALT SHAREHOLDERS
NUMBER OF IEXALT CONVERTED TO NUMBER
IEXALT SHAREHOLDERS SHARES HELD OF SHARES OF SUNBELT
- ------------------- ------------------ ----------------------
_______________________________ 2,250,000 2,250,000
Hunter Carr
AGROSOURCE
_______________________________ 1,500,000 1,500,000
By: Duly Authorized Officer
_______________________________ 6,000,000 6,000,000
Jack Tompkins
_______________________________ 3,000,000 3,000,000
Morris Chapman
_______________________________ 2,250,000 2,250,000
Jonathan Gilchrist
_______________________________ 2,250,000 2,250,000
Don Sapaugh
_______________________________ 600,000 600,000
Randy Beck
_______________________________ 300,000 300,000
James Sneeringer
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NUMBER OF IEXALT CONVERTED TO NUMBER
IEXALT SHAREHOLDERS SHARES HELD OF SHARES OF SUNBELT
- ------------------- ------------------ ----------------------
_______________________________ 100,000 100,000
Stan Coffee
ICCT, INC.
_______________________________ 70,000 70,000
By: Duly Authorized Officer
_______________________________ 41,666 41,666
Tommy Waldrop
_______________________________ 12,000 12,000
Duane Ward
_______________________________ 12,000 12,000
Bruce Barbour
_______________________________ 6,000 6,000
Brian Lang
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CERTIFIED BUSINESS BROKERS
_______________________________ 2,000 2,000
By: Duly Authorized Officer
TOTAL 18,393,666 18,393,666
23
SUNBELT EXPLORATION, INC.
DIRECTORS' STOCK OPTION PLAN
ARTICLE I
PURPOSE
The purpose of the Sunbelt Exploration, INC. Directors' Stock Option
Plan (the "Plan") is to secure for Sunbelt Exploration, INC. and its
stockholders the benefits arising from stock ownership by its Directors. The
Plan will provide a means whereby eligible Directors may purchase shares of the
common stock, $.001 par value, of Sunbelt Exploration, INC. pursuant to options
granted in accordance with the Plan.
ARTICLE II
DEFINITIONS
The following capitalized terms used in the Plan shall have the
respective meanings set forth in this Article:
II.1 "Annual Grant Date" shall mean September 1 of each calendar year
commencing September 1, 1999 during the term of the Plan or the nearest
preceding business day if September 1 falls on a weekend or holiday.
II.2 "Board" shall mean the Board of Directors of Sunbelt Exploration,
INC.
II.3 "Chairman" shall mean the duly appointed Chairman of any standing
Committee of the Board.
II.4 "Change of Control" shall mean the occurrence of any of the
following acts:
(a) The acquisition by any person, entity or "group" within the
meaning ofss. 13(d) or 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of thirty (30%) percent or more of either
the then outstanding shares of the Company's Common Stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally in the election of directors; provided, however, the purchase by
underwriters in a firm commitment public offering of the Company's securities
shall not constitute a Change of Control; or
(b) If the individuals who serve on the Company's Board as of July
1, 1998 (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, any person who becomes a Director
subsequent to July 1, 1998, whose election or nomination for election by the
Company's stockholders was approved by a vote of at least a majority of the
Directors then compiling the Incumbent Board, shall for purposes of this
Agreement be considered as if such person was a member of the Incumbent Board;
or
(c) Approval by the Company's stockholders of: (i) a merger,
reorganization or consolidation whereby the Company's stockholders immediately
prior to such approval do not, immediately after consummation of such
reorganization, merger or consolidation own more than 50% of the combined voting
power entitled to vote generally in the election of directors of the surviving
entity's then outstanding voting securities; or (ii) liquidation or dissolution
of the Company; or (iii) the sale of all or substantially all of the assets of
the Company.
II.5 "COMMITTEE" shall mean a duly appointed standing committee of the
Board.
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II.6 "COMMON STOCK" shall mean the common stock, $.001 par value of the
Company.
II.7 "COMPANY" shall mean Sunbelt Exploration, Inc. and any of its
subsidiaries.
II.8 "DIRECTOR" shall mean any person who is a member of the Board of
the Company.
II.9 "ELIGIBLE DIRECTOR" shall be any Director who is not a full or
part-time employee of the Company.
II.10 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
II.11 "EXERCISE PRICE" shall mean the price per share at which an Option
may be exercised.
II.12 "FAIR MARKET VALUE" shall mean the closing price of a share of
Common Stock on the principal securities exchange on which such Common Stock is
traded on the last preceding business day prior to the date as to which Fair
Market Value is being determined, or on the next preceding business day on which
such Common Stock is traded, if no shares of Common Stock were traded on such
date. If the Common Stock is not traded on a securities exchange, Fair Market
Value shall be the closing sales price of the Common Stock as reported on the
NASDAQ-National Market System for the last preceding business day prior to the
date on which Fair Market Value is to be determined or on the next preceding
business day if the Common Stock was not traded on such date. If the Common
Stock is not quoted on the NASDAQ-National Market System, Fair Market Value
shall be the average of the high bid and low asked prices of the Common Stock in
the over-the-counter market on the last preceding business day prior to the day
as of which Fair Market Value is being determined, or on the next preceding day
on which such high bid and low asked prices were recorded. If the Common Stock
is not publicly traded, Fair Market Value shall be determined by the Board, in
good faith, but only during any period in which no equity security of the
Company's is registered pursuant to ss. 12 of the Exchange Act. In no case shall
Fair Market Value be less than the par value per share of the Common Stock. Fair
market value shall be determined without regard to any restriction other than a
restriction which, by its terms, will never lapse.
II.13 "GRANT DATE" shall mean the Initial Grant Date or the Annual Grant
Date as appropriate.
II.14 "INITIAL GRANT DATE" shall mean with respect to each Eligible
Director, the date such Eligible Director is first elected as a member of the
Board.
II.15 "Option" shall mean an Option, including a Reload Option, to
purchase shares granted pursuant to the Plan.
II.16 "Option Agreement" shall mean the written agreement described in
Article VI herein.
II.17 "Permanent Disability" shall mean the condition of an Eligible
Director who is unable to participate as a member of the Board by reason of any
medically determined physical or mental impairment which can be expected to
result in death or which can be expected to last for a continuous period of not
less than twelve (12) months.
II.18 "Purchase Price" shall be the Exercise Price multiplied by the
number of whole shares of Common Stock with respect to which an Option may be
exercised.
II.19 "Plan" shall mean this Sunbelt Exploration, Inc. Directors' Stock
Option Plan.
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II.20 "Reload Option" means an option granted to an Eligible Director
equal to the number of shares of Common Stock delivered by the Eligible Director
to pay for the exercise of an Option as more fully described in Article XIII -
RELOAD OPTIONS.
ARTICLE III
ADMINISTRATION
III.1 GENERAL. This Plan shall be administered by the Board in
accordance with the express provisions of this Plan, subject to the restrictions
contained inss.16 of the Exchange Act.
III.2 POWERS OF THE BOARD. The Board shall have full and complete
authority to adopt such rules and regulations and to make all such other
determinations not inconsistent with the Plan orss.16 of the Exchange Act (once
the Common Stock is registered pursuant toss.12 of the Exchange Act), as may be
necessary for the administration of the Plan.
III.3 SECTION 16 COMPLIANCE. It is the intention of the Company that the
Plan, and the administration of the Plan (once the Company's Common Stock is
registered pursuant toss.12 of the Exchange Act) comply in all respects
withss.16 of the Exchange Act and the rules and regulations promulgated
thereunder. If any Plan provision, or any aspect of the administration of the
Plan, is found not to be in compliance withss.16 of the Exchange Act, the
provision or administration shall be deemed null and void, and in all events the
Plan shall be construed in favor of its meeting the requirements of Rule 16b-3
promulgated under the Exchange Act.
ARTICLE IV
SHARES SUBJECT TO PLAN
Subject to adjustment in accordance with Articles IX and XII an
aggregate of 800,000 shares of Common Stock are reserved for issuance under the
Plan. Shares of Common Stock reserved under this Plan may be either authorized,
but unissued shares of Common Stock or reacquired shares of Common Stock. If an
Option, or any portion thereof, shall expire or terminate for any reason without
having been exercised in full, the unpurchased shares of Common Stock covered by
such Option shall be available for future grants of Options.
ARTICLE V
NON-DISCRETIONARY GRANTS
V.1 INITIAL GRANTS. On the Initial Grant Date, each Eligible Director
shall receive the grant of an Option to purchase 25,000 shares of Common Stock.
V.2 ANNUAL GRANTS. On each Annual Grant Date, each Eligible Director
shall receive the grant of an Option to purchase 25,000 shares of Common Stock.
V.3 COMMITTEE SERVICE. Each Eligible Director who serves on a Committee,
other than the Executive Committee, shall receive the grant of additional
Options to purchase 2,000 shares of Common Stock on the Initial Grant Date and
each Annual Grant Date, for each Committee he serves on as of the Grant date.
Service on the Executive Committee shall entitle an Eligible Director to receive
Options to purchase 3,000 shares of Common Stock on the Initial Grant Date and
each Annual Grant Date. The grant of Options pursuant to this Section 5.3 shall
be in addition to the grant of Options contained in Sections 5.1 and 5.2,
respectively.
V.4 CHAIRMAN OF COMMITTEE. Each Eligible Director who serves as a
Chairman of a Committee as of a Grant Date, other than the Chairman of the
Executive Committee, shall receive an additional grant of Options to
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purchase 1,500 shares of Common Stock for each Chairmanship on the Initial Grant
Date and each Annual Grant Date. Service as Chairman of the Executive Committee
shall entitle an Eligible Director to receive additional Options to purchase
2,500 shares of Common Stock on the Initial Grant Date and each Annual Grant
Date. The grant of Options pursuant to this Section 5.4 shall be in addition to
the grant of Options contained in Sections 5.1, 5.2 and 5.3, respectively.
ARTICLE VI
TERMS OF OPTION
Each Option shall be evidenced by a written Option Agreement executed by
the Company and the Eligible Director which shall specify the Grant Date, the
number of shares of Common Stock subject to the Option, the Exercise Price and
shall also include or incorporate by reference the substance of all of the
following provisions and such other provisions consistent with this Plan as the
Board may determine:
VI.1 TERM. The term of the Option shall be five (5) years from the Grant
Date of each Option, subject to earlier termination in accordance with Articles
VI and X of the Plan.
VI.2 RESTRICTION ON EXERCISE. No Option shall be exercisable until six
(6) months after the Grant Date, except in the case of the Eligible Director's
death or permanent disability, upon which events the Option will become
immediately exercisable. Thereafter, an Option, or any portion thereof, may be
exercised until the earlier of the expiration of the option's term or
termination of the Option in accordance with this Article VI.
VI.3 EXERCISE PRICE. The Exercise Price for each share of Common Stock
subject to an Option shall be the Fair Market Value of the Common Stock on the
date the Option was granted as determined in Section 2.12 herein.
VI.4 MANNER OF EXERCISE. An Option shall be exercised in accordance with
its terms, by delivery of a written notice of exercise to the Company and
payment of the full Purchase Price of the shares of Common Stock being
purchased. An Eligible Director may exercise an Option with respect to all or
less than all of the shares of Common Stock for which the Option may then be
exercised, but an eligible Director must exercise the Option in full shares of
Common Stock.
VI.5 PAYMENT. The Purchase Price pursuant to an Option or portion
thereof, may be paid:
(a) in United States dollars, in cash or by check, bank draft or
money order payable to the Company; or
(b) by delivery of shares of Common Stock owned by an Eligible
Director which has an aggregate Fair Market Value on the date of exercise equal
to the Purchase Price, subject to the provisions ofss.16(b) of the Exchange Act;
or
(c) to the extent authorized by the Board, or if specified in the
Option being exercised, by a promissory note from optionee to the Company, upon
such terms and conditions determined by the Board and secured by the Common
Stock issuable upon exercise of the Option; or
(d) by any combination of the above methods of payment.
VI.6 TRANSFERABILITY. No Option shall be transferable otherwise than by
will or the laws of descent and distribution, and an Option shall be exercisable
during the Eligible Director's lifetime only by the Eligible Director, his
guardian or legal representative.
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VI.7 TERMINATION OF MEMBERSHIP ON THE BOARD. If an Eligible Director's
membership on the Board terminates for any reason, an Option held on the date of
termination may be exercised in whole or in part at any time within one (1) year
after the date of such termination (but in no event after the actual expiration
of the term of the Option) and shall thereafter terminate.
ARTICLE VII
GOVERNMENT AND OTHER REGULATIONS
VII.1 DELIVERY OF COMMON STOCK. The obligation of the Company to issue
or transfer and deliver shares of Common Stock for exercised Options under the
Plan shall be subject to all applicable laws, regulations, rules, orders and
approvals which shall then be in effect.
VII.2 HOLDING OF STOCK AFTER EXERCISE OF OPTION. The Option Agreement
shall provide that the Eligible Director, by accepting such option, represents
and agrees, for the Eligible Director and his permitted transferees, that none
of the shares of Common Stock purchased upon exercise of the Option shall be
acquired with a view to any sale, transfer or distribution of the shares in
violation of the Securities Act of 1933, as amended (the "Act") and the person
exercising an Option shall furnish evidence satisfactory to that Company to that
effect, including an indemnification of the Company in the event of any
violation of the Act by such person.
ARTICLE VIII
WITHHOLDING TAX
The Company may, in its discretion, require an Eligible Director to pay
to the Company, at the time of exercise of an Option an amount that the Company
deems necessary to satisfy its obligations, if any, to withhold federal, state
or local income or other taxes (which for purposes of this Article VIII includes
an Eligible Director's FICA obligation) incurred by reason of such exercise.
When the exercise of an Option does not give rise to the obligation to withhold
federal income taxes on the date of exercise, the Company may, in its
discretion, require an Eligible Director to place shares of Common Stock
received upon exercise of the Option in escrow for the benefit of the Company
until such time as federal income tax withholding is required on amounts
included in the Eligible Director's gross income as a result of the exercise of
an Option. At such time, the Company, in its discretion, may require an Eligible
Director to pay to the Company an amount that the Company deems necessary to
satisfy its obligation to withhold federal, state or local taxes incurred by
reason of the exercise of the Option, in which case the shares of Common Stock
will be released from escrow upon such payment by an Eligible Director.
ARTICLE IX
ADJUSTMENTS
IX.1 PROPORTIONATE ADJUSTMENTS. If the outstanding shares of Common
Stock are increased, decreased, changed into or exchanged into a different
number or kind of shares of Common Stock or securities of the Company through
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, an appropriate and
proportionate adjustment shall be made to the maximum number and kind of shares
of Common Stock as to which Options may be granted under this Plan. A
corresponding adjustment changing the number or kind of shares of Common Stock
allocated to unexercised Options or portions thereof, which shall have been
granted prior to any such change, shall likewise be made. Any such adjustment in
the outstanding Options shall be made without change in the Purchase Price
applicable to the unexercised portion of the Option with a corresponding
adjustment in the Exercise Price of the shares of Common Stock covered by the
Option. Notwithstanding the foregoing, there shall be no
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adjustment for the issuance of shares of Common Stock on conversion of notes,
preferred stock or exercise of warrants or shares of Common Stock issued by the
Board for such consideration as the Board deems appropriate.
IX.2 DISSOLUTION OR LIQUIDATION. Upon the dissolution or liquidation of
the Company, or upon a reorganization, merger or consolidation of the Company
with one or more corporations as a result of which the Company is not the
surviving corporation, or upon a sale of substantially all of the property or
more than 80% of the then outstanding shares of Common Stock of the Company to
another corporation, the Company shall give to each Eligible Director at the
time of adoption of the plan for liquidation, dissolution, merger or sale either
(1) a reasonable time thereafter within which to exercise the Option prior to
the effective date of such liquidation or dissolution, merger or sale, or (2)
the right to exercise the Option as to an equivalent number of shares of Common
Stock of the corporation succeeding the Company or acquiring its business by
reason of such liquidation, dissolution, merger, consolidation or
reorganization.
ARTICLE X
AMENDMENT OR TERMINATION OF PLAN
X.1 AMENDMENTS. The Board may at any time amend or revise the terms of
the Plan, provided no such amendment or revision shall, unless appropriate
stockholder approval of such amendment or revision is obtained:
(a) materially increase the maximum number of shares of Common Stock
which may be sold pursuant to Options granted under the Plan;
(b) materially increase the benefits accruing to participants under
the Plan;
(c) materially modify the requirements as to eligibility for
participants in the Plan.
X.2 TERMINATION. The Board may suspend or terminate this Plan at any
time. This Plan, unless sooner terminated, shall terminate on the tenth (10th)
anniversary of its adoption by the Board. No Option may be granted under this
Plan, while this Plan is suspended or after it is terminated.
X.3 HOLDER OF CONSENT. No amendment, suspension or termination of the
Plan shall, without the consent of the holder of Options, alter or impair any
rights or obligations under any Option theretofore granted under the Plan.
ARTICLE XI
MISCELLANEOUS PROVISIONS
XI.1 PRIVILEGE OF STOCK OWNERSHIP. No Eligible Director entitled to
exercise any Option granted under the Plan shall have any of the rights or
privileges of a stockholder of the Company with respect to any shares of Common
Stock issuable upon exercise of an Option until certificates representing the
shares of Common Stock shall have been issued and delivered.
XI.2 PLAN EXPENSES. Any expenses incurred in the administration of the
Plan shall be borne by the Company.
XI.3 USE OF PROCEEDS. Payments received from an Eligible Director upon
the exercise of Options shall be used for general corporate purposes of the
Company.
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XI.4 GOVERNING LAW. The Plan has been adopted under the laws of the
State of Nevada. The Plan and all Options which may be granted hereunder and all
matters related thereto, shall be governed by and construed and enforceable in
accordance with the laws of the State of Nevada Delaware as it then exists.
XI.5 GENDER AND NUMBER. Except as otherwise indicated by the context,
reference to the masculine gender shall include the feminine gender, the plural
shall include the singular and the singular shall include the plural.
XI.6 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
ARTICLE XII
STOCKHOLDER APPROVAL AND EFFECTIVE DATE
The Plan shall be submitted for approval by the holders of the
outstanding voting stock of the Company within twelve (12) months from the date
the Plan is adopted by the Board; provided, however, that if such vote was not
solicited substantially in accordance with the rules and regulations, if any, in
effect under ss.14(a) of the Exchange Act, at the time of such vote, the Company
will furnish in writing to the holders of record of the securities entitled to
vote for the Plan, substantially the same information concerning the Plan which
would be required by the rules and regulations in effect under ss.14(a) of the
Exchange Act, as if proxies to be voted with respect to the approval or
disapproval of the Plan were then being solicited, on or prior to the date of
the first annual meeting of security holders held subsequent to the later of (i)
the first registration of an equity security under ss.12 of the Exchange Act; or
(ii) the acquisition of an equity security for which an exemption is claimed.
The Plan shall be deemed approved by the holders of the outstanding voting stock
of the Company by the affirmative vote of the holders of a majority of the
voting shares of the Company represented and voting at a duly held meeting at
which a quorum is present. Any Options granted under the Plan prior to obtaining
such stockholder approval shall be granted under the conditions that the Options
so granted (i) shall not be exercisable prior to such approval, and (ii) shall
become null and void if such stockholder approval is not obtained.
ARTICLE XIII
RELOAD OPTIONS
XIII.1 RELOAD OPTION. Whenever the optionee holding any Option
outstanding under the Plan (including Reload Options granted under this Article
XIII) exercises the Option and makes payment of the Exercise Price pursuant to
Section 6.5(b) by tendering Common Stock previously held by the optionee, then
the Company shall automatically grant a Reload Option for the number of shares
of Common Stock that is equal to the number of shares tendered by the optionee
on payment of the Exercise Price of the Option being exercised.
XIII.2 RELOAD OPTION EXERCISE PRICE. The Reload Option Exercise Price
per share shall be an amount equal to the Fair Market Value per share of the
Company's Common Stock determined as of the date of receipt by the Company of
the notice by optionee to exercise the Option.
XIII.3 TERM OF RELOAD OPTION. The exercise period of the Reload Option
shall expire, and the Reload Option shall no longer be exercisable, on the later
of (i) expiration date of the original surrendered Option, or (ii) one year from
the date of grant.
XIII.4 RESTRICTION ON EXERCISE. Any Reload Option granted under this
Article XIII shall vest immediately, but shall not be exercisable until the end
of six months after the date of its issuance, except in the case of the death or
permanent disability of the optionee, upon which event the Reload Option will
become immediately exercisable.
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XIII.5 OTHER TERMS OF RELOAD OPTIONS. All other terms of the Reload
Options granted hereunder shall be identical to the terms and conditions of the
original Option, the exercise of which gives rise to the grant of the Reload
Option.
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EXHIBIT 2.2
Sunbelt Exploration, INC.
1998 STOCK OPTION PLAN
ARTICLE I - PLAN
I.1 Purpose. This Plan is a plan for Employees (including, but not limited to
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
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.
I.2 Rule 16b-3 Plan. The Company is subject to the reporting 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.
I.3 Effective Date of Plan. The Plan shall be effective June 1, 1999 (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 voting in
person or by proxy at a duly held stockholders' meeting, or if the provisions of
the corporate charter, by-laws or applicable state law prescribes a greater
degree of stockholder approval for this action, the approval by the holders of
that percentage, at a duly held meeting 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.
II.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.
<PAGE>
II.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.
II.3 "Board of Directors" means the board of directors of the Company.
II.4 "Change in Control" shall mean and include the following transactions or
situations:
(1) 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.
(2) 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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
<PAGE>
importance, regardless of whether the Company is subject to such reporting
requirement.
II.5 "Code" means the Internal Revenue Code of 1986, as amended.
II.6 "Committee" means the Compensation Committee of the Board of Directors or
such other committee designated by the Board of Directors. The Committee shall
include at least two members who are Disinterested Persons.
II.7 "Company" means Sunbelt Exploration, INC.
II.8 "Consultant" means any person, including an advisor, engaged by the Company
or Affiliate to render services and who is compensated for such services.
II.9 "Disinterested Person" means a "disinterested person" as that term is
defined in Rule 16b-3 under the 1934 Act.
II.10 "Eligible Persons" shall mean, with respect to the Plan, those persons
who, at the time that an Award is granted, are (i) personnel or employees
(including, but not limited to, 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.
II.11 "Employee" means a person employed by the Company or any Affiliate to whom
an Award is granted.
II.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.
II.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.
II.14 "Nonqualified Option"means an option to purchase Stock granted under this
Plan other than an Incentive Option.
II.15 "Option" means both an Incentive Option and a Nonqualified Option granted
under this Plan to purchase shares of Stock.
II.16 "Option Agreement" means the written agreement by and between the Company
and an Eligible Person which sets out the terms of an Option.
II.17 "Outside Director"means a member of the Board of Directors serving on the
Committee who satisfies Section 162(m) of the Code.
<PAGE>
II.18 "Plan" means the Sunbelt Exploration, Inc. Stock Option Plan, as set out
in this document and as it may be amended from time to time.
II.19 "Plan Year" means the Company's fiscal year.
II.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.
II.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.
II.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.
II.23 "Restricted Stock Award" means an Award of Restricted Stock.
II.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.
II.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.
II.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.
II.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 this 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 of Directors may designate one or more
<PAGE>
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
IV.1 Authority to Grant Awards. The Committee may grant to those 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.
IV.2 Dedicated Shares. The total number of shares of Stock with respect to which
Awards may be granted under the Plan shall be 1,000,000 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.
IV.3 Non-transferability. Awards shall not be transferable by the 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.
IV.4 Requirements of Law. The Company shall not be required to 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
<PAGE>
pursuant thereto, to comply with any law or regulation of any governmental
authority.
IV.5 Changes in the Company's Capital Structure.
(1) 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.
(2) 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,
<PAGE>
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.
(3) 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.
(4) In each situation described in this Section 4.5, the Committee will make
similar adjustments, as appropriate, in outstanding Stock Appreciation Rights.
(5) 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.
IV.6 Election under Section 83(b) of the Code. No Employee shall 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
V.1 Type of Option. The Committee shall specify at the time of grant whether a
given Option shall constitute an Incentive Option or a Nonqualified Option.
Incentive Stock Options may only be granted to Employees.
V.2 Option Price. The price at which Stock may be purchased under 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.
V.3 Duration of Options and SARS. No Option or SAR shall be 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.
<PAGE>
V.4 Amount Exercisable -- Incentive Options. Each Option may be 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. 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.
V.5 Exercise of Options. Each Option shall be exercised by the 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:
(1) 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, or
(2) Stock at its Fair Market Value on the date of exercise, or
(3) an election to make a cashless exercise through a registered broker-dealer
(if approved in advance by the Committee), or
(4) 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
(5) 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
<PAGE>
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.
V.6 Stock Appreciation Rights. All Eligible Persons shall be 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.
V.7 Stock Appreciation Rights in Tandem with Options. Stock 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.
V.8 Conditions of Stock Appreciation Rights. All Stock 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.
V.9 Payment of Stock Appreciation Rights. The amount of payment 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.
V.10 Exercise on Termination of Employment. Unless it is expressly provided
otherwise in the Option or SAR agreement, Options and SAR granted to Employees
<PAGE>
shall terminate one day less than six 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.
V.11 Death. If, before the expiration of an Option or SAR, the 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.
V.12 Retirement. Unless it is expressly provided otherwise in the 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.
V.13 Disability. If, before the expiration of an Option or SAR, 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.
V.14 Substitution Options. Options may be granted under this Plan 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
<PAGE>
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.
V.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.
V.16 No Rights as Stockholder. No Eligible Person shall have any 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
VI.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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VI.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:
(1) 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);
(2) 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;
(3) 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;
(4) unless stated otherwise in the Restricted Stock Agreement,
(1) 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
(2) 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.
VI.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 Sunbelt Exploration 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.
VI.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.
VI.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,
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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.
VI.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
VII.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.
VII.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.
VII.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.
VII.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
<PAGE>
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:
(1) determine the Eligible Persons to whom and the time or times at which
Options or Awards will be made,
(2) determine the number of shares and the purchase price of Stock covered in
each Option or Award, subject to the terms of the Plan,
(3) determine the terms, provisions and conditions of each Option and Award,
which need not be identical,
(4) accelerate the time at which any outstanding Option or SAR may be exercised,
or Restricted Stock Award will vest,
(5) define the effect, if any, on an Option or Award of the death, disability,
retirement, or termination of employment of the Employee,
(6) prescribe, amend and rescind rules and regulations relating to
administration of the Plan, and
(7) 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
<PAGE>
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
X.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.
X.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.
X.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 or of the commission of a felony 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.
X.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
<PAGE>
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.
X.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.
X.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.
X.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.
X.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.
X.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
<PAGE>
establishing any other forms of incentive or other compensation for employees of
the Company or any Affiliate.
X.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.
X.11 Governing Law. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Nevada.
