<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VPN COMMUNICATIONS CORPORATION
--------------------------------
(Exact name of Registrant as specified in its charter)
NEVADA 93-0943718
- ------------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3200 BRISTOL STREET, SUITE 725, COSTA MESA, CALIFORNIA 92626
---------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
2000 STOCK COMPENSATION PROGRAM
---------------------------------
(Full title of Plan)
E. G. MARCHI, PRESIDENT
VPN COMMUNICATIONS CORPORATION
3200 BRISTOL STREET, SUITE 725
COSTA MESA, CALIFORNIA 92626
----------------------------------
(Name and address of agent for service)
(714) 540-4444
---------------------------------
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed
Title of Amount Offering Maximum
Securities to be Price Aggregate Amount of
to be Registered per Share Offering Registration
Registered (1) (2) Price Fee
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 2,000,000 $0.06 $120,000.00 $31.68
$0.001 Per Share Shares
- ----------------------------------------------------------------------------------
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
as amended (the "Securities Act"), this Registration Statement also covers
an indeterminate number of additional shares that may be issuable in
connection with share splits, share dividends or similar transactions.
(2) Estimated pursuant to Rule 457(c) under the Securities Act, solely for
the purpose of calculating the registration fee, based on the average of
the bid and asked prices of the Company's common stock as reported within
five business days prior to the date of this filing.
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<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.
*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
*
*The document(s) containing the information specified in Part I of
Form S-8 will be sent or given to participants as specified by Rule
428(b)(1) promulgated by the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933 (the "Securities Act").
Such document(s) are not being filed with the Commission, but constitute
(along with the documents incorporated by reference into the Registration
Statement pursuant to Item 3 of Part II hereof) a prospectus that meets the
requirements of Section 10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents previously or concurrently filed by the Company
with the Commission are hereby incorporated by reference into this
Registration Statement:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998 (the "Annual Report") filed by the Company (SEC File
No. 33-19345-LA) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), with the Commission on May 19, 1999.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the Annual
Report referred to in (a) above.
(c) The Registrant hereby incorporates the description of the Registrant's
Common Stock by reference to section entitled Description of Common
Stock in the Registration Statement on Form S-18, as filed on December
24, 1987, Commission File No. 33-19345-LA.
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<PAGE>
All of the above documents and documents subsequently filed by the Company
with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act, prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed
incorporated by reference into this Registration Statement and to be a part
thereof from the date of the filing of such documents. Any statement
contained in the documents incorporated, or deemed to be incorporated, by
reference herein or therein shall be deemed to be modified or superseded
for purposes of this Registration Statement and the prospectus which is a
part hereof (the "Prospectus") to the extent that a statement contained
herein or therein or in any other subsequently filed document which also
is, or is deemed to be, incorporated by reference herein or therein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement and the Prospectus.
All documents incorporated by reference herein will be made available to
all participants in the 2000 Stock Compensation Program without charge,
upon written or oral request. Other documents required to be delivered to
participants pursuant to Rule 428(b)(1) under the Securities Act of 1933
are also available without charge, upon written or oral request. All
requests for documents shall be directed to:
E. G. Marchi, President
VPN Communications Corporation
3200 Bristol Street, Suite 725
Costa Mesa, California 92626
(714) 540-4444
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 7502, 751, and 752 of the Nevada General Corporation Law empower a
corporation to indemnify its directors and officers and to purchase
insurance with respect to liability arising out of their capacity or status
as directors and officers. However, these provisions do not eliminate or
limit the liability of the Company's directors and officers:
</Page>
<PAGE>
(a) for any breach of their duty of loyalty to the Company or its
stockholders;
(b) for any acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
(c) for any transaction from which they derived an improper personal
benefit.
Nevada law provides that the indemnification permitted by that law shall
not be deemed exclusive of any other rights to which the directors and
officers may be entitled under a corporation's By-Laws, any agreement, a
vote of stockholders or otherwise.
Under Nevada law, the directors have a fiduciary duty to the Company and
its shareholders that is not eliminated by these referenced Sections and,
in appropriate circumstances, equitable remedies such as injunctive or
other forms of nonmonetary relief may be available. In addition, each
director of the Company will continue to be subject to liability under
Nevada law for breach of their duty of loyalty for acts or omissions which
are found by a court of competent jurisdiction to be not in good faith or
that involve intentional misconduct, or knowing violations of law, for
actions leading to improper personal benefit to them, and for payment of
dividends or approval of stock repurchases or redemptions that are
prohibited by Nevada law. These referenced Sections do not affect a
director's or an officer's responsibilities under any other laws, such as
the federal securities laws.
Article V of the Company's By-Laws provides for indemnification of its
directors and officers.
At the present time, the Company does not have any officer-director
liability insurance, nor does the Company have indemnification agreements
with any of its directors, officers, employees or agents.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
See the Exhibit Index following the signature page in this Registration
Statement, which Exhibit Index is incorporated herein by reference.
ITEM 9. UNDERTAKINGS.
(a) The undersigned Company hereby undertakes:
</Page>
<PAGE>
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to the Registration Statement to: (i)
include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement; and notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be selected in the form of a prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration" table in the effective registration statement; and (iii)
include any material information with respect to the plan of distribution
not previously disclosed in the Registration Statement or any material
change to such information in the Registration Statement, provided however,
that provisions (i) and (ii) of this undertaking are inapplicable if the
information to be filed thereunder is contained in periodic reports filed
by the Company pursuant to the Exchange Act that are incorporated by
reference into the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) To remove from registration by means of post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise,
the Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and, is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than director, officer or
controlling person in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such
issue.
</Page>
<PAGE>
(c) The Company hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the Company's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
</Page>
<PAGE>
SIGNATURES
The Registrant: Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly
caused this registration statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of Costa Mesa, State of
California, on March 28, 2000.
VPN COMMUNICATIONS CORPORATION
By: /s/ E. G. Marchi
- ------------------------
E. G. Marchi, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
/s/ E. G. Marchi /s/ Theodore A. Bohrer
- --------------------------- --------------------------
E. G. Marchi Theodore A. Bohrer
Director and President Director, Secretary and
Principal Financial and
Accounting Officer
</Page>
<PAGE>
VPN COMMUNICATIONS CORPORATION
EXHIBIT INDEX
TO
FORM S-8 REGISTRATION STATEMENT
EXHIBIT NO. DESCRIPTION
4.1 2000 Stock Compensation Program
5.1 Opinion of Bryan Cave LLP
23.1 Consent of Schvaneveldt & Company
</Page>
<PAGE>
Exhibit 4.1
VPN COMMUNICATIONS CORPORATION
2000 STOCK COMPENSATION PROGRAM
1. Purpose.
--------
This 2000 Stock Compensation Program (the "Program") is intended
to secure for VPN Communications Corporation, a Nevada corporation (the
"Company"), its subsidiaries, and its stockholders the benefits arising
from ownership of the Company's common stock (the "Common Stock") by those
selected individuals of the Company and its subsidiaries, who will be
responsible for the future growth of such corporations. The Program is
designed to help attract and retain superior personnel for positions of
substantial responsibility with the Company and its subsidiaries, and to
provide individuals with an additional incentive to contribute to the
success of the corporations.
2. Elements of the Program.
------------------------
The Program is composed of various parts, and may be amended to
add or subtract parts as the Plan Administrators deem in the best interest
of the Company. The first part is the Stock Bonus Plan ("Bonus Plan") under
which (i) common stock shares are granted in lieu of cash to key employees
and consultants at their election as a bonus for performing duties
essential in the growth of the company in its' initial year. The second
part is the Stock Deferral Plan (Deferral) in which (i) payments of
compensation in the forms of shares of common stock (deferred payments) are
granted ; and (ii) rights to receive cash or shares of common stock based
on the amount of income deferred (up to 1/3 of gross income). The third
part is the Executive Stock Option Plan (the "Executive Plan") under which
(i) units representing the equivalent of shares of Common Stock (the
"Performance Shares") are granted; (ii) payments of compensation in the
form of shares of Common Stock (the "Stock Payments") are granted; and
(iii) rights to receive cash or shares of Common Stock as a bonus, based on
the performance of the executive or Key Independent Contractor (Bonus
Shares). The fourth part is the Stock Compensation Plan ("Compensation
Plan") under which the Plan Administrators are authorized to offer
employees and key independent contractors common stock in exchange for
compensation owed them in excess of the amount deferred under plan II and
any other debt owed them by the company.
3. Applicability of General Provisions.
------------------------------------
Unless any Plan specifically indicates to the contrary, all Plans
shall be subject to the General Provisions of the Program set forth below.
4. Administration of the Program and the Plans.
--------------------------------------------
The VPN Communications Corporation 2000 Stock Compensation
Program shall be administered, construed, governed and amended in
accordance with their respective terms. The Plans as elements of the
program shall be administered, construed, governed, and amended in
accordance with their respective terms.
Page 1
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<PAGE>
GENERAL PROVISIONS OF STOCK COMPENSATION PROGRAM
Article 1. Administration.
---------------
The Program shall be administered by the Company's
Board of Directors (the "Program Administrators"). The Program
Administrators shall hold meetings at such times and places as they may
determine and as necessary to approve all grants and other transactions
under the Program as required under Rule 16b-3(d) under the Exchange Act,
shall keep minutes of their meetings, and shall adopt, amend, and revoke
such rules and procedures as they may deem proper with respect to the
Program. Any action of the Program Administrators shall be taken by
majority vote or the unanimous written consent of the Program
Administrators.
Article 2. Authority of Program Administrators.
------------------------------------
Subject to the other provisions of this Program,
and with a view to effecting its purpose, the Program Administrators shall
have sole authority, in their sole and absolute discretion, (a) to construe
and interpret the Program; (b) to define the terms used herein; (c) to
determine the individuals to whom options and restricted shares and rights
to purchase shares shall be granted under the Program; (d) to determine the
time or times at which options and restricted shares, rights to purchase
shares or other awards shall be granted under the Program; (e) to determine
the number and type of shares or securities subject to each option,
restricted share, purchase right or other award, the duration of each award
granted under the Program, and the price of any share purchase; (f) to
determine all of the other terms and conditions of options, restricted
shares, purchase rights and other awards granted under the Program; and (g)
to make all other determinations necessary or advisable for the
administration of the Program and to do everything necessary or appropriate
to administer the Program; provided, however, that the Board shall
establish the price for all shares issued hereunder. All decisions,
determinations, and interpretations made by the Program Administrators
shall be binding and conclusive on all participants in the Program (the
"Plan Participants") and on their legal representatives, heirs and
beneficiaries.
Article 3. Maximum Number of Shares Subject to the Program.
------------------------------------------------
Subject to the provisions of Article 7, the
maximum aggregate number of shares of Common Stock subject to the Program
shall be two million (2,000,000) shares. Subject to the limitation
contained in Section 2 of Part 1, the maximum number of shares of common
stock issuable pursuant to the Program to any single Program Participant in
any given fiscal year shall be 200,000 shares. The Board of Directors of
the Company shall make recommendations to the Program Administrators from
time to time with respect to the allocation of the shares reserved under
the Program for the directors, officers, employees and agents of the
Company and its subsidiaries. The shares of Common Stock issued under the
Program may be
Page 2
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<PAGE>
authorized but unissued shares, shares issued and reacquired by the Company
or shares purchased by the Company on the open market. If any of the
options granted under the Program expire or terminate for any reason before
they have been exercised in full, the unpurchased shares subject to those
expired or terminated options shall cease to reduce the number of shares
available for purposes of the Program. If the conditions associated with
the grant of restricted shares are not achieved within the period specified
for satisfaction of the applicable conditions, or if the restricted share
grant terminates for any reason before the date on which the conditions
must be satisfied, the shares of Common Stock associated with such
restricted shares shall cease to reduce the number of shares available for
purposes of the Program.
The proceeds received by the Company from the sale of its Common
Stock pursuant to the exercise of options, transfer of restricted shares or
issuance of stock purchased under the Program, if in the form of cash,
shall be added to the Company's general funds and used for general
corporate purposes.
Notwithstanding anything to the contrary in this Program, at no
time that the Program is subject to qualification under the California
Corporations Code shall the total number of shares issuable upon exercise
of all outstanding options and the total number of shares provided for
under any stock bonus or similar plan of the Company exceed the applicable
percentage as calculated in accordance with the conditions and exclusions
of Rule 260.140.45 of the California Code of Regulations, based on the
number of shares of the Company which are outstanding at the time the
calculation is made, unless such limitation is approved in accordance with
such Rule.
Article 4. Eligibility and Participation.
------------------------------
Officers, employees, directors (whether employee
directors or non-employee directors), and independent contractors or agents
of the Company or its subsidiaries who are responsible for or contribute to
the management, growth or profitability of the business of the Company or
its subsidiaries shall be eligible for selection by the Program
Administrators to participate in the Program. Consultants or advisors of
the Company or its subsidiaries shall be eligible to receive awards under
the Program.
The term "subsidiary" as used herein means any
company, other than the Company, in an unbroken chain of companies,
beginning with the Company if, at the time of any grant hereunder, each of
the companies, other than the last company in the unbroken chain, owns
stock possessing more than 50% of the total combined voting power of all
classes of stock in one of the other companies in such chain.
Article 5. Effective Date and Term of Program.
-----------------------------------
The Program became effective March 14, 2000 upon
its adoption by the Board of Directors of the Company. The Program shall
continue in effect for a term of 5 years unless sooner terminated under
Article 8 of these General Provisions.
Page 3
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Article 6. Adjustments.
------------
If the outstanding shares of Common Stock are
increased, decreased, changed into, or exchanged for a different number or
kind of shares or securities through merger, consolidation, combination,
exchange of shares, other reorganization, recapitalization,
reclassification, stock dividend, stock split or reverse stock split, an
appropriate and proportionate adjustment shall be made in the maximum
number and kind of shares as to which options and restricted shares may be
granted under this Program. A corresponding adjustment changing the number
and kind of shares allocated to unexercised options, restricted shares, or
portions thereof, which shall have been granted prior to any such change,
shall likewise be made. Any such adjustment in outstanding options shall
be made without change in the aggregate purchase price applicable to the
unexercised portion of the option, but with a corresponding adjustment in
the price for each share or other unit of any security covered by the
option.
Article 7. Termination and Amendment of Program.
-------------------------------------
The Program shall terminate five (5) years from
the date the Program is adopted by the Board of Directors, or, if
applicable, the date a particular Plan is approved by the stockholders, or
shall terminate at such earlier time as the Board of Directors may so
determine. No options shall be granted and no stock shall be sold and
purchased under the Program after that date.
Article 8. Prior Rights and Obligations.
-----------------------------
No amendment, suspension, or termination of the
Program shall, without the consent of the individual who has received a
bonus or Deferral option, alter or impair any of that individual's rights
or obligations under any option or restricted share granted or shares sold
and purchased under the Program prior to that amendment, suspension, or
termination.
Article 9. Privileges of Stock Ownership.
------------------------------
Notwithstanding the exercise of any option granted
pursuant to the terms of this Program, the achievement of any conditions
specified in any restricted share granted pursuant to the terms of this
Program or the election to purchase any shares pursuant to the terms of
this Program, no individual shall have any of the rights or privileges of a
stockholder of the Company in respect of any shares of stock issuable upon
the exercise of his or her option, the satisfaction of his or her
restricted share conditions or the sale, purchase and issuance of such
purchased shares until certificates representing the shares have been
issued and delivered.
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Article 10. Reservation of Shares of Common Stock.
--------------------------------------
The Company, during the term of this Program, will
at all times reserve and keep available such number of shares of its Common
Stock as shall be sufficient to satisfy the requirements of the Program.
In addition, the Company will from time to time, as is necessary to
accomplish the purposes of this Program, seek or obtain from any regulatory
agency having jurisdiction any requisite authority in order to issue and
sell shares of Common Stock hereunder. The inability of the Company to
obtain from any regulatory agency having jurisdiction the authority deemed
by the Company's counsel to be necessary to the lawful issuance and sale of
any shares of its stock hereunder shall relieve the Company of any
liability in respect of the nonissuance or sale of the stock as to which
the requisite authority shall not have been obtained.
Article 11. Tax Withholding.
----------------
The exercise of any option or restricted share
granted or the sale and issuance of any shares to be purchased under this
Program are subject to the condition that if at any time the Company shall
determine, in its discretion, that the satisfaction of withholding tax or
other withholding liabilities under any state or federal law is necessary
or desirable as a condition of, or in connection with, such exercise or the
delivery or purchase of shares pursuant thereto, then in such event, the
exercise of the option or restricted share or the sale and issuance of any
shares to be purchased shall not be effective unless such withholding shall
have been effected or obtained in a manner acceptable to the Company. At
the Company's sole and absolute discretion, the Company may, from time to
time, accept shares of the Company's Common Stock subject to one of the
Plans as the source of payment for such liabilities.
Article 12. Compliance with Law.
--------------------
It is the express intent of the Company that this
Program complies in all respect with all applicable provisions of state and
federal law, including without limitation Section 25102(o) of the
California Corporations Code to the extent such Section is applicable to
the Company. It is the express intent of the Company that when any equity
security of the Company is registered pursuant to Section 12 of the
Exchange Act, this Program shall comply in all respects with applicable
provisions of the Rule 16b-3 or Rule 16a-1(c)(3) under the Exchange Act in
connection with any grant of awards to, or other transaction by, a Plan
Participant who is subject to Section 16 of the Exchange Act (except for
transactions exempted under alternative Exchange Act rules). Accordingly,
if any provision of the Program or any agreement relating to any award
thereunder does not comply with Rule 16b-3 or Rule 16a-1(c)(3) or Section
25102(o) of the California Corporations Code as then applicable to any such
transaction, such provision will be construed or deemed amended to the
extent necessarily to conform to the applicable requirements of Rule 16b-3
or Rule 16a-1(c)(3) or Section 25102(o) of the California Corporations Code
so that such Plan Participant shall avoid liability under Section 16(b) and
the Program shall comply with Section 25102(o) as then applicable to any
such transaction. Unless otherwise provided in any grant or award to any
person who is or may thereafter be subject to Section 16 of the Exchange
Act, the approval of such grant or award shall include the approval of the
disposition of the Company of Company equity securities for the purposes of
satisfying the payment of the exercise or purchase price or tax withholding
obligations related to such grant or award within the meaning of Rules 16a-
1(c)(3) and 16b-3(e).
Page 5
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Article 13. Indemnification.
----------------
No Program Administrator, as that term is defined
in the Program, or any officer or employee of the Company or an affiliate
acting at the direction or on behalf of the Program Administrator shall be
personally liable for any action or determination taken or made in good
faith with respect to the Program, and shall, to the extent permitted by
law, be fully indemnified and protected by the Company with respect to any
such action or determination.
Article 14. Death Beneficiaries.
--------------------
In the event of a Plan Participant's death, all of
such person's outstanding awards, including his or her rights to receive
any accrued but unpaid Stock Payments, will transfer to the maximum extent
permitted by law to such person's beneficiary. Each Plan Participant may
name, from time to time, any beneficiary or beneficiaries (which may be
named contingently or successively) as his or her beneficiary for purposes
of this Program. Each designation shall be on a form prescribed by the
Program Administrators, will be effective only when delivered to the
Company, and when effective will revoke all prior designations by the Plan
Participant. If a Plan Participant dies with no such beneficiary
designation in effect, such person's beneficiary shall be his or her estate
and such person's awards will be transferable by will or pursuant to laws
of descent and distribution applicable to such person.
Article 15. Unfunded Program.
-----------------
The Program shall be unfunded and the Company
shall not be required to segregate any assets that may at any time be
represented by awards under the Program. Neither the Company, its
affiliates, the Program Administrators, nor the Board shall be deemed to be
a trustee of any amounts to be paid under the Program nor shall anything
contained in the Program or any action taken pursuant to its provisions
create or be construed to create a fiduciary relationship between any such
party and a Plan Participant or anyone claiming on his or her behalf. To
the extent a Plan Participant or any other person acquires a right to
receive payment pursuant to an award under the Program, such right shall be
no greater than the right of an unsecured general creditor of the Company.
Article 16. Choice of Law and Venue.
-------------------------
The Program and all related documents shall be
governed by, and construed in accordance with, the laws of the State of
Nevada. Acceptance of an award shall be deemed to constitute consent to
the jurisdiction and venue of the state and federal courts located in Clark
County, State of Nevada for all purposes in connection with any suit,
action or other proceeding relating to such award, including the
enforcement of any rights under the Program or any agreement or other
document, and shall be deemed to constitute consent to any process or
notice of motion in connection with such proceeding being served by
certified or registered mail or personal service within or without the
State of Nevada, provided a reasonable time for appearance is allowed.
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<PAGE>
Article 17. Arbitration.
------------
Any disputes involving the Program will be
resolved by arbitration in Clark County, Nevada before one (1) arbitrator
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association.
Article 18. Program Administrators' Right.
------------------------------
Except as may be provided in an award agreement,
the Program Administrators may, in their discretion, waive any restrictions
or conditions applicable to, extend or modify any period (including any
period in which an option or other exercisable award may be exercised,
subject to the requirements of the Code) applicable to, or accelerate the
vesting of, any award (other than the right to purchase shares pursuant to
the Stock Purchase Plan).
Article 19. Termination of Benefits Under Certain Conditions.
-------------------------------------------------
The Program Administrators, in their sole and
absolute discretion, may cancel any unexpired, unpaid or deferred award
(other than a right to purchase shares pursuant to the Stock Purchase Plan)
at any time if the Plan Participant is not in compliance with all
applicable provisions of the Program or any award agreement or if the Plan
Participant, whether or not he or she is currently employed by the Company
or one of its subsidiaries, acts in a manner contrary to the best interests
of the Company and its subsidiaries.
Article 20. Conflicts in Program.
---------------------
In case of any conflict in the terms of the
Program, or between the Program and an award agreement, the provisions in
the Program which specifically grant such award shall control, and the
provisions in the Program shall control over the provisions in any award
agreement.
Article 21. Information to Plan Participants.
---------------------------------
To the extent required by applicable law, the
Company shall provide Plan Participants with the Company's financial
statements at least annually.
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<PAGE>
PART I
VPN Communications Corporation
STOCK BONUS PLAN
Section 1. Purpose.
--------
The purpose of this VPN Communications Corporation
Stock Bonus Plan (the "Bonus) is to promote the growth and general
prosperity of the Company by permitting the Company to grant registered
shares in lieu of cash bonuses to help attract and retain superior
personnel for positions of substantial responsibility with the Company and
its subsidiaries and to provide individuals with an additional incentive to
contribute to the success of the Company. This Stock Bonus Plan is Part I
of the 2000 Stock Compensation Program. Unless any provision herein
indicates to the contrary, the Stock Bonus Plan shall be subject to the
General Provisions of the Program and terms used but not defined in this
Stock Bonus Plan shall have the meanings, if any, ascribed thereto in the
General Provisions of the Program.
Section 2. Terms and Conditions.
---------------------
The terms and conditions of shares granted under
the Bonus Plan may differ from one another as the Program Administrators
shall, in their discretion, determine as long as all shares granted under
the Bonus Plan satisfy the requirements of the Stock Bonus Plan.
Each Bonus agreement shall provide to the recipient (the
"Holder"), at their election in lieu of cash, the transfer of a specified
number of shares of Common Stock of the Company that shall become
nonforfeitable upon the execution of the Stock Bonus Plan Agreement (Bonus
Agreement). At the time that the bonus is granted, the Program
Administrators shall specify the service or performance conditions and the
period of duration over which the conditions apply.
The Holder shall not have any rights with respect to such award,
unless and until such Holder has executed an agreement evidencing the terms
and conditions of the award (the "Stock Bonus Agreement"). Each individual
who is awarded shares, at their election in lieu of cash, shall be issued a
stock certificate in respect of such shares. Such certificate shall be
registered in the name of the Holder and shall carry the following legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the VPN Communications Corporation Stock Bonus Plan entered
into between the registered owner and VPN Communications Corporation.
Copies of such Plan and Agreement are on file in the offices of VPN
Communications Corporation."
The Program Administrators shall require that the stock
certificates evidencing such shares be held in the custody of the company
until the applicable conditions have been satisfied.
Section 3. Transferablity.
---------------
Subject to the provisions of the Bonus Plan
Agreements, as may be set by the Program Administrators commencing on the
grant date, the Holder shall be permitted to sell, transfer, pledge, or
assign shares awarded under the Stock Bonus Plan.
Page 8
</Page>
<PAGE>
Section 4. Share Rights Upon Employment or Service.
----------------------------------------
If a Holder terminates employment or service
with the company, any shares granted to him shall not be forfeited by the
Holder.
Section 5. Stockholder Rights.
-------------------
The Holder shall have, with respect to the
shares granted, all of the rights of a stockholder of the Company, including the
right to vote the shares, and the right to receive any dividends thereon.
Certificates for shares of stock shall be delivered to the Holder promptly
after, and only after, the Bonus Plan Agreement shall be executed, and
recipient has made the election to receive shares in lieu of a cash bonus
awarded.
Section 6. Compliance with Securities Laws.
--------------------------------
Shares shall not be issued under the Stock Bonus
Plan unless the issuance and delivery of the shares pursuant thereto shall
comply with all relevant provisions of foreign, state and federal law,
including, without limitation, the Securities Act of 1933, as amended, and
the Exchange Act, and the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the shares may then be
listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance. The Program Administrators may
also require a Holder to furnish evidence satisfactory to the Company,
including a written and signed representation letter and consent to be
bound by any transfer restrictions imposed by law.
Section 7. Continued Employment or Service.
--------------------------------
This agreement is not contingent upon continued
employment or service.
Page 9
</Page>
<PAGE>
VPN COMMUNICATIONS CORPORATION
STOCK BONUS PLAN AGREEMENT
THIS AGREEMENT is made as of __________, _____, by and between
VPN Communications Corporation a Nevada corporation (the "Company"), and
______________________ ("Holder"):
WHEREAS, the Company maintains the VPN Communications Corporation
Stock Bonus Plan ("Stock Bonus Plan") under which the Program
Administrators grant shares of the Company's common stock, no par value
("Common Stock") to employees and non-employees, at recipients election in
lieu of cash bonuses awarded, as the Program Administrators may determine,
subject to terms, conditions, or restrictions as they may deem appropriate;
and
WHEREAS, pursuant to the Stock Bonus Plan, the Program
Administrators have awarded to Holder a stock bonus award conditioned upon
the execution by the Company and Holder of this Stock Bonus Plan Agreement
setting forth all the terms and conditions applicable to such award.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, it is hereby agreed as follows:
1. Award of Shares.
Under the terms of the Stock Bonus Plan, and upon ther election
of the recipient to receive shares in lieu of cash bonuses awarded, the
Program Administrators hereby award and transfer to Holder a stock award on
__________("Grant Date"), covering shares of Common Stock ("Shares")
subject to the terms, conditions, and restrictions set forth in this
Agreement. This transfer of Shares shall constitute a transfer of such
property in connection with Holder's performance of service to the Company
(which transfer is intended to constitute a "transfer" for purposes of
Section 83 of the Internal Revenue Code).
2. Stock Certificates.
A stock certificate evidencing the Shares shall be issued in the
name of Holder as of the Grant Date. Holder shall thereupon be the
shareholder of all the Shares represented by the stock certificate. As
such, Holder shall be entitled to all rights of a stockholder of the
Company, including the right to vote the Shares and receive dividends
and/or other distributions declared on such Shares.
3. Administration.
The Program Administrators shall have full authority and
discretion (subject only to the express provisions of the Stock Bonus Plan)
to decide all matters relating to the administration and interpretation of
the Stock Bonus Plan and this Agreement. All such Program Administrators
determinations shall be final, conclusive, and binding upon the Company,
Holder, and any and all interested parties.
Page 10
</Page>
<PAGE>
4. Right to Continued Employment or Service.
Nothing in the Stock Bonus Plan or this Agreement shall confer
on Holder any right to continue in the employ of or service to the Company or,
except as may otherwise be limited by a written agreement between the
Company and Holder, in any way affect the Company's right to terminate
Holder's employment or service, at will, at any time without prior notice
at any time for any or no reason (whether by dismissal, discharge,
retirement or otherwise).
5. Amendment.
This Agreement shall be subject to the terms of the Stock Bonus
Plan as amended, the terms of which are incorporated herein by reference.
However, the stock bonus award that is the subject of this Agreement may
not in any way be restricted or limited by any Stock Bonus Plan amendment
or termination approved after the date of the award without Holder's
written consent.
6. Force and Effect.
The various provisions of this Agreement are severable in their
entirety. Any determination of invalidity or unenforceability of any one
provision shall have no effect on the continuing force and effect of the
remaining provisions.
7. Governing Law.
This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Nevada.
8. Successors.
This Agreement shall be binding upon and inure to the benefit of
the successors, assigns, and heirs of the respective parties.
9. Notice.
All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given
if delivered personally or by certified mail, return receipt requested, as
follows:
To Company: VPN Communications Corporation
3200 Bristol Street
Suite 725
Costa Mesa , Ca 92626
Attn: Secretary
To Holder: _____________________________
_____________________________
_____________________________
_____________________________
Page 11
</Page>
<PAGE>
10. Incorporation of Plan by Reference.
The Shares are awarded pursuant to the terms of the Plan, the
terms of which are incorporated herein by reference, and the Share award
shall in all respects be interpreted in accordance with the Plan. The
Program Administrators shall interpret and construe the Plan and this
instrument, and its interpretations and determinations shall be conclusive
and binding on the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or thereunder.
In Witness Whereof, the parties hereto have signed this Agreement as of the
date hereof.
VPN COMMUNICATIONS CORPORATION,
a Nevada corporation
By: --------------------------------
E. G. Marchi, President
ACCEPTED AND AGREED TO
____________________________
(Optionee)
Page 12
</Page>
<PAGE>
PART II
VPN Communications Corporation
DEFERRED COMPENSATION STOCK OPTION PLAN
Section 1. Deferral Option Terms and Conditions.
-------------------------------------
The purpose of this VPN Communications
Corporation Deferred Compensation Stock Option Plan (the "Deferral Option
Plan") is to promote the growth and general prosperity of the Company by
permitting the Company to grant certain stock deferral rights ("Deferral
Option"), exercisable by the recipients in lieu of cash payable to them which
has been deferred, to help attract and retain superior personnel for positions
of substantial responsibility with the Company and its subsidiaries and to
provide individuals with an additional incentive to contribute to the
success of the Company. The terms and conditions of Deferral Options
granted under the Deferral Option Plan may differ from one another as the
Program Administrators shall, in their discretion, determine in each
agreement (the "Deferral Option Agreement"). Unless any provision herein
indicates to the contrary, this Deferral Option Plan shall be subject to
the General Provisions of the Program, and terms used but not defined in
this Deferral Option Plan shall have the meanings, if any, ascribed thereto
in the General Provisions of the Program.
Section 2. Duration of Deferral Options.
-----------------------------
Each Deferral Option and all rights thereunder
granted pursuant to the terms of the Deferral Option Plan shall expire on
the date determined by the Program Administrators as evidenced by the
Deferral Option Agreement, but in no event shall any Deferral Option expire
later than five (5) years from the date on which the Deferral Option is
granted. In addition, each Deferral Option shall be subject to early
termination as provided in the Deferral Option Plan.
Section 3. Grant.
------
Subject to the terms and conditions of the
Deferral Option Agreement, the Program Administrators may grant the right
to receive a payment upon the exercise of a Deferral Option which reflects
the number of shares of Common Stock for which such Deferral Option was
granted to any person who is eligible to receive awards, and have elected
to receive shares in lieu of payment of deferred compensation.
Section 4. Payment at Exercise.
--------------------
Upon the settlement of a Deferral Option in
accordance with the terms of the Deferral Option Agreement, the Plan
Participant shall (subject to the terms and conditions of the Deferral
Option Plan and Deferral Option Agreement) receive a payment equal to the
Grant Price (as defined below) for the number of shares of the Deferral
Option being exercised at that time. Such payment may be paid, at the
election of the recipient, in cash or in shares of the Company's Common
Stock or by a combination of the foregoing, at the time of exercise of the
Deferral Option, specified by the Program Administrators in the Deferral
Option Agreement. If any portion of the payment is paid in shares of the
Company's Common Stock, such shares shall be valued for this purpose at the
Deferral Option Grant Price. "Deferral Grant Price" shall mean the price
allocated to the stock pursuant to the Stock Deferral Option Agreement.
Page 13
</Page>
<PAGE>
Section 5. Special Terms and Conditions.
-----------------------------
Each Deferral Option Agreement which evidences
the grant of a Deferral Option shall incorporate such terms and conditions as
the Program Administrators in their sole and absolute discretion deem are
not inconsistent with the terms of the Deferral Option Plan.
Section 6. Compliance with Securities Laws.
--------------------------------
Deferral Options shall not be granted and shares
shall not be issued with respect to any Deferral Option granted under the
Deferral Option Plan unless the grant of that Deferral Option or the
exercise of that Deferral Option and the issuance and delivery of the
shares pursuant thereto shall comply with all applicable provisions of
foreign, state and federal law, including, without limitation, the
Securities Act of 1933, as amended, and the Exchange Act, and the rules and
regulations promulgated thereunder, and the requirements of any stock
exchange upon which the shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance. The Program Administrators may also require a Plan Participant
to furnish evidence satisfactory to the Company, including a written and
signed representation letter and consent to be bound by any transfer
restrictions imposed by law, legend, condition, or otherwise, that any
securities are being acquired only for investment purposes and without any
present intention to sell or distribute the securities in violation of any
state or federal law, rule, or regulation. Further, each Plan Participant
shall consent to the imposition of a legend on securities and the
imposition of stop-transfer instructions restricting their transferability
as required by law or by this Section 6.
Section 7. Continued Employment or Service.
--------------------------------
Each Plan Participant, if requested by the
Program Administrators, must agree in writing as a condition of receiving his or
her Deferral Option or any shares as a result thereof, to remain in the
employment of, or service to, the Company or any of its subsidiaries
following the date of the granting of that Deferral Option or the issuance
of such shares for a period specified by the Program Administrators.
Nothing in this Deferral Option Plan or in any Deferral Option Agreement
shall confer upon any Plan Participant any right to continued employment
by, or service to, the Company or any of its subsidiaries, or limit in any
way the right of the Company or any subsidiary at any time to terminate or
alter the terms of that employment or service arrangement.
Section 8. Deferral Option Rights Upon Termination of
Employment or Service.
------------------------------------------
If a Plan Participant under this Deferral Option
Plan ceases to be employed by, or provide services to, the Company or any
of its subsidiaries for any reason other than death or disability, his or
her Deferral Option shall terminate thirty (30) days after the date of
termination of employment (unless sooner terminated in accordance with its
terms); provided, however, that in the event employment is terminated for
cause as defined by applicable law, his or her option shall terminate
immediately, provided, further, however, that the Program Administrators
may, in their sole and absolute discretion, allow the Deferral Option to be
exercised, to the extent exercisable on the date of termination of
employment or service, at any time within ninety (90) days after the date
of termination of employment or service, unless either the Deferral Option
Agreement or this Deferral Option Plan otherwise provides for earlier
termination.
Page 14
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<PAGE>
Section 9. Rights Upon Disability.
-----------------------
If a Plan Participant becomes disabled within
the meaning of Code Section 422(e)(3) while employed by or providing service to
the Company or any subsidiary corporation, his or her Deferral Option shall
terminate six months after the date of termination of employment or service
due to disability (unless sooner terminated in accordance with its terms);
provided, however, that the Program Administrators may, in their sole and
absolute discretion, allow the Deferral Option to be exercised (to the
extent exercisable on the date of termination of employment or service) at
any time within one year after the date of termination of employment due to
disability, unless either the Deferral Option Agreement or the Deferral
Option Plan otherwise provides for earlier termination.
Section 10. Rights Upon Death.
------------------
Except as otherwise limited by the Program
Administrators at the time of the grant of a Deferral Option, if a Plan
Participant under the Deferral Option Plan dies while employed by, or
providing services to, the Company or any of its subsidiaries, his or her
Deferral Option shall expire six months after the date of death unless by
its terms it expires sooner; provided, however, that the Program
Administrators may, in their sole and absolute discretion, allow the
Deferral Option to be exercised (to the extent exercisable on the date of
death) at any time within one year after the date of death, under the
Deferral Option Agreement or the Deferral Option Plan otherwise provides
for earlier termination. During this six month or shorter period, the
Deferral Option may be exercised, to the extent that it remains unexercised
on the date of death, by the person or persons to whom the Plan
Participant's rights under the Deferral Option shall pass by will or by the
laws of descent and distribution, bu tonly to the extent that the Plan
Participant is entitled to exercise the Deferral at the date of death.
Page 15
</Page>
<PAGE>
VPN Communications Corporation
DEFERRED COMPENSATION STOCK OPTION PLAN AGREEMENT
(GRANT OF OPTION)
Date of Grant: ____________________, ____
THIS GRANT, dated as of the date of grant first stated above (the
"Date of Grant") , is delivered by VPN Communications Corporation, a Nevada
corporation (the "Company"), to ____________________ (the "Optionee"), who
is an employee of the Company or one of its subsidiaries (the Optionee's
employer is sometimes referred to herein as the "Employer").
WHEREAS, the Board of Directors of the Company (the "Board") on
adopted, with subsequent stockholder approval, the VPN
- ---------- Communications Corporation, Deferred Stock Option Plan (the
"Plan");
WHEREAS, the Plan provides for the granting of deferred
compensation stock options by the Board or Program
Administrators to employees of the Company or any subsidiary of the Company
who have deferred compensation payable to them to purchase, or to exercise
certain rights with respect to, shares of the Common Stock of the Company,
no par value (the "Stock"), in accordance with the terms and provisions
thereof; and
WHEREAS, the Program Administrators consider the Optionee to be a
person who is eligible for a grant of deferred compensation stock
options under the Plan, and have determined that it would be in
the best interest of the Company to grant the deferred compensation stock
options documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Grant of Option.
Subject to the terms and conditions hereinafter set forth, the
Company, with the approval and at the direction of the Program
Administrators, hereby grants to the Optionee, at their election, as of the
Date of Grant, an option to purchase a number of shares of Stock at a price
of $.10 per share, (not to exceed 1/3 of total quarterly income earned) on
the date of Grant. Such option is hereinafter referred to as the "Option"
and the shares of stock purchasable upon exercise of the Option are
hereinafter sometimes referred to as the "Option Shares."
2. Installment Exercise.
Subject to such further limitations as are provided herein, the
Option shall become exercisable in Quarterly installments, on the first day
following the close of the prior calendar quarter, the Optionee having the
right hereunder to purchase from the Company a number of Option Shares upon
exercise of the Option, in proportion to the deferred compensation subject
to the employee's exercise of option.
3. Termination of Option.
(a) Subject to the other provisions of this Grant, the Option and
all rights hereunder with respect thereto, to the extent such rights shall not
have been exercised, shall terminate and become null and void after the
expiration of five years from the Date of Grant (the "Option Term").
Page 16
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<PAGE>
(b) Notwithstanding anything else to the contrary contained herein,
upon the occurrence of the Optionee ceasing for any reason to be employed
by the Employer (such occurrence being a "termination of the Optionee's
employment"), the Option, to the extent not previously exercised, shall
terminate and become null and void within thirty (30) days after the date
of such termination of the Optionee's employment, except (1) in the event
employment is terminated for cause as defined by applicable law, in which
case Optionee's Option shall terminate and become null and void immediately
or (2) in a case where the Program Administrators may otherwise determine
in their sole and absolute discretion for up to ninety (90) days following
the termination of employment. Upon a termination of the Optionee's
employment by reason of disability or death, the Option may be exercised,
but only to the extent that the Option was outstanding and exercisable on
such date of disability or death, up to a six-month period following the
date of such termination of the Optionee's employment, unless extended for
a period of up to one year, at the sole and absolute discretion of the
Program Administrators.
(c) In the event of the death of the Optionee, the Option may be
exercised by the Optionee's legal representative, but only to the extent
that the option would otherwise have been exercisable by the Optionee.
(d) A transfer of the Optionee's employment between the Company and
any subsidiary of the Company, or between any subsidiaries of the Company,
shall not be deemed to be a termination of the Optionee's employment.
4. Exercise of Option.
(a) The Optionee may exercise the option with respect to all or any
part of the number of Option Shares then exercisable hereunder by giving
the Secretary of the Company written notice of intent to exercise. The
notice of exercise shall specify the number of Option Shares as to which
the Option is to be exercised against deferred compensation, and the date
of exercise thereof.
(b) On the exercise date specified in the Optionee's notice or as
soon thereafter as is practicable, the Company shall cause to be delivered
to the Optionee, a certificate or certificates for the Option Shares then
being purchased. The obligation of the Company to deliver Stock shall,
however, be subject to the condition that if at any time the Program
Administrators shall determine in their discretion that the listing,
registration or qualification of the Option or the Option Shares upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as
a condition of, or in connection with, the Option or the issuance or
purchase of Stock thereunder, the Option may not be exercised in whole or
in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Program Administrators.
5. Adjustment of and Changes in Stock of the Company.
In the event of a reorganization, recapitalization, change of
shares, stock split, spin-off, stock dividend, reclassification, subdivision or
combination of shares, merger, consolidation, rights offering, or any other
change in the corporate structure or shares of capital stock of the
Company, the Program Administrators shall make such adjustment as may be
required under the applicable reorganization agreement in the number and
kind of shares of Stock subject to the Option or in the option price;
Page 17
</Page>
<PAGE>
provided, however, that no such adjustment shall give the Optionee any
additional benefits under the Option. If there is no provision for the
treatment of the Option under an applicable reorganization agreement, the
Option may terminate on a date determined by the Program Administrators
following at least 30 days written notice to the Optionee.
6. No Rights of Stockholders.
Neither the Optionee nor any personal representative shall be, or
shall have any of the rights and privileges of, a stockholder of the
Company with respect to any shares of Stock purchasable or issuable upon
the exercise of the Option, in whole or in part, prior to the date of
exercise of the Option.
7. Non-Transferability of Option.
During the Optionee's lifetime, the Option hereunder shall be
exercisable only by the Optionee or any guardian or legal representative of
the Optionee, and the Option shall not be transferable except, in case of
the death of the Optionee, by will or the laws of descent and distribution,
nor shall the Option be subject to attachment, execution or other similar
process. In the event of (a) any attempt by the Optionee to alienate,
assign, pledge, hypothecate or otherwise dispose of the option, except as
provided for herein, or (b) the levy of any attachment, execution or
similar process upon the rights or interest hereby conferred, the Company
may terminate the Option by notice to the Optionee and it shall thereupon
become null and void.
8. Restriction on Exercise.
The Option may not be exercised if the issuance of the Option Shares
upon such exercise would constitute a violation of any applicable federal
or State securities or other law or valid regulation. As a condition to
the exercise of the Option, the Company may require the Optionee exercising
the Option to make any representation or warranty to the Company as may be
required by any applicable law or regulation and, specifically, may require
the Optionee to provide evidence satisfactory to the Company that the
Option Shares are being acquired only for investment purposes and without
any present intention to sell or distribute the shares in violation of any
federal or State securities or other law or valid regulation.
7. Employment Not Affected.
The granting of the Option or its exercise shall not be construed as
granting to the Optionee any right with respect to continuance of
employment of the Employer. Except as may otherwise be limited by a
written agreement between the Employer and the Optionee, the right of the
Employer to terminate at will the Optionee's employment with it at any time
(whether by dismissal, discharge, retirement or otherwise) is specifically
reserved by the Company, as the Employer or on behalf of the Employer
(whichever the case may be), and acknowledged by the Optionee.
8. Amendment of Option.
The Option may be amended by the Program Administrators at any time
(i) if the Program Administrators determine, in their sole and absolute
discretion, that amendment is necessary or advisable in the light of any
addition to or change in the Internal Revenue Code of 1986 or in the
regulations issued thereunder, or any federal or state securities law or
other law or regulation, which change occurs after the Date of Grant and by
its terms applies to the Option; or (ii) other than in the circumstances
described in clause (i), with the consent of the Optionee.
Page 18
</Page>
<PAGE>
9. Notice.
All notices, requests, demands, and other communications hereunder
shall be in writing and shall be deemed to have been duly given if
delivered personally or by certified mail, return receipt requested, as
follows:
To Company: VPN Communications Corporation
3200 Bristol Street
Suite 725
Costa Mesa, Ca 92626
To Optionee: ______________________________
______________________________
______________________________
______________________________
10. Incorporation of Plan by Reference.
The Option is granted pursuant to the terms of the Plan, the terms of
which are incorporated herein by reference, and the Option shall in all
respects be interpreted in accordance with, and shall be subject to, the
Plan. The Program Administrators shall interpret and construe the Plan and
this instrument, and its interpretations and determinations shall be
conclusive and binding on the parties hereto and any other person claiming
an interest hereunder, with respect to any issue arising hereunder or
thereunder.
11. Governing Law.
The validity, construction, interpretation and effect of this
instrument shall exclusively be governed by and determined in accordance
with the law of the State of Nevada, except to the extent preempted by
federal law, which shall to the extent govern.
In Witness Whereof, the Company has caused its duly authorized officers to
execute this Grant of Option, and to apply the corporate seal hereto, and
the Optionee has placed his or her signature hereon, effective as of the
Date of Grant.
VPN Communications Corporation
a Nevada Corporation
By: ----------------------------
E. G. Marchi, President
ACCEPTED AND AGREED TO:
By: ----------------------------
Optionee
Page 19
</Page>
<PAGE>
PART III
VPN Communications Corporation
Executive Stock Option Plan
Section 1. Terms and Conditions.
---------------------
The purpose of the VPN Communications
Corporation Executive Stock Option Plan (the "Executive Plan") is to promote
the growth and general prosperity of the Company by permitting the Company to
grant restricted shares to help attract and retain superior personnel for
positions of substantial responsibility with the Company and its
subsidiaries to provide individuals with an additional incentive to the
success of the Company. The terms and conditions of Performance Shares,
Stock Payments or Bonus Rights granted under the Stock Rights Plan may
differ from one another as the Program Administrators shall, in their
discretion, determine in each stock rights agreement (the "Stock Rights
Agreement"). Unless any provision herein indicates to the contrary, this
Stock Rights Plan shall be subject to the General Provisions of the
Program, and terms used but not defined in this Stock Rights Plan shall
have the meanings, if any, ascribed thereto in the General Provisions of
the Program.
Section 2. Duration.
---------
Each Performance Share or Dividend Equivalent
Right and all rights thereunder granted pursuant to the terms of the Stock
Rights Plan shall expire on the date determined by the Program
Administrators as evidenced by the Stock Rights Agreement, but in no event
shall any Performance Shares or Dividend Equivalent Rights expire later
than ten (10) years from the date on which the Performance Shares or
Dividend Equivalent Rights are granted. In addition, each Performance
Share, Stock Payment or Dividend Equivalent Right shall be subject to early
termination as provided in the Stock Rights Plan.
Section 3. Grant.
------
Subject to the terms and conditions of the Stock
Rights Agreement, the Program Administrators may grant Performance Shares,
Stock Payments or Dividend Equivalent Rights as provided under the Stock
Rights Plan. Each grant of Performance Shares, Dividend Equivalent Rights
or Stock Payments shall be evidenced by a Stock Rights Agreement, which
shall state the terms and conditions of each as the Program Administrators,
in their sole and absolute discretion, deem are not inconsistent with the
terms of the Stock Rights Plan.
Section 4. Performance Shares.
-------------------
Performance Shares shall become payable to a
Plan Participant based upon the achievement of specified Performance Objectives
and upon such other terms and conditions as the Program Administrators may
determine and specify in the Stock Rights Agreement evidencing such
Performance Shares. Each grant shall satisfy the conditions for
performance-based awards hereunder and under the General Provisions of the
Program. A grant may provide for the forfeiture of Performance Shares in
the event of termination of employment or other events, subject to
exceptions for death, disability, retirement or other events, all as the
Program Administrators may determine and specify in the Stock Rights
Page 20
</Page>
<PAGE>
Agreement for such grant. Payment may be made for the Performance Shares at
such time and in such form as the Program Administrators shall determine
and specify in the Stock Rights Agreement and payment for any Performance
Shares may be made in full in cash or by certified cashier's check payable
to the order of the Company or, if permitted by the Program Administrators,
by shares of the Company's Common Stock or by the surrender of all or part
of an award, or in other property, rights or credits deemed acceptable by
the Program Administrators or, if permitted by the Program Administrators,
by a combination of the foregoing. If any portion of the purchase price is
paid in shares of the Company's Common Stock, those shares shall be
tendered at their then Fair Market Value. Payment in shares of Common
Stock includes the automatic application of shares of Common Stock received
upon the exercise or settlement of Performance Shares or other option or
award to satisfy the exercise or settlement price.
Section 5. Stock Payments.
---------------
The Program Administrators may grant Stock
Payments to a person eligible to receive the same as a bonus or additional
compensation or in lieu of the obligation of the Company or a subsidiary to
pay cash compensation under other compensatory arrangements, only with the
election of the eligible person, provided that the Plan Participant will be
required to pay an amount equal to the aggregate par value of any newly
issued Stock Payments. A Plan Participant shall have all the voting,
dividend, liquidation and other rights with respect to shares of Common
Stock issued to the Plan Participant as a Stock Payment upon the Plan
Participant becoming holder of record of such shares of Common Stock;
provided, however, the Program Administrators may impose such restrictions
on the assignment or transfer of such shares of Common Stock as they deem
appropriate and as are evidenced in the Stock Rights Agreement for such
Stock Payment.
Section 6. Dividend Equivalent Rights.
---------------------------
The Program Administrators may grant Dividend
Equivalent Rights in tandem with the grant of Incentive Options or
Nonqualified Options, SARs, Restricted Shares or Performance Shares that
otherwise do not provide for the payment of dividends on the shares of
Common Stock subject to such awards for the period of time to which such
Dividend Equivalent Rights apply, or may grant Dividend Equivalent Rights
that are independent of any other such award. A Dividend Equivalent Right
granted in tandem with another award may be evidenced by the agreement for
such other award; otherwise, a Dividend Equivalent Right shall be evidenced
by a separate Stock Rights Agreement. Payment may be made by the Company
in cash or by shares of the Company's Common Stock or by a combination of
the foregoing, may be immediate or deferred and may be subject to such
employment, performance objectives or other conditions as the Program
Administrators may determine and specify in the Stock Rights Agreement for
such Dividend Equivalent Rights. The total payment attributable to a share
of Common Stock subject to a Dividend Equivalent Right shall not exceed one
hundred percent (100%) of the equivalent dividends payable with respect to
an outstanding share of Common Stock during the term of such Dividend
Equivalent Right, taking into account any assumed investment (including
assumed reinvestment in shares of Common Stock) or interest earnings on the
equivalent dividends as determined under the Stock Rights Agreement in the
case of a deferred payment, provided that such percentage may increase to a
maximum of two hundred percent (200%) if a Dividend Equivalent Right is
subject to a Performance Objective.
Page 21
</Page>
<PAGE>
Section 7. Compliance with Securities Laws.
--------------------------------
Securities shall not be issued with respect to
any award under the Stock Rights Plan, unless the issuance and delivery of the
securities pursuant thereto shall comply with all applicable provisions of
foreign, state and federal law, including, without limitation, the
Securities Act of 1933, as amended, and the Exchange Act, and the rules and
regulations promulgated thereunder, and the requirements of any stock
exchange upon which the securities may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance. The Program Administrators may also require a Plan Participant
to furnish evidence satisfactory to the Company, including a written and
signed representation letter and consent to be bound by any transfer
restrictions imposed by law, legend, condition, or otherwise, that the
securities are being acquired only for investment purposes and without any
present intention to sell or distribute the securities in violation of any
state or federal law, rule, or regulation. Further, each Plan Participant
shall consent to the imposition of a legend on the securities subject to
his or her award and the imposition of stop-transfer instructions
restricting their transferability as required by law or by this Section 7.
Section 8. Continued Employment or Service.
--------------------------------
Each Plan Participant, if requested by the
Program Administrators, must agree in writing as a condition of receiving his or
her award, to remain in the employment of, or service to, the Company or
any of its subsidiaries following the date of the granting of that award
for a period specified by the Program Administrators. Nothing in this
Stock Rights Plan in any award granted hereunder shall confer upon any Plan
Participant any right to continued employment by, or service to, the
Company or any of its subsidiaries, or limit in any way the right of the
Company or any subsidiary at any time to terminate or alter the terms of
that employment or service arrangement.
Section 9. Rights Upon Termination of Employment or Service.
-------------------------------------------------
If a Plan Participant under this Stock Rights Plan
ceases to be employed by, or provide service to, the Company or any of its
subsidiaries for any reason his or her award shall immediately terminate.
Page 22
</Page>
<PAGE>
VPN COMMUNICATIONS CORPORATION
EXECUTIVE STOCK OPTION PLAN AGREEMENT
THIS AGREEMENT is made as of __________, _____, by and between
VPN Communications Corporation a Nevada corporation (the "Company"), and
______________________ ("Holder"):
WHEREAS, the Company maintains the VPN Communications Corporation
Executive Stock Option Plan ("Stock Option Plan") under which the Program
Administrators grant shares of the Company's common stock, no par value
("Common Stock") to employees and non-employees as the Program
Administrators may determine, subject to terms, conditions, or restrictions
as they may deem appropriate; and
WHEREAS, pursuant to the Stock Bonus Plan, the Program
Administrators have awarded to Holder a stock bonus award conditioned upon
the execution by the Company and Holder of an Executive Stock Option Plan
Agreement setting forth all the terms and conditions applicable to such
award.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, it is hereby agreed as follows:
1. Award of Shares.
Under the terms of the Executive Stock Option Plan, the Program
Administrators hereby award and transfer to Holder a stock award on
_______,2000 ("Grant Date"), covering shares of Common Stock ("Shares")
subject to the terms, conditions, and restrictions set forth in this
Agreement. This transfer of Shares shall constitute a transfer of such
property in connection with Holder's performance of service to the Company
(which transfer is intended to constitute a "transfer" for purposes of
Section 83 of the Internal Revenue Code).
2. Stock Certificates.
A stock certificate evidencing the Shares shall be issued in the
name of Holder as of the Grant Date. Holder shall thereupon be the
shareholder of all the Shares represented by the stock certificate. As
such, Holder shall be entitled to all rights of a stockholder of the
Company, including the right to vote the Shares and receive dividends
and/or other distributions declared on such Shares.
3. Administration.
The Program Administrators shall have full authority and
discretion (subject only to the express provisions of the Stock Option
Plan) to decide all matters relating to the administration and
interpretation of the Stock Bonus Plan and this Agreement. All such
Program Administrators determinations shall be final, conclusive, and
binding upon the Company, Holder, and any and all interested parties.
4. Right to Continued Employment or Service.
Nothing in the Stock Option Plan or this Agreement shall confer
on Holder any right to continue in the employ of or service to the Company
or, except as may otherwise be limited by a written agreement between the
Company and Holder, in any way affect the Company's right to terminate
Holder's employment or service, at will, at any time without prior notice
at any time for any or no reason (whether by dismissal, discharge,
retirement or otherwise).
Page 23
</Page>
<PAGE>
5. Amendment.
This Agreement shall be subject to the terms of the Stock Option
Plan as amended, the terms of which are incorporated herein by reference.
However, the stock bonus award that is the subject of this Agreement may
not in any way be restricted or limited by any Stock Bonus Plan amendment
or termination approved after the date of the award without Holder's
written consent.
6. Force and Effect.
The various provisions of this Agreement are severable in their
entirety. Any determination of invalidity or unenforceability of any one
provision shall have no effect on the continuing force and effect of the
remaining provisions.
7. Governing Law.
This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Nevada.
8. Successors.
This Agreement shall be binding upon and inure to the benefit of
the successors, assigns, and heirs of the respective parties.
9. Notice.
All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given
if delivered personally or by certified mail, return receipt requested, as
follows:
To Company: VPN Communications Corporation
3200 Bristol Street
Suite 725
Costa Mesa, Ca 92626
Attn: Secretary
To Holder: _____________________________
_____________________________
_____________________________
_____________________________
10. Incorporation of Plan by Reference.
The Shares are awarded pursuant to the terms of the Plan, the
terms of which are incorporated herein by reference, and the Share award
shall in all respects be interpreted in accordance with the Plan. The
Program Administrators shall interpret and construe the Plan and this
instrument, and its interpretations and determinations shall be conclusive
and binding on the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or thereunder.
Page 24
</Page>
<PAGE>
In Witness Whereof, the parties hereto have signed this Agreement as of the
date hereof.
VPN Communications Corporation
a Nevada corporation
By: -----------------------------
E. G. Marchi, President
ACCEPTED AND AGREED TO
- ----------------------------------
Holder
Page 25
</Page>
<PAGE>
PART IV
VPN COMMUNICATIONS CORPORATION
STOCK COMPENSATION PLAN
Section 1. Granting of Restricted Common Stock.
------------------------------------
The Board may, in its sole discretion and subject to
the provisions of the Plan, grant to eligible officers, employees or
directors at such times as it deems appropriate following adoption of the
Plan by the Board, shares of Restricted Common Stock.
Section 2. Price of Restricted Common Stock.
---------------------------------
The price at which Restricted Common Stock may be
purchased by a Participant under the Plan shall be determined by the Board
and shall be 85% of the fair market value, per share, of the Common Stock
at the time the Restricted Common Stock was granted.
Section 3. Persons Subject to Section 16 of the Exchange Act.
--------------------------------------------------
Participants who are subject to Section 16 of the
Exchange Act are hereby advised that reliance on Rule 16b3 may require that
any equity security of VPN Communications Corporation acquired upon
exercise of Restricted Common Stock by such person be held at least until
the date six months after the date of grant of the Restricted Common Stock.
Section 4. Other Provisions.
-----------------
(a) No Right to Employment.
-----------------------
Neither the adoption of the Plan nor its operation, nor any
document describing or referring to the Plan, or any part thereof, shall
confer upon any Participant under the Plan any right to continue in the
employ of VPN Communications Corporation or a subsidiary or shall in any
way affect the right and power of VPN communications or a subsidiary to
terminate the employment of any Participant under the Plan at any time with
or without assigning a reason therefor.
(b) Tax Withholding.
----------------
The Board shall have the right to deduct from any
settlement of an Award, including without limitation the delivery or
vesting of Common Stock, made under the Plan any Federal, state, or local
taxes of any kind required by law to be withheld with respect to such
payments or to take any such other action as may be necessary in the
opinion of the Board to satisfy all obligations for payment of such
taxes. If Common Stock that would otherwise be delivered in settlement of
the Award are used to satisfy tax withholding, such Common Stock shall be
valued based on their Fair Market Value determined in accordance with
section 6(B) when the tax withholding is required to be made. Participants
who are subject to Section 16 of the Exchange Act are hereby advised that
pursuant to Rule 16b3 thereunder the use of shares to satisfy tax
withholding will be treated as the exercise of a Stock Appreciation Right.
Page 26
</Page>
<PAGE>
(c Amendment and Termination.
--------------------------
The Board may at any time suspend, amend, or terminate the Plan,
and, without limiting the foregoing, the Board shall have the express
authority to amend the Plan from time to time, with or without approval by
the shareholders, in the manner and to the extent that the Board believes
is necessary or appropriate in order to cause the Plan to conform to
provisions of Rule 16b3 under the Exchange Act and any other rules under
Section 16 of the Exchange Act, as any of such rules may be amended,
supplemented, or superseded from time to time. Except for adjustments made
in accordance with Section 9(A), the Board may not, without the consent of
the grantee of the Award, alter or impair any Award previously granted
under the Plan. No Award may be granted during any suspension of the Plan
or after termination thereof.
(d) Effective Date of the Plan.
---------------------------
The Plan was adopted by the Board on March 14, 2000.
(e) Duration of the Plan.
---------------------
Unless previously terminated by the Board, the Plan shall
terminate at the close of business on March 13, 2005 and no Award shall be
granted under it thereafter, but such termination shall not affect any
Award theretofor granted.
(f) Use of Certain Terms.
---------------------
The terms "parent" and "subsidiary" shall have the meanings
ascribed to them in Section 424 of the Code and unless the context
otherwise requires, the other terms defined in Section 421, 422, and 424,
inclusive, of the Code and regulations and revenue rulings applicable
thereto, shall have the meanings attributed to them therein.
Page 27
</Page>
/Letterhead/
Bryan Cave LLP
18881 Von Karman, Suite 1500
Irvine, California 92612-1582
(949) 223-7000
Facsimile (949) 223-7100
Randolf W. Katz
Partner
Direct Dial
(949) 223-7103
March 29, 2000
VPN Communications Corp.
3200 Bristol Street, Suite 725
Costa Mesa, CA 92626
Re: Registration on Form S-8
Gentlemen:
At your request, we have examined the Registration Statement on Form
S-8 (the "Registration Statement") as proposed to be filed by you with the
Securities and Exchange Commission in connection with the registration
under the Securities Act of 1933, as amended, of the offer and sale of up
to 2,000,000 shares (the "Shares") of Common Stock, $0.001 par value per
share, of VPN Communications Corp., a Nevada corporation (the "Company"),
upon exercise of options and warrants granted or to be granted pursuant to
the Company's 2000 Stock Compensation Program. We have further examined
the proceedings that you have previously taken and are familiar with the
additional proceedings proposed to be taken in connection with the
authorization, issuance, and sale of the Shares.
Subject to compliance with applicable state securities and "Blue Sky"
laws, we are of the opinion that the Shares, upon their issuance and sale
in the manner described in the Registration Statement, will be legally
issued, fully paid, and non-assessable securities of the Company.
We consent to the use of this opinion as Exhibit 5.1 of the
Registration Statement and to the use of our name in the Prospectus
constituting a part thereof.
Very truly yours,
/S/ Randolf W. Katz
Randolf W. Katz
Randolf W. Katz
/Letterhead/
Schvaneveldt & Company
Certified Public Accountant
275 East South Temple, Suite #300
Salt Lake City, Utah 84111
(801) 521-2392
Darrell T. Schvaneveldt, C.P.A.
Consent of Darrell T. Schvaneveldt
Independent Auditor
I consent to the use, of our report dated may 14, 1999, on the financial
statements of Exhibitronix, Inc., dated December 31, 1998, as referenced to
as previously filed and to the reference made to me in the filing of the S-8
Registration Form.
/S/ Schvaneveldt & Company
Salt Lake City, Utah
March 29, 2000
