AMENDED AND RESTATED
STOCK INCENTIVE PLAN
(Amendment No. 2)
eConnect
1. GENERAL PROVISIONS.
1.1 Purpose.
The Amended and Restated eConnect Stock Incentive Plan
(Amendment No. 2) ("Plan") is intended to allow designated
officers, employees, and certain non-employees (all of whom are
sometimes collectively referred to herein as "Employees") of
eConnect, a Nevada corporation ("eConnect") and its Subsidiaries
(as that term is defined below) which it may have from time to
time (eConnect and such Subsidiaries are referred to herein as the
"Company") to receive certain options ("Stock Options") to
purchase eConnect's common stock, one tenth of one cent ($0.001)
par value ("Common Stock"), and to receive grants of Common Stock
subject to certain restrictions ("Awards"). As used in this
Plan, the term "Subsidiary" shall mean each corporation which is a
"subsidiary corporation" of eConnect within the meaning of Section
424(f) of the Internal Revenue Code of 1986, as amended (the
"Code"). The purpose of this Plan is to provide Employees with
equity-based compensation incentives to make significant and
extraordinary contributions to the long-term performance and
growth of the Company, and to attract and retain Employees of
exceptional ability.
1.2 Administration.
1.2.1 The Plan shall be administered by the Compensation
Committee (the "Committee") of, or appointed by, the Board of
Directors of eConnect (the "Board"). The Committee shall select
one of its members as Chairman and shall act by vote of a majority
of a quorum, or by unanimous written consent. A majority of its
members shall constitute a quorum. The Committee shall be
governed by the provisions of eConnect's Bylaws and of Nevada law
applicable to the Board, except as otherwise provided herein or
determined by the Board.
1.2.2 The Committee shall have full and complete authority,
in its discretion, but subject to the express provisions of the
Plan: to approve the Employees nominated by the management of the
Company to be granted Awards or Stock Options; to determine the
number of Awards or Stock Options to be granted to an Employee; to
determine the time or times at which Awards or Stock Options shall
be granted; to establish the terms and conditions upon which
Awards or Stock Options may be exercised; to remove or adjust any
restrictions and conditions upon Awards or Stock Options; to
specify, at the time of grant, provisions relating to
exercisability of Stock Options and to accelerate or otherwise
modify the exercisability of any Stock Options; and to adopt such
rules and regulations and to make all other determinations deemed
necessary or desirable for the administration of the Plan. All
interpretations and constructions of the Plan by the Committee,
and all of its actions hereunder, shall be binding and conclusive
on all persons for all purposes.
1.2.3 The Company hereby agrees to indemnify and hold
harmless each Committee member and each employee of the Company,
and the estate and heirs of such Committee member or employee,
against all claims, liabilities, expenses, penalties, damages or
other pecuniary losses, including legal fees, which such Committee
member or employee, his or her estate or heirs may suffer as a
result of his or her responsibilities, obligations or duties in
connection with the Plan, to the extent that insurance, if any,
does not cover the payment of such items. No member of the
Committee or the Board shall be liable for any action or
determination made in good faith with respect to the Plan or any
Award or Stock Option granted pursuant to the Plan.
1.3 Eligibility and Participation.
Employees eligible under the Plan shall be approved by the
Committee from those Employees who, in the opinion of the
management of the Company, are in positions which enable them to
make significant and extraordinary contributions to the long-term
performance and growth of the Company. In selecting Employees to
whom Stock Options or Awards may be granted, consideration shall
be given to factors such as employment position, duties and
responsibilities, ability, productivity, length of service,
morale, interest in the Company and recommendations of super-
visors.
1.4 Shares Subject to the Plan.
The maximum number of shares of Common Stock that may be
issued pursuant to the Plan shall be Ten Million (10,000,000)
subject to adjustment pursuant to the provisions of paragraph 4.1.
If shares of Common Stock awarded or issued under the Plan are
reacquired by the Company due to a forfeiture or for any other
reason, such shares shall be cancelled and thereafter shall again
be available for purposes of the Plan. If a Stock Option expires,
terminates or is cancelled for any reason without having been
exercised in full, the shares of Common Stock not purchased
thereunder shall again be available for purposes of the Plan.
2. PROVISIONS RELATING TO STOCK OPTIONS.
2.1 Grants of Stock Options.
The Committee may grant Stock Options in such amounts, at
such times, and to such Employees nominated by the management of
the Company as the Committee, in its discretion, may determine.
Stock Options granted under the Plan shall constitute "incentive
stock options" within the meaning of Section 422 of the Code, if
so designated by the Committee on the date of grant. The
Committee shall also have the discretion to grant Stock Options
which do not constitute incentive stock options, and any such
Stock Options shall be designated non-statutory stock options by
the Committee on the date of grant. The aggregate fair market
value (determined as of the time an incentive stock option is
granted) of the Common Stock with respect to which incentive stock
options are exercisable for the first time by any Employee during
any one calendar year (under all plans of the Company and any
parent or subsidiary of the Company) may not exceed the maximum
amount permitted under Section 422 of the Code (currently one
hundred thousand dollars ($100,000.00)). Non-statutory stock
options shall not be subject to the limitations relating to incen-
tive stock options contained in the preceding sentence. Each
Stock Option shall be evidenced by a written agreement (the
"Option Agreement") in a form approved by the Committee, which
shall be executed on behalf of the Company and by the Employee to
whom the Stock Option is granted, and which shall be subject to
the terms and conditions of this Plan. In the discretion of the
Committee, Stock Options may include provisions (which need not be
uniform), authorized by the Committee in its discretion, that
accelerate an Employee's rights to exercise Stock Options
following a "Change in Control," as such term is defined in
paragraph 3.1 hereof. The holder of a Stock Option shall not be
entitled to the privileges of stock ownership as to any shares of
Common Stock not actually issued to such holder.
2.2 Purchase Price.
The purchase price (the "Exercise Price") of shares of Common
Stock subject to each non-statutory Stock Option ("Option Shares")
shall equal forty cents ($0.40) per share for those Stock Options
exercised on or before December 31, 2000; thereafter the exercise
price shall be twenty-five percent (25%) of the fair market value
of the Common Stock on the date of the exercise. The Exercise
Price of incentive Stock Options shall be the fair market value of
the options on the date of the grant thereof. For an employee
holding stock possessing more than ten percent (10%) percent of
the total combined voting power of all classes of stock of the
Company, the Exercise Price of an incentive Stock Option shall be
at least one hundred ten percent (110%) of the fair market value
of the Common Stock and such option.
2.3 Option Period.
The Stock Option period (the "Term") shall commence on the
date of grant of the incentive Stock Option and shall be ten (10)
years or such shorter period as is determined by the Committee;
the Term for an incentive Stock Option granted to an employee
holding stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company
shall be five (5) years from the date such option is granted.
The Term for Non-statutory Stock Options shall be whatever
period, if any, is set by the Board. Each Stock Option shall
provide that it is exercisable over its term in such periodic
installments as the Committee in its sole discretion may deter-
mine. Such provisions need not be uniform. Notwithstanding the
foregoing, but subject to the provisions of paragraphs 1.2.2 and
2.1, Stock Options granted to Employees who are subject to the
reporting requirements of Section 16(a) of the Exchange Act
("Section 16 Reporting Persons") shall not be exercisable until at
least six (6) months and one day from the date the Stock Option is
granted.
2.4 Exercise of Options.
2.4.1 Each Stock Option may be exercised in whole or in part
(but not as to fractional shares) by delivering it for surrender
or endorsement to the Company, attention of the Corporate
Secretary, at the principal office of the Company, together with
payment of the Exercise Price and an executed Notice and Agreement
of Exercise in the form prescribed by paragraph 2.4.2. Payment
may be made (i) in cash, (ii) by cashier's or certified check,
(iii) by surrender of previously owned shares of the Company's
Common Stock valued pursuant to paragraph 2.2 (if the Committee
authorizes payment in stock in its discretion), (iv) by
withholding from the Option Shares which would otherwise be
issuable upon the exercise of the Stock Option that number of
Option Shares equal to the exercise price of the Stock Option, if
such withholding is authorized by the Committee in its discretion,
(v) in the discretion of the Committee, by the delivery to the
Company of the optionee's promissory note secured by the Option
Shares, bearing interest at a rate sufficient to prevent the
imputation of interest under Sections 483 or 1274 of the Code, and
having such other terms and conditions as may be satisfactory to
the Committee, or (vi) cashless exercise program as established by
eConnect. A maximum of twenty-five percent (25%) of the Stock
Option shall be exercisable in any one (1) calendar year.
2.4.2 Exercise of each Stock Option is conditioned upon the
agreement of the Employee to the terms and conditions of this Plan
and of such Stock Option as evidenced by the Employee's execution
and delivery of a Notice and Agreement of Exercise in a form to be
determined by the Committee in its discretion. Such Notice and
Agreement of Exercise shall set forth the agreement of the
Employee that: (a) no Option Shares will be sold or otherwise
distributed in violation of the Securities Act of 1933 (the
"Securities Act") or any other applicable federal or state
securities laws, (b) each Option Share certificate may be im-
printed with legends reflecting any applicable federal and state
securities law restrictions and conditions, (c) the Company may
comply with said securities law restrictions and issue "stop
transfer" instructions to its Transfer Agent and Registrar without
liability, (d) if the Employee is a Section 16 Reporting Person,
the Employee will furnish to the Company a copy of each Form 4 or
Form 5 filed by said Employee and will timely file all reports
required under federal securities laws, and (e) the Employee will
report all sales of Option Shares to the Company in writing on a
form prescribed by the Company.
2.4.3 No Stock Option shall be exercisable unless and until
any applicable registration or qualification requirements of
federal and state securities laws, and all other legal require-
ments, have been fully complied with. The Company will use
reasonable efforts to maintain the effectiveness of a Registration
Statement under the Securities Act for the issuance of Stock
Options and shares acquired thereunder, but there may be times
when no such Registration Statement will be currently effective.
The exercise of Stock Options may be temporarily suspended without
liability to the Company during times when no such Registration
Statement is currently effective, or during times when, in the
reasonable opinion of the Committee, such suspension is necessary
to preclude violation of any requirements of applicable law or
regulatory bodies having jurisdiction over the Company. If any
Stock Option would expire for any reason except the end of its
term during such a suspension, then if exercise of such Stock
Option is duly tendered before its expiration, such Stock Option
shall be exercisable and exercised (unless the attempted exercise
is withdrawn) as of the first day after the end of such
suspension. The Company shall have no obligation to file any
Registration Statement covering resales of Option Shares.
2.5 Restrictions on Transfer.
Each Stock Option granted under this Plan shall be
transferable only by will or the laws of descent and distribution.
No interest of any Employee under the Plan shall be subject to
attachment, execution, garnishment, sequestration, the laws of
bankruptcy or any other legal or equitable process. Each Stock
Option granted under this Plan shall be exercisable during an
Employee's lifetime only by such Employee or by such Employee's
legal representative.
3. PROVISIONS RELATING TO AWARDS.
3.1 Grant of Awards.
Subject to the provisions of the Plan, the Committee shall
have full and complete authority, in its discretion, but subject
to the express provisions of this Plan, to (i) grant Awards pur-
suant to the Plan, (ii) determine the number of shares of Common
Stock subject to each Award ("Award Shares"), (iii) determine the
terms and conditions (which need not be identical) of each Award,
including the consideration (if any) to be paid by the Employee
for such Common Stock, which may, in the Committee's discretion,
consist of the delivery of the Employee's promissory note meeting
the requirements of paragraph 2.4.1, (iv) establish and modify
performance criteria for Awards, and (v) make all of the
determinations necessary or advisable with respect to Awards under
the Plan. Each award under the Plan shall consist of a grant of
shares of Common Stock subject to a restriction period (after
which the restrictions shall lapse), which shall be a period
commencing on the date the award is granted and ending on such
date as the Committee shall determine (the "Restriction Period").
The Committee may provide for the lapse of restrictions in
installments, for acceleration of the lapse of restrictions upon
the satisfaction of such performance or other criteria or upon the
occurrence of such events as the Committee shall determine.
3.2 Incentive Agreements.
Each Award granted under the Plan shall be evidenced by a
written agreement (an "Incentive Agreement") in a form approved by
the Committee and executed by the Company and the Employee to whom
the Award is granted. Each Incentive Agreement shall be subject
to the terms and conditions of the Plan and other such terms and
conditions as the Committee may specify.
3.3 Waiver of Restrictions.
The Committee may modify or amend any Award under the Plan or
waive any restrictions or conditions applicable to such Awards;
provided, however, that the Committee may not undertake any such
modifications, amendments or waivers if the effect thereof
materially increases the benefits to any Employee, or adversely
affects the rights of any Employee without his or her consent.
3.4 Terms and Conditions of Awards.
3.4.1 Upon receipt of an Award of shares of Common Stock
under the Plan, even during the Restriction Period, an Employee
shall be the holder of record of the shares and shall have all the
rights of a shareholder with respect to such shares, subject to
the terms and conditions of the Plan and the Award.
3.4.2 Except as otherwise provided in this paragraph 3.4, no
shares of Common Stock received pursuant to the Plan shall be
sold, exchanged, transferred, pledged, hypothecated or otherwise
disposed of during the Restriction Period applicable to such
shares. Any purported disposition of such Common Stock in
violation of this paragraph 3.4.2 shall be null and void.
3.4.3 The Committee may require under such terms and
conditions as it deems appropriate or desirable that (i) the
certificates for Common Stock delivered under the Plan are to be
held in custody by the Company or a person or institution
designated by the Company until the Restriction Period expires,
(ii) such certificates shall bear a legend referring to the
restrictions on the Common Stock pursuant to the Plan, and (iii)
the Employee shall have delivered to the Company a stock power
endorsed in blank relating to the Common Stock.
4. MISCELLANEOUS PROVISIONS.
4.1 Adjustments Upon Change in Capitalization.
4.1.1 The number and class of shares subject to each out-
standing Stock Option, the Exercise Price thereof (but not the
total price), the maximum number of Stock Options that may be
granted under the Plan, the minimum number of shares as to which a
Stock Option may be exercised at any one time, and the number and
class of shares subject to each outstanding Award, shall
be proportionately adjusted in the event of any increase or
decrease in the number of the issued shares of Common Stock which
results from a split-up or consolidation of shares, payment of a
stock dividend or dividends exceeding a total of five percent (5%)
for which the record dates occur in any one fiscal year, a
recapitalization (other than the conversion of convertible securi-
ties according to their terms), a combination of shares or other
like capital adjustment, so that (i) upon exercise of the Stock
Option, the Employee shall receive the number and class of shares
such Employee would have received had such Employee been the
holder of the number of shares of Common Stock for which the Stock
Option is being exercised upon the date of such change or increase
or decrease in the number of issued shares of the Company, and
(ii) upon the lapse of restrictions of the Award Shares, the
Employee shall receive the number and class of shares such
Employee would have received if the restrictions on the Award
Shares had lapsed on the date of such change or increase or
decrease in the number of issued shares of the Company.
4.1.2 Upon a reorganization, merger or consolidation of the
Company with one or more corporations as a result of which is not
the surviving corporation or in which eConnect survives as a
wholly-owned subsidiary of another corporation, or upon a sale of
all or substantially all of the property of the Company to another
corporation, or any dividend or distribution to shareholders of
more than ten percent (10%) of the Company's assets, adequate
adjustment or other provisions shall be made by the Company or
other party to such transaction so that there shall remain and/or
be substituted for the Option Shares and Award Shares provided for
herein, the shares, securities or assets which would have been
issuable or payable in respect of or in exchange for such Option
Shares and Award Shares then remaining, as if the Employee had
been the owner of such shares as of the applicable date. Any
securities so substituted shall be subject to similar successive
adjustments.
4.2 Withholding Taxes.
The Company shall have the right at the time of exercise of
any Stock Option, the grant of an Award, or the lapse of
restrictions on Award Shares, to make adequate provision for any
federal, state, local or foreign taxes which it believes are or
may be required by law to be withheld with respect to such
exercise ("Tax Liability"), to ensure the payment of any such Tax
Liability. The Company may provide for the payment of any Tax
Liability by any of the following means or a combination of such
means, as determined by the Committee in its sole and absolute
discretion in the particular case: (i) by requiring the Employee
to tender a cash payment to the Company, (ii) by withholding from
the Employee's salary, (iii) by withholding from the Option Shares
which would otherwise be issuable upon exercise of the Stock
Option, or from the Award Shares on their grant or date of lapse
of restrictions, that number of Option Shares or Award Shares
having an aggregate fair market value (determined in the manner
prescribed by paragraph 2.2) as of the date the withholding tax
obligation arises in an amount which is equal to the Employee's
Tax Liability or (iv) by any other method deemed appropriate by
the Committee. Satisfaction of the Tax Liability of a Section 16
Reporting Person may be made by the method of payment specified in
clause (iii) above only if the following two conditions are
satisfied:
(a) the withholding of Option Shares or Award Shares and
the exercise of the related Stock Option occur at least six (6)
months and one day following the date of grant of such Stock
Option or Award; and
(b) the withholding of Option Shares or Award Shares is
made either (i) pursuant to an irrevocable election ("Withholding
Election") made by such Employee at least six months in advance of
the withholding of Options Shares or Award Shares, or (ii) on a
day within a ten (10) day "window period" beginning on the third
business day following the date of release of the Company's
quarterly or annual summary statement of sales and earnings.
Anything herein to the contrary notwithstanding, a Withholding
Election may be disapproved by the Committee at any time.
4.3 Relationship to Other Employee Benefit Plans.
Stock Options and Awards granted hereunder shall not be
deemed to be salary or other compensation to any Employee for
purposes of any pension, thrift, profit-sharing, stock purchase or
any other employee benefit plan now maintained or hereafter
adopted by the Company.
4.4 Amendments and Termination.
The Board of Directors may at any time suspend, amend or
terminate this Plan. No amendment, except as provided in
paragraph 2.8, or modification of this Plan may be adopted, except
subject to stockholder approval, which would: (a) materially
increase the benefits accruing to Employees under this Plan, (b)
materially increase the number of securities which may be issued
under this Plan (except for adjustments pursuant to paragraph 4.1
hereof), or (c) materially modify the requirements as to
eligibility for participation in the Plan.
4.5 Successors in Interest.
The provisions of this Plan and the actions of the Committee
shall be binding upon all heirs, successors and assigns of the
Company and of Employees.
4.6 Other Documents.
All documents prepared, executed or delivered in connection
with this Plan (including, without limitation, Option Agreements
and Incentive Agreements) shall be, in substance and form, as
established and modified by the Committee; provided, however, that
all such documents shall be subject in every respect to the
provisions of this Plan, and in the event of any conflict between
the terms of any such document and this Plan, the provisions of
this Plan shall prevail.
4.7 No Obligation to Continue Employment.
This Plan and grants hereunder shall not impose any
obligation on the Company to continue to employ any Employee.
Moreover, no provision of this Plan or any document executed or
delivered pursuant to this Plan shall be deemed modified in any
way by any employment contract between an Employee (or other
employee) and the Company.
4.8 Misconduct of an Employee.
Notwithstanding any other provision of this Plan, if an
Employee commits fraud or dishonesty toward the Company or wrong-
fully uses or discloses any trade secret, confidential data or
other information proprietary to the Company, or intentionally
takes any other action materially inimical to the best interests
of the Company, as determined by the Committee, in its sole and
absolute discretion, such Employee shall forfeit all rights and
benefits under this Plan.
4.9 Term of Plan.
This Plan was adopted by the Board effective November 7,
2000. No Stock Options or Awards may be granted under this Plan
after November 7, 2010.
4.10 Governing Law.
This Plan shall be construed in accordance with, and governed
by, the laws of the State of Nevada.
4.11 Shareholder Approval.
No Stock Option shall be exercisable, or Award granted,
unless and until the Directors of the Company have approved this
Plan and all other legal requirements have been fully complied
with. In addition, no incentive Stock Option shall be granted
until approved by a majority of the issued and outstanding Common
Stock of the eConnect.
4.12 Assumption Agreements.
The Company will require each successor, (direct or indirect,
whether by purchase, merger, consolidation or otherwise), to all
or substantially all of the business or assets of the Company,
prior to the consummation of each such transaction, to assume and
agree to perform the terms and provisions remaining to be
performed by the Company under each Incentive Agreement and Stock
Option and to preserve the benefits to the Employees thereunder.
Such assumption and agreement shall be set forth in a written
agreement in form and substance satisfactory to the Committee (an
"Assumption Agreement"), and shall include such adjustments, if
any, in the application of the provisions of the Incentive
Agreements and Stock Options and such additional provisions, if
any, as the Committee shall require and approve, in order to
preserve such benefits to the Employees. Without limiting the
generality of the foregoing, the Committee may require an
Assumption Agreement to include satisfactory undertakings by a
successor:
(a) to provide liquidity to the Employees at the end of the
Restriction Period applicable to Common Stock awarded to them
under the Plan, or on the exercise of Stock Options;
(b) if the succession occurs before the expiration of any
period specified in the Incentive Agreements for satisfaction of
performance criteria applicable to the Common Stock awarded
thereunder, to refrain from interfering with the Company's ability
to satisfy such performance criteria or to agree to modify such
performance criteria and/or waive any criteria that cannot be
satisfied as a result of the succession;
(c) to require any future successor to enter into an
Assumption Agreement; and
(d) to take or refrain from taking such other actions as
the Committee may require and approve, in its discretion.
The Committee referred to in this paragraph 4.12 is the Committee
appointed by a Board of Directors in office prior to the
succession then under consideration.
4.13 Compliance With Rule 16b-3.
Transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3. To the extent that any
provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted
by law and deemed advisable by the Committee.
IN WITNESS WHEREOF, this Plan has been executed as of the 7th day
of November, 2000.
eConnect
By: /s/ Thomas S. Hughes
Thomas S. Hughes, President
