DESCRIPTION: REGISTRANT'S EMPLOYEE STOCK OPTION PLAN (2000)
Ohio & Southwestern Energy Company, Inc.
EMPLOYEE STOCK OPTION PLAN
1. PURPOSE. The purpose of this Ohio & Southwestern Energy Company, Inc.
Employee Stock Option Plan ("Plan") is to further the growth and development of
Ohio & Southwestern Energy Company, Inc. ("Company") by providing through
ownership of stock of the Company, an incentive to officers and other key
employees who are in a position to contribute materially to the prosperity of
the Company, to increase such persons' interests in the Company's welfare, to
encourage them to continue their services to the Company or its subsidiaries, if
any, and to attract individuals of outstanding ability to enter the employment
of the Company or its subsidiaries.
2. INCENTIVE AND NON-QUALIFIED STOCK OPTIONS. Two types of options (referred to
herein as "options" without distinction between such two types) may be granted
under the plan: Options intended to qualify as incentive stock options
("incentive stock options") under Section 422 of the Internal Revenue Code of
1986, as amended ("Code"), and any successor statutes; and other options not
specifically authorized or qualified for favorable income tax treatment by the
Code ("non-qualified stock options").
3. ADMINISTRATION
3.1 ADMINISTRATION BY BOARD. Subject to Section 3.2, the Plan shall be
administered by the Board of Directors of the Company ("Board"). Subject to the
provisions of the Plan, the Board shall have authority to construe and interpret
the Plan, to promulgate, amend, and rescind rules and regulations relating to
its administration, from time to time to select from among the eligible
employees (as determined pursuant to Section 4) of the Company and its
subsidiaries those employees to whom options will be granted, to determine the
timing and manner of the grant of the options, to determine the exercise price,
the number of shares covered by and all of the terms of the options, to
determine the duration and purpose of leaves of absence which may be granted to
optionees without constituting termination of their employment for purposes of
the Plan, and to make all of the determinations necessary or advisable for
administration of the Plan. The interpretation and construction by the Board of
any provision of the Plan, or of agreement issued and executed under the Plan,
shall be final and binding upon all parties. No member of the Board shall be
liable for any action or determination undertaken or made in good faith with
respect to the Plan or any agreement executed pursuant to the Plan.
3.2 ADMINISTRATION BY COMMITTEE. The Board may, in its sole discretion, delegate
any or all of its administrative duties to a committee (the "Committee") of not
less than three individuals, to be appointed by and serve at the pleasure of the
Board. From time to time, the Board may increase or decrease (to not less than
three members) the size of the Committee, and add additional members to, or
remove members from, the Committee. The Committee shall act pursuant to a
majority vote, or the written consent of a majority of its members, and minutes
shall be kept of all of its meetings and copies thereof shall be provided to the
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Board. Subject to the provisions of the Plan and the directions of the Board,
the Committee may establish and follow such rules and regulations for the
conduct of its business, as it may deem advisable. No member of the Committee
shall be liable for any action or determination undertaken or made in good faith
with respect to the Plan or any agreement executed pursuant to the Plan.
4. ELIGIBILITY. Any employee (including any officer who is an employee) of the
Company or any of its subsidiaries shall be eligible to receive an option under
the Plan; provided, however, that no person who owns stock possessing more than
10% of the total combined voting power of all classes of stock of the Company or
any of its parent or subsidiary corporations shall be eligible to receive an
incentive stock option under the Plan unless at the time such option is granted
the option price (determined in the manner provided in Section 6.2) is at least
110% of the fair market value of the shares subject to the option and such
option by its terms is not exercisable after the expiration of five years from
the date such option is granted. An employee may receive more than one option
under the Plan.
5. SHARES SUBJECT TO OPTIONS. The stock available for grant of options under the
Plan shall be shares of the Company's authorized but unissued, or reacquired,
common stock. The aggregate number of shares that may be issued pursuant to
exercise of options granted under the Plan, as amended, shall not exceed
1,000,000 shares of common stock (subject to adjustment as provided in Section
6.13), including shares previously issued under the Plan. In the event that any
outstanding option under the Plan for any reason expires or is terminated, the
shares of common stock allocable to the unexercised portion of the option shall
again be available for options under the Plan as if no option had been granted
with respect to such shares.
6. TERMS AND CONDITIONS OF OPTIONS. Options granted under the Plan shall be
evidenced by agreements (which need not be identical) in such form and
containing such provisions that are consistent with the Plan as the Board or the
Committee shall from time to time approve. Such agreements may incorporate all
or any of the terms hereof by reference and shall comply with and be subject to
the following terms and conditions:
6.1 NUMBER OF SHARES SUBJECT TO OPTION. Each option agreement shall specify
the number of shares subject to the option.
6.2 OPTION PRICE. The purchase price for the shares subject to any
option shall not be less than 100% of the fair market value of the shares of
common stock of the Company on the date the option is granted. In the case of an
incentive stock option granted to an employee who owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or any of its parent or subsidiary corporations, the option price shall
not be less than 110% of the fair market value of the shares of common stock of
the Company on the date the option is granted. For purposes of the Plan, the
"fair market value" of any share of common stock of the Company at any date
shall be (a) if the common stock is listed on an established stock exchange or
exchanges, the last reported sale price per share on the day prior to such date
on the principal exchange on which it is traded, or if no sale was made on such
day on such principal exchange, at the closing reported bid price on such day on
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such exchange, or (b) if the common stock is not then listed on an exchange, the
average of the closing bid and asked prices per share for the common stock in
the over-the-counter market as quoted on NASDAQ or the Over-the-Counter Bulletin
Board (OTC-BB) on the day prior to such date, or (c) if the common stock is not
then listed on an exchange or quoted NASDAQ or OTC-BB, an amount determined in
good faith by the Board or the Committee.
6.3 MEDIUM AND TIME OF PAYMENT. The purchase price for any shares
purchased pursuant to exercise of an option granted under the Plan shall be paid
in full upon exercise of the option in cash or by check.
6.4 TERM OF OPTION. No option shall be exercisable after the expiration
of the earliest of (a) five (5) years after the date of option is granted, (b)
two (2) months after the date of the optionee's employment with the Company and
its subsidiaries terminates if such termination is for any reason other than
permanent disability or death, or (c) one (1) year after the date the optionee's
employment with the Company and its subsidiaries terminates if such termination
is a result of death or permanent disability or if such termination is for any
reason other than death or permanent disability, and optionee dies within three
(3) months after the date of such termination; provided, however, that the
option agreement for any option may provide for shorter periods in each of the
foregoing instances. In the case of an incentive stock option granted to an
employee who owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any of its parent or subsidiary
corporations, the term set forth in (a), above, shall not be more than five
years after the date the option is granted. For the purposes of this Section
6.2, "permanent disability" shall mean a disability of the type defined in
Section 22(e)(3) of the Code.
6.5 EXERCISE OF OPTION. No option shall be exercisable during the
lifetime of an optionee by any person other than the optionee or at any time
prior to one year from the date the option is granted. Subject to the foregoing,
the Board or the Committee shall have the power to set the time or times within
which each option shall be exercisable and to accelerate the time or times of
exercise. The extent that an optionee has the right to exercise an option and
purchase shares pursuant thereto, the option may be exercised from time to time
by written notice to the Company, stating the number of shares being purchased
and accompanied by payment in full of the purchase price for such shares.
6.6 NO TRANSFER OF OPTION. No option shall be transferable by an optionee
otherwise than by will or the laws of descent and distribution.
6.7 RESTRICTION ON ISSUANCE OF SHARES. The issuance of options and
shares shall be subject to compliance with all of the applicable requirements of
law with respect to the issuance and sale of securities, including, without
limitation, any required qualification under the 2000 Colorado Corporate
Statutes.
6.8 INVESTMENT REPRESENTATION. Any optionee may be required, as a
condition of issuance of shares covered by his or her option, to represent that
the shares to be acquired pursuant to exercise of the option will be acquired
for investment and without a view to distribution thereof, and in such case, the
Company may place a legend on the certificate evidencing the shares reflecting
the fact that they were acquired for investment and cannot be sold or
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transferred unless registered under the Securities Act of 1933, as amended, or
unless counsel for the Company is satisfied that the circumstances of the
proposed transfer do not require such registration.
6.9 RIGHTS AS A SHAREHOLDER OR EMPLOYEE. An optionee or transferee of an
option shall have no right as a shareholder of the Company with respect to any
shares covered by any option until the date of the issuance of a share
certificate for such shares. No adjustment shall be made for dividends (ordinary
or extraordinary, whether cash, securities, or other property) or distributions
or other rights for which the record date is prior to the date such share
certificate is issued, except as provided in Section 6.13. Nothing in the Plan
or in any option agreement shall confer upon any employee any right to continue
in the employ of the Company or any of its subsidiaries or interfere in any way
with any right of the Company or any subsidiary to terminate the optionee's
employment at any time.
6.10 NO FRACTIONAL SHARES. In no event shall the Company be required to
issue fractional shares upon the exercise of an option.
6.11 EXERCISABILITY IN THE EVENT OF DEATH. In the event of the death of
the optionee, any option or unexercised portion thereof granted to the optionee,
to the extent exercisable by him or her on the date of death, may be exercised
by the optionee's personal representatives, heirs, or legatees subject to the
provisions of Section 6.4 hereof.
6.12 RECAPITALIZATION OR REORGANIZATION OF COMPANY OR ACQUISITION OF
MATERIAL ADDITIONAL OPERATING ASSETS. Except as otherwise provided herein,
appropriate and proportionate adjustments shall be made in the number and class
of shares subject to the Plan and to the option rights granted under the Plan,
and the exercise price of such option rights, in the event of a stock dividend
(but only on common stock), stock split, reverse stock split, recapitalization,
reorganization, merger, consolidation, separation, or like change in the
corporate or capital structure of the Company. In the event of a complete
liquidation of the Company or a merger, reorganization, or consolidation of the
Company with any other corporation in which the Company is not the surviving
corporation or the Company becomes a wholly-owned subsidiary of another
corporation, any unexercised options theretofore granted under the Plan shall be
deemed canceled unless the surviving corporation in any such merger,
reorganization, or consolidation elects to assume the options under the Plan or
to issue substitute options in place thereof; provided, however, that,
notwithstanding the foregoing, if such options would be canceled in accordance
with the foregoing, the optionee shall have the right, exercisable during a
ten-day period ending on the fifth day prior to such liquidation, merger, or
consolidation, to exercise the optionee's option in whole or in part without
regard to any installment exercise provisions in the optionee's option
agreement. To the extent that the foregoing adjustments relate to stock or
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securities of the Company, such adjustments shall be made by the Board or the
Committee, the determination of which in that respect shall be final, binding,
and conclusive, provided that each incentive stock option granted pursuant to
the Plan shall not be adjusted in a manner that causes its it to fail to
continue to qualify as an incentive stock option within the meaning of Section
422A of the Code. In the event that the Company shall issue additional common
shares for cash which cash shall be used to acquire additional assets to be used
in the business, including new businesses, or issue additional common shares in
exchange for assets to be used for the benefit of the shareholders, the number
of shares permitted to be granted pursuant to this Plan shall be increased from
the 1,000,000 referred to in paragraph 5, above to a number equal to 10% of the
outstanding common shares of the Company.
6.13 MODIFICATION, EXTENSION, AND RENEWAL OF OPTIONS. Subject to the
terms and conditions and within the limitations of the Plan, the Board or
Committee may modify, extend, or renew outstanding options granted under the
Plan, accept the surrender of outstanding options (to the extent not theretofore
exercised). The Board or Committee shall not, however, modify any outstanding
incentive stock option in any manner which would cause the option not to qualify
as an incentive stock option within the meaning of Section 422A of the Code.
Notwithstanding the foregoing, no modification of an option shall,
without the consent of the optionee, alter or impair any rights of the optionee
under the option.
6.14 OTHER PROVISIONS. Each option may contain such other terms,
provisions, and conditions not inconsistent with the Plan as may be determined
by the Board or Committee.
7. TERMINATION OR AMENDMENT OF THE PLAN. The Board may at any time terminate or
amend the plan; provided that, without approval of the shareholders of the
Company, there shall be, except by operation of the provisions of Section 6.12,
no increase in the total number of shares covered by the Plan, no change in the
class of persons eligible to receive options granted under the Plan, no
reduction in the exercise price of options granted under the Plan and no
extension of the latest date upon which options may be exercised; and provided
further that, without the consent of the optionee, no amendment may adversely
affect any then outstanding option or any unexercised portion thereof.
8. INDEMNIFICATION. In addition to such other rights of indemnification as they
may have as members of the Board or the Committee, the members of the Board or
the Committee administering the Plan shall be indemnified by the Company against
reasonable expense, including attorney's fees, actually and necessarily incurred
in connection with the defense of any action, suit, or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any action, suit, or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit, or proceeding that such member is liable
for negligence or misconduct in the performance of his duties, provided that
within 60 days after institution of any such action, suit, or proceeding, the
member shall in writing offer the Company the opportunity, at its own expense,
to handle and defend the same.
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9. TERM OF PLAN. The Plan was adopted by the Board on September 30, 2000. Unless
sooner terminated by the Board in its sole discretion, the Plan will expire on
September 30, 2010.
Ohio & Southwestern Energy Company, Inc.
By: ------------------------------------
Name: Ralph Shearing
Title: President
The undersigned controlling shareholder of Ohio & Southwestern Energy Company
("Company") acknowledges and endorses this Registrant's Employee Stock Option
Plan 2000. Furthermore, by signing in the space provided below Canarab
Acquisitions Corp. votes their 8,650,000 common shares of the Company in favour
of adopting the said Stock Option Plan (2000) and will irrevocably vote in
favour of the said Stock Option Plan (2000) at the next Annual General Meeting
of the Company, if shareholder approval of the plan is required under law.
Acknowledged and Agreed by:
Canarab Acquisitions Corp.
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Ralph Shearing (President)
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Abbas Salih (Director/Secretary)
