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Exhibit: 10.5FD
FUNDEX GAMES, LTD.
1996 EMPLOYEE STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this 1996 Employee Stock
Option Plan (the "Plan") are to attract and retain the best available personnel,
to provide additional incentive to the Employees of the Company and its
Subsidiaries, to promote the success of the Company's business and to enable the
Employees to share in the growth and prosperity of the Company by providing them
with an opportunity to purchase stock in the Company.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written stock option agreement.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "AFFILIATE" shall mean any entity that directly, or
indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Company.
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time. References in the Plan to any section of the
Code shall be deemed to include any amendment or successor provisions
to such section and any regulations issued under such section.
(d) "COMMON STOCK" shall mean the Common Stock of the Company.
(e) "COMPANY" shall mean Fundex Games, Ltd., a Nevada
corporation.
(f) "COMMITTEE" shall mean the Committee appointed by the
Board in accordance with Section 4(a) of the Plan, if one is appointed.
(g) "CONTINUOUS EMPLOYMENT" OR "CONTINUOUS STATUS AS AN
EMPLOYEE" shall mean the absence of any interruption or termination of
employment or service as an Employee by or to the Company or any Parent
or Subsidiary of the Company which now exists or is hereafter organized
or acquired by or acquires the Company. Continuous Employment shall not
be considered interrupted in the case of sick leave, military leave or
any other leave of absence approved by the Board or in the case of
transfers between locations of the Company or between the Company, its
Parent, or any of its Subsidiaries or its successors.
(h) "DISABILITY" shall mean the inability of the Optionee to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or has lasted or can be expected to last for a
continuous period of not less than 12 months. In determining the
Disability of an Optionee, the Board may require the Optionee to
furnish proof of the existence of Disability and may select a physician
to examine the Optionee. The final determination as to the Disability
of the Optionee shall be made by the Board.
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(i) "DISINTERESTED PERSON" shall mean an administrator of the Plan
who, during the one year prior to service as an administrator of the
Plan, has not been granted or awarded and, during such service, is not
granted or awarded stock, stock options or stock appreciation rights
pursuant to the Plan or any other plan of the Company or any of its
Affiliates entitling the participants therein to acquire stock, stock
options or stock appreciation rights of the Company or any Affiliates,
except for any plan under which the award of stock, stock options or
stock appreciation rights is not subject to the discretion of any person
or persons. The term "DISINTERESTED PERSON" shall be interpreted in a
manner consistent with the meaning of such term under Rule 16b-3
promulgated by the Securities and Exchange Commission under the Exchange
Act.
(j) "EMPLOYEE" shall mean any person, including officers and
directors, employed by the Company, its Parent, any of its Subsidiaries
or its successors. A person shall not be deemed to be employed by the
Company merely because such person is a member of the Board of Directors
of the Company or a consultant to the Company.
(k) "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended
(l) "INCENTIVE STOCK OPTION" shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of
the Code.
(m) "NONSTATUTORY STOCK OPTION" shall mean an Option which is not
an Incentive Stock Option.
(n) "OPTION" shall mean a stock option granted pursuant to the
Plan evidencing the grant of a right to an Employee pursuant to the Plan
to purchase a specified number of Shares at a specified exercise price.
(o) "OPTION AGREEMENT" shall mean a written agreement
substantially in one of the forms attached hereto as Exhibit A, or such
other form or forms as the Board (subject to the terms and conditions of
this Plan) may from time to time approve, evidencing and reflecting the
terms of an Option.
(p) "OPTIONED STOCK" shall mean the Common Stock subject to an
Option.
(q) "OPTIONEE" shall mean an Employee who is granted an Option.
(r) "PARENT" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Sections 424 (e) and (g) of the Code.
(s) "PLAN" shall mean this 1996 Stock Option Plan.
(t) "SHARE" or "SHARES" shall mean shares of the Common Stock, as
adjusted in accordance with Section 10 of the Plan.
(u) "STOCK PURCHASE AGREEMENT" shall mean an agreement
substantially in the form attached hereto as Exhibit B, or such other
form or forms as the Board (subject to the terms and conditions of this
Plan) may from time to time approve,
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which is to be executed as a condition of purchasing Optioned Stock upon
exercise of an Option.
(v) "SUBSIDIARY" shall mean a subsidiary corporation, whether now
or hereafter existing, as defined in Sections 424(f) and (g) of the Code.
(w) "TERMINATION FOR CAUSE" shall mean termination of employment
as a result of (i) any act or acts by the Optionee constituting a felony
under any federal, state or local law; (ii) the Optionee's willful and
continued failure to perform the duties assigned to him or her as an
Employee, (iii) any material breach by the Optionee of any agreement with
the Company concerning his or her employment or other understanding
concerning the terms and conditions of employment by the Company; (iv)
dishonesty, gross negligence or malfeasance by the Optionee in the
performance of his or her duties as an Employee or any conduct by the
Optionee which involves a material conflict of interest with any business
of the Company or Affiliate; or (v) the Optionee's taking or knowingly
omitting to take any other action or actions in the performance of
Optionee's duties as an Employee without informing appropriate members of
management to whom such Optionee reports, which action or actions, in the
determination of the Board, have caused or substantially contributed to
the material deterioration in the business or financial condition of the
Company or any Affiliate, taken as a whole.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
pursuant to the exercise of Options under the Plan is 300,000 Shares. The Shares
may be authorized, but unissued or reacquired Shares.
If an Option should expire or become unexercisable for any reason without
having been exercised in full or if the Company repurchases Shares from the
Optionee pursuant to the terms of a Stock Purchase Agreement, the unpurchased or
repurchased Shares, respectively, which were subject thereto shall, unless the
Plan shall have been terminated, return to the Plan and become available for
other Options under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. The Plan shall be administered by the Board.
Members of the Board who are eligible for Options or have been granted Options
may vote on any matters affecting the administration of the Plan or the grant of
any Options pursuant to the Plan, except that no such member shall act upon the
granting of an Option to himself or herself, but any such member may be counted
in determining the existence of a quorum at any meeting of the Board or
Committee during which action is taken with respect to the granting of Options
to him or her.
The Board may at any time appoint a Committee consisting of not less than
two persons to administer the Plan on behalf of the Board, subject to such terms
and conditions as the Board may prescribe. Members of the Committee shall serve
for such period of time as the Board may determine. From time to time the Board
may increase the size of the Committee and appoint additional members thereto,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies however caused, or remove all members of the Committee
and thereafter directly administer the Plan. In the event the Company has a
class of equity securities registered under Section 12 of the Exchange Act and
unless the Board
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determines otherwise, from the effective date of such registration until six
months after the termination of such registration, all grants of Options to
persons subject to the provisions of Section 16(b) of the Exchange Act during
any and all periods of time when all members of the Board do not qualify as
Disinterested Persons shall be made by, or only in accordance with the
recommendations of, a Committee of two or more persons having full authority to
act in the matter and all of whom are Disinterested Persons.
(b) POWERS OF THE BOARD. Subject to the provisions of the
Plan, the Board shall have the authority, in its discretion: (i) to grant
Incentive Stock Options and Nonstatutory Stock Options; (ii) to determine, upon
review of relevant information and in accordance with Section 7 of the Plan, the
fair market value per Share; (iii) to determine the terms and conditions of
vesting of Options, the exercise price of the Options and the consideration to
be paid for shares upon the exercise of Options (which exercise price and
consideration shall be determined in accordance with Section 7 of the Plan);
(iv) to determine the Employees to whom, and the time or times at which, Options
shall be granted, and the number of Shares to be subject to each Option; (v) to
prescribe, amend and rescind rules and regulations relating to the Plan; (vi) to
determine the terms and provisions of each Option Agreement and each Stock
Purchase Agreement (each of which need not be identical with the terms of other
Options and Stock Purchase Agreements) and, with the consent of the holder
thereof, to modify or amend each Option and Stock Purchase Agreement; (vii) to
determine whether a stock repurchase agreement or other agreement will be
required to be executed by any Employee as a condition to the exercise of an
Option, and to determine the terms and provisions of any such agreement (which
need not be identical with the terms of any other such agreement) and, with the
consent of the Optionee, to amend any such agreement; (viii) to interpret the
Plan, the Option Agreements, the Stock Purchase Agreements or any agreement
entered into with respect to the grant or exercise of Options; (ix) to authorize
any person to execute on behalf of the Company any instrument required to
effectuate the grant of an Option previously granted by the Board or to take
such other actions as may be necessary or appropriate with respect to the
Company's rights pursuant to Options or agreements relating to the grant or
exercise thereof; and (x) to make such other determinations and establish such
other procedures as it deems necessary or advisable for the administration of
the Plan.
(c) EFFECT OF THE BOARD'S DECISION. All decisions,
determinations and interpretations of the Board shall be final and binding on
all Optionee's and any other holders of Options.
5. ELIGIBILITY. Options may be granted only to Employees (including
employees of the Company who are also directors of the Company). An Employee who
has been granted an Option may, if such Employee is otherwise eligible, be
granted additional Options.
6. EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective as of
the date of the adoption of the Plan by the Company's Board of Directors subject
to the approval by the Company's shareholders within 12 months before or after
the date the Plan is adopted; provided, however, that Options may be granted
pursuant to the Plan prior to such shareholder approval subject to subsequent
approval of the Plan by such shareholders. The Plan shall continue in effect for
a term of ten years unless sooner terminated in accordance with the terms and
provisions of the Plan.
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7. OPTION PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The exercise price per Share for the
Shares to be issued pursuant to the exercise of a Nonstatutory Stock Option
shall be not less than 85% of the "fair market value" per Share, as described
below. The exercise price per Share for the Shares to be issued pursuant to the
exercise of an Incentive Option shall be the fair market value per Share.
However, with respect to both Incentive Stock Options and Nonstatutory Stock
Options, the exercise price shall be 110% of the fair market value per Share on
the date of grant in the case of any Optionee who, at the time the Option is
granted, owns stock (as determined under Section 424(d) of the Code) possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or its Parent or Subsidiaries.
(b) FAIR MARKET VALUE. The fair market value per Share on the
date of grant shall be determined by the Board in its sole discretion, exercised
in good faith; provided, however, that where there is a public market for the
Common Stock, the fair market value per Share shall be the average of the
closing bid and asked prices of the Common Stock on the date of grant, as
reported in THE WALL STREET JOURNAL (or, if not so reported, as otherwise
reported by the National Association of Securities Dealers Automated Quotations
("NASDAQ") System), or, in the event the Common Stock is listed on a stock
exchange or on the NASDAQ Stock Market, the fair market value per Share shall be
the closing price on the exchange or on the NASDAQ Stock Market as of the date
of grant of the Option, as reported in THE WALL STREET JOURNAL.
(c) PAYMENT OF CONSIDERATION. The consideration to be paid for
the Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Board in its discretion on the date of grant
and may consist of cash, check, promissory notes or other forms of legally
permitted consideration if authorized by the Board in connection with the grant
of an Option.
8. OPTIONS.
(a) TERMS AND PROVISIONS OF OPTIONS. As provided in Section 4
of this Plan and subject to any limitations specified herein, the Board shall
have the authority to determine the terms and provisions of any Option granted
under the Plan or any agreement required to be executed in connection with the
grant or exercise of an Option. Each Option granted pursuant to this Plan shall
be evidenced by an Option Agreement. Options granted under the Plan are
conditioned upon the Company obtaining any required permit or order from
appropriate governmental agencies, authorizing the Company to issue such Options
and Shares issuable upon exercise thereof.
(b) NUMBER OF SHARES. Each Option Agreement shall state the
number of Shares to which it pertains and whether such Option is intended to
constitute an Incentive Stock Option or a Nonstatutory Stock Option. The maximum
number of Shares which may be awarded as Options under the Plan during any
calendar year to any Optionee is 50,000 Shares. If an Option held by an Employee
is canceled, the canceled Option shall continue to be counted against the
maximum number of Shares for which Options may be granted to such Employee and
any replacement Option granted to such Employee shall also count against such
limit.
(c) TERM OF OPTION. The term of each Option may be up to ten
years from the date of grant thereof, as determined by the Board upon the grant
of the Option and
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specified in the Option Agreement, except that the term of an Incentive Stock
Option granted to an Employee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent of the total combined
voting power of all classes of stock of the Company or its Parent or
Subsidiaries, shall not exceed five years from the date of grant thereof.
(d) EXERCISE OF OPTION.
(i) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
option shall vest and become exercisable at such times, in such
installments and under such conditions as may be determined by the
Board, specified in the Option Agreement and as shall be
permissible under the terms of the Plan, including performance
criteria with respect to the Company and/or the Optionee, provided
that each Option shall vest and become exercisable at the rate of
not less than 20% per year over five years from the date such
Option is granted. An Option may be exercised in accordance with
the provisions of this Plan as to all or any portion of the Shares
then exercisable under an Option, from time to time during the
term of the Option. An Option may not be exercised for a fraction
of a Share.
An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company at its
principal business office in accordance with the terms of the
Option Agreement by the person entitled to exercise the Option and
full payment for the Shares with respect to which the Option is
exercised has been received by the Company, accompanied by an
executed Stock Purchase Agreement (including the attachments
thereto) substantially in the form of Exhibit B hereto and as may
be modified by the Board from time to time, and any other
agreements required by the terms of the Plan and/or the Option
Agreement. Full payment may consist of such consideration and
method of payment allowable under Section 7 of the Plan. Until the
Option is properly exercised in accordance with the terms of this
Section 8(d), no right to vote or to receive dividends or any
other rights as a shareholder shall exist with respect to the
Optioned Stock. No adjustment shall be made for a dividend or
other right for which the record date is prior to the date the
Option is exercised, except as provided in Section 10 of the Plan.
As soon as practicable after any proper exercise of an
Option in accordance with the provisions of the Plan, the Company
shall, without transfer or issue tax to the Optionee, deliver to
the Optionee at the principal executive office of the Company or
such other place as shall be mutually agreed upon between the
Company and the Optionee, a certificate or certificates
representing the Shares for which the Option shall have been
exercised. The time of issuance and delivery of the certificate(s)
representing the Shares for which the Option shall have been
exercised may be postponed by the Company for such period as may
be required by the Company, with reasonable diligence, to comply
with any applicable listing requirements of any national or
regional securities exchange or any
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law or regulation applicable to the issuance or delivery of such
Shares. No Option may be exercised unless the Plan has been duly
approved by the shareholders of the Company in accordance with
applicable law. Notwithstanding anything to the contrary herein,
the terms of a Stock Purchase Agreement required to be executed
and delivered in connection with the exercise of an Option may
require the certificate or certificates representing the Shares
purchased upon the exercise of an Option to be delivered and
deposited with the Company as security for the Optionee's faithful
performance of the terms and conditions of his or her Stock
Purchase Agreement.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be
available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is
exercised.
(ii) TERMINATION OF STATUS AS AN EMPLOYEE. If an Optionee
ceases to serve as an Employee for any reason other than death or
Disability or Termination for Cause, and thereby terminates his or
her Continuous Status As An Employee, to the extent that such
Optionee was entitled to exercise the Option at the date of such
termination, such Optionee shall have the right to exercise the
Option at any time within 30 days subsequent to the last day of
such Optionee's Continuous Status As An Employee (unless at the
time of grant of such Option the Board specified a longer period,
not to exceed 90 days), PROVIDED, however, that no Option shall be
exercisable after the expiration of the term set forth in the
Option Agreement. To the extent that such Optionee was not
entitled to exercise the Option at the date of the terminating
event, or if such Optionee does not exercise such Option (which
such Optionee was entitled to exercise) within the time specified
herein, the Option shall terminate. In the event that an
Optionee's Continuous Status As An Employee terminates due to
death or Disability, to the extent that such Optionee was entitled
to exercise the Option at the date of such termination, the Option
may be exercised any time within 180 days subsequent to the death
or Disability of the Optionee (unless at the time of grant of such
Option the Board specified a longer period, not to exceed one
year), PROVIDED, however, that no Option shall be exercisable
after the expiration of the Option term set forth in the Option
Agreement. To the extent that such Optionee was not entitled to
exercise such Option at the date of his or her termination due to
death or Disability or if such Option is not exercised (to the
extent it could be exercised) within the time specified herein,
the Option shall terminate. If an Optionee ceases to serve as an
Employee due to a Termination For Cause, as determined by the
Company's Board, in its sole discretion, Optionee shall cease to
have any right to exercise any Option under such termination, and
the Option shall terminate.
(e) LIMIT ON VALUE OF OPTIONED STOCK. To the extent that the
aggregate fair market value (determined at the time an Incentive Stock Option is
granted) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by an Optionee during any calendar year under all
incentive stock option plans of the Company, its
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Parent or its Subsidiaries, if any, exceeds $100,000, the Options in excess of
such limit shall be treated as Nonstatutory Stock Options.
(f) EXPIRATION OF OPTION. Notwithstanding any provision in the
Plan, including but not limited to the provisions set forth in this Section 8,
an Option may not be exercised, under any circumstances, after the expiration of
its term.
9. NONTRANSFERABILITY OF OPTIONS. Options granted under this Plan may not
be sold, pledged, assigned, hypothecated, gifted, transferred or disposed of in
any manner, either voluntarily or involuntarily by operation of law, other than
by will or by the laws of descent or distribution or as a transfer between
spouses incident to a "divorce" within the meaning of Section 1041(a) of the
Code, and any such attempt may result, at the discretion of the Board, in the
termination of such Options. During the lifetime of the Optionee, his or her
Option may be exercised only by such Optionee or his or her legal guardian.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) Subject to any required action by the shareholders of the
Company, the number of Shares covered by each outstanding Option, and the number
of Shares which have been authorized for issuance under the Plan but as to which
no Options have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option or repurchase of Shares from an Optionee
upon termination of employment or service, as well as the exercise price per
Share covered by each such outstanding Option, shall be proportionately adjusted
for any increase or decrease in the number of issued Shares resulting from a
stock split, reverse stock split, combination, recapitalization or
reclassification of the Common Stock, or the payment of a stock dividend (but
only on the Common Stock) or any other increase or decrease in the number of
issued shares of Common Stock effected without receipt of consideration by the
Company (other than stock bonuses to Employees or directors); provided, however,
that the conversion of any convertible securities of the Company shall not be
deemed to have been effected without the receipt of consideration. Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of Shares subject to the Plan
or an Option.
(b) In the event of a proposed dissolution or liquidation of
the Company or the sale of all or substantially all of the assets of the Company
(other than in the ordinary course of business), or the merger, consolidation or
reorganization of the Company with or into another corporation as a result of
which the Company is not the surviving corporation or as a result of which the
outstanding Shares are exchanged for or converted into cash or property or
securities not of the Company, the Board shall (i) make provision for the
assumption of all outstanding Options by the successor corporation or a Parent
or a Subsidiary thereof, or (ii) declare that outstanding Options shall
terminate as of a date fixed by the Board which is at least thirty (30) days
after the notice thereof to the Optionee (unless such thirty (30) day period is
waived by the Optionee) and shall give each Optionee the right to exercise his
or her Option as to all or any part of the shares underlying such Option to the
extent then exercisable, provided such exercise does not violate Section
8(d)(ii) of the Plan.
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(c) No fractional shares of Common Stock shall be issuable on
account of any action described in this Section, and the aggregate number of
shares into which Shares then covered by the Option, when changed as the result
of such action, shall be reduced to the largest number of whole shares resulting
from such action, unless the Board, in its sole discretion, shall determine to
issue scrip certificates in respect to any fractional shares, which scrip
certificates, in such event, shall be in a form and have such terms and
conditions as the Board in its discretion shall prescribe.
11. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Board makes the determination granting
such Option, PROVIDED, however, that if the Board determines that such grant
shall be as of some future date, the date of grant shall be such future date.
Notice of the determination shall be given to each Employee to whom an Option is
so granted within a reasonable time after the date of such grant.
12. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or
terminate the Plan from time to time in such respects as the Board may deem
advisable and shall make any amendments which may be required so that Options
intended to be Incentive Stock Options shall at all times continue to be
Incentive Stock Options for the purpose of the Code, except that, without
approval of the holders of a majority of the shares of the Company's capital
stock represented or present and entitled to vote at a valid meeting of the
Company's shareholders at which action is taken on an amendment or revision, no
such amendment or revision shall:
(i) Increase the number of Shares subject to the Plan,
other than in connection with an adjustment under Section 10 of
the Plan;
(ii) Materially change the designation of the class of
Employees eligible to be granted Options;
(iii) Remove the administration of the Plan from the Board
except to a Committee;
(iv) Materially increase the benefits accruing to
participants under the Plan; or
(v) Extend the term of the Plan.
(b) EFFECT OF AMENDMENT OR TERMINATION. Except as otherwise
provided in Section 10, any amendment or termination of the Plan shall not
affect Options already granted and such Options shall remain in full force and
effect as if this Plan had not been amended or terminated, unless mutually
agreed otherwise between the Optionee and the Company, which agreement must be
in writing and signed by the Optionee and the Company.
13. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Shares shall not be issued pursuant to the exercise of an
Option unless the exercise of such Option and the issuance and delivery of such
Shares pursuant thereto
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shall comply with all relevant provisions of law, including, without limitation,
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, applicable state securities laws, 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.
(b) As a condition to the exercise of an Option, the Board may
require the person exercising such Option to execute an agreement with, and/or
may require the person exercising such Option to make any representation and
warranty to, the Company as may in the judgment of counsel to the Company be
required under applicable law or regulation, including but not limited to a
representation and warranty that the Shares are being purchased only for
investment and without any present intention to sell or to distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
appropriate under any of the aforementioned relevant provisions of law.
14. RESERVATION OF SHARES. The Company, during the term of this Plan,
shall at all times reserve and keep available, such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The Company, during the term of this Plan, shall use its best efforts to
seek to obtain from appropriate regulatory agencies any requisite authorization
in order to issue and to sell such number of Shares as shall be sufficient to
satisfy the requirements of the Plan. The inability of the Company to obtain
from any such regulatory agency having jurisdiction the requisite
authorization(s) deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any Shares hereunder, or the inability of the Company to
confirm to its satisfaction that any issuance and sale of any Shares hereunder
will meet applicable legal requirements, shall relieve the Company of any
liability in respect to the failure to issue or to sell such Shares as to which
such requisite authority shall not have been obtained.
15. STOCK OPTION AND STOCK PURCHASE AGREEMENTS. Options shall be
evidenced by written Option Agreements in such form or forms as the Board shall
approve from time to time. Upon the exercise of an Option, the Optionee shall
sign and deliver to the Company a Stock Purchase Agreement in such form or forms
as the Board shall approve from time to time.
16. EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective upon
shareholder approval as provided in Section 17 of the Plan. The Plan shall
continue in effect for a term of ten years unless sooner terminated under
Section 12 of the Plan.
17. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within 12 months before or after the
date the Plan is adopted by the Board. If such shareholder approval is obtained
at a duly held shareholders' meeting, it may be obtained by the affirmative vote
of the holders of a majority of the shares of the Company represented or present
and entitled to vote thereon. All Options granted prior to shareholder approval
of the Plan are subject to such approval, and if such approval is not obtained
within 12 months before or after the date the Plan is adopted by the Board all
such Options shall expire and shall be of no further force or effect.
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18. TAXES, FEES, EXPENSES AND WITHHOLDING OF TAXES.
(a) The Company shall pay all original issue and transfer
taxes (but not income taxes, if any) with respect to the grant of Options and/or
the issue and transfer of Shares pursuant to the exercise thereof, and all other
fees and expenses necessarily incurred by the Company in connection therewith,
and will from time to time use its best efforts to comply with all laws and
regulations which, in the opinion of counsel for the Company, shall be
applicable thereto.
(b) The grant of Options hereunder and the issuance of Shares
pursuant to the exercise thereof is conditioned upon the Company's reservation
of the right to withhold, in accordance with any applicable law, from any
compensation or other amounts payable to the Optionee, any taxes required to be
withheld under federal, state or local law as a result of the grant or exercise
of such Option or the sale of the Shares issued upon exercise thereof. To the
extent that compensation or other amounts, if any, payable to the Optionee are
insufficient to pay any taxes required to be so withheld, the Company may, in
its sole discretion, require the Optionee, as a condition of the exercise of an
Option, to pay in cash to the Company an amount sufficient to cover such tax
liability or otherwise to make adequate provision for the Company's satisfaction
of its withholding obligations under federal, state and local law.
19. LIABILITY OF COMPANY. The Company, its Parent or any Subsidiary which
is in existence or hereafter comes into existence shall not be liable to an
Optionee or other person if it is determined for any reason by the Internal
Revenue Service or any court having jurisdiction that any Options intended to be
Incentive Stock Options granted hereunder do not qualify as incentive stock
options within the meaning of Section 422 of the Code.
20. INFORMATION TO OPTIONEE. The Company shall provide without charge at
least annually to each Optionee during the period his or her Option is
outstanding a balance sheet and income statement of the Company. In the event
that the Company provides annual reports or periodic reports to its shareholders
during the period in which an Optionee's Option is outstanding, the Company
shall provide to each Optionee a copy of each such report.
21. INDEMNIFICATION. No member of the Committee or of the Board shall be
liable for any act or action taken, whether of commission or omission, except in
circumstances involving actual bad faith, or for any act or action taken,
whether of commission or omission, by any other member or by any officer, agent,
or Employee. In addition to such other rights of indemnification they may have
as members of the Board, or as members of the Committee, the Committee shall be
indemnified by the Company against reasonable expenses, including attorneys'
fees actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken, by commission
or omission, in connection with the Plan or any Option taken thereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee or Board member is liable for actual bad faith in
the performance of his or her duties; provided that within 60 days after
institution of any such action, suit or proceeding, a Committee or Board member
shall in writing offer the Company the opportunity, at its own expense, to
handle and defend the same.
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22. NOTICES. Any notice to be given to the Company pursuant to the
provisions of this Plan shall be given in writing, addressed to the Company in
care of its Secretary at its principal office, and any notice to be given to an
employee to whom an Option is granted hereunder shall be delivered personally or
addressed to him or her at the address given beneath his or her signature on his
Option Agreement or Stock Purchase Agreement or at such other address as such
Optionee or his or her transferee (upon the transfer of the Optioned Stock) may
hereafter designate in writing to the Company. Any such notice shall be deemed
duly given when enclosed in a properly sealed envelope or wrapper addressed as
aforesaid, registered or certified, and deposited, postage and registry or
certification fee prepaid, in a post office or branch post office regularly
maintained by the United States Postal Service. It shall be the obligation of
each Optionee and each transferee holding Shares purchased upon exercise of an
Option to provide the Secretary of the Company, by letter mailed as provided
hereinabove, with written notice of his or her direct mailing address.
23. NO ENLARGEMENT OF EMPLOYEE RIGHTS. This Plan is purely voluntary on
the part of the Company, and the continuance of the Plan shall not be deemed to
constitute a contract between the Company and any Employee, or to be
consideration for or a condition of the employment or service of any Employee.
Nothing contained in this Plan shall be deemed to give any Employee the right to
be retained in the employ or service of the Company, its Parent, Subsidiary or a
successor corporation, or to interfere with the right of the Company or any such
corporations to discharge or to retire any Employee at any time with or without
cause and with or without notice. No Employee shall have any right to or
interest in Options authorized hereunder prior to the grant thereof to such
Employee, and upon such grant he or she shall have only such rights and
interests as are expressly provided herein, subject, however, to all applicable
provisions of the Company's Articles of Incorporation, as the same may be
amended from time to time.
24. LEGENDS ON CERTIFICATES.
(a) FEDERAL LAW. Unless an appropriate registration statement
is filed pursuant to the Federal Securities Act of 1933, as amended, with
respect to the Options and Shares issuable under this Plan, each document or
certificate representing such Options or Shares shall be endorsed thereon with a
legend substantially as follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE, TRANSFER OR
DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
(b) ADDITIONAL LEGENDS. Each document or certificate
representing the Options or Shares issuable under the Plan shall also contain
legends as may be required under applicable blue sky laws or by any Stock
Purchase Agreement or other agreement the execution of which is a condition to
the exercise of an Option under this Plan.
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25. AVAILABILITY OF PLAN. A copy of this Plan shall be delivered to the
Secretary of the Company and shall be shown by him or her to any eligible person
making reasonable inquiry concerning it.
26. INVALID PROVISIONS. In the event that any provision of this Plan is
found to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any other
provisions contained herein as invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid or unenforceable provision was not contained herein.
27. SEVERABILITY. In the event that any provision of the Plan is found to
be invalid or otherwise unenforceable under any applicable law, such invalidity
or unenforceability shall not be construed as rendering any other provisions
contained herein as invalid or unenforceable, and all such other provisions
shall be given full force and effect to the same extent as though the invalid or
unenforceable provision was not contained herein.
28. APPLICABLE LAW. To the extent that federal laws do not otherwise
control, this Plan shall be governed by and construed in accordance with the
laws of the State of Nevada without regard to the conflict of laws principles
thereof.
(END OF PLAN)
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