EXHIBIT 4.1
NOVA INTERNATIONAL FILMS, INC.
2003 STOCK COMPENSATION PLAN
Section 1. Purpose
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The purpose of this 2003 Stock Compensation Plan (the "Plan") is to
advance the interests of Nova International Films, Inc., a Delaware corporation
("Nova"), by enhancing its ability to attract, retain and provide incentives to
directors, officers, employees and independent contractors who are crucial to
the future growth and success of Nova and its subsidiaries and Affiliates (as
hereinafter defined).
Section 2. Definitions
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"Affiliate" when used in conjunction with Nova, shall include, but not
be limited to, an entity or other person that directly or indirectly controls,
or is controlled by, or is under common control with Nova.
"Award" means any Option, Stock Appreciation Right, Performance Share
or Restricted Stock awarded under the Plan.
"Board" means the board of directors of Nova.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a committee of not less than two members of the Board
appointed by the Board to administer the Plan.
"Common Stock" or "Stock" means the Common Stock of Nova.
"Company" means Nova and, except where the content requires otherwise,
all present and future subsidiaries and Affiliates of Nova.
"Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Board, to receive amounts due or
exercise rights of the Participant in the event of the Participant's death or
incapacity. In the absence of an effective designation by a Participant,
Designated Beneficiary shall mean the Participant's estate, in the event of the
Participant's death, and the Participant's legal guardian, in the event of the
Participant's incapacity.
"Fair Market Value" means with respect to Common Stock on any given
date (i) if the Common Stock is listed for trading on one or more national
securities exchanges, the mean of the high and low sales prices during regular
trading hours on the principal exchange on which it is traded on the date in
question, or, if the Common Stock shall not have been traded during regular
trading hours on such principal exchange on such date, the mean of the high and
low sales prices during regular trading hours on such principal exchange on the
first day prior thereto on which the Common Stock was so traded; (ii) if Common
Stock is not listed for trading on a national securities exchange but is traded
on the over-the-counter market, the mean of the highest and lowest bid prices
for the Common Stock during regular trading hours on the date in question, or,
if there are no such bid prices for the Common Stock on such date, the mean of
the highest and lowest bid prices during regular trading hours on the first day
prior thereto on which such prices appear; and (iii) in all other events, such
amount as may be determined by the Board in good faith by any fair and
reasonable means.
"Incentive Stock Option" or "ISO" means an option to purchase shares of
Common Stock awarded to a Participant under Section 6 which is intended to meet
the requirements of Code Section 422.
"Nonstatutory Stock Option" or "NSO" means an option to purchase shares
of Common Stock awarded to a Participant under Section 6 which is not intended
to be an ISO.
"Option" means an Incentive Stock Option or a Nonstatutory Stock
Option.
"Participant" means a person selected by the Board to receive an Award
under the Plan.
"Performance Shares" mean shares of Common Stock which may be earned by
the achievement of performance goals awarded to a Participant under Section 8.
"Reporting Person" means a person subject to Section 16 of the
Securities Exchange Act of 1934 or any successor provision.
"Restricted Period" means the period of time selected by the Board
during which shares subject to a Restricted Stock Award may be repurchased by or
forfeited to the Company.
"Restricted Stock" means shares of Common Stock awarded to a
Participant under Section 9.
"Stock Appreciation Right" or "SAR" means a right to receive any excess
in Fair Market Value of shares of Common Stock over the exercise price awarded
to a Participant under Section 7.
Section 3. Administration
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The Board shall have plenary authority in its discretion, to the
maximum extent permissible by law, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan. Without limiting the
foregoing, the Board shall have authority to make Awards, to set administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable
from time to time, and to interpret the provisions of the Plan. In determining
the persons to whom Awards shall be made, the number of shares to be covered by
each Award and the terms thereof (including the restriction, if any, which shall
apply to the Common Stock subject to an Award), the Board shall take into
account the duties of the respective persons, their present and potential
contributions to the success of the Company and such other factors as the Board,
in its discretion, shall deem relevant in connection with accomplishing the
purposes of the Plan.
The Board's decisions shall be final and binding. Except as otherwise
required by law, no member of the Board shall be liable for any action or
determination relating to the Plan made in good faith.
The Board may appoint a Committee and delegate to the Committee some or
all of its authority with respect to Plan administration. In the event the Board
appoints a Committee, references in the Plan to the Board shall, as appropriate,
be read as references to the Committee.
Section 4. Eligibility
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Awards may be made to employees and independent contractors of the
Company. For purposes hereof, independent contractors shall include consultants,
advisors and directors of the Company.
Section 5. Stock Available for Awards
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(a) Subject to adjustment under Section 10 below, Awards may be made
under the Plan for up to 10,000,000 (ten million) shares of Common Stock. If any
Award in respect of shares of Common Stock expires or is terminated unexercised
or is forfeited for any reason or settled in a manner that results in fewer
shares outstanding than were initially awarded, the shares subject to such Award
or so surrendered, as the case may be, to the extent of such expiration,
termination, forfeiture or decrease, shall again be available for award under
the Plan, subject, however, in the case of Incentive Stock Options, to any
limitation required under the Code. Shares issued under the Plan may consist in
whole or in part of authorized but unissued shares or treasury shares.
(b) The Board may grant Awards under the Plan in substitution for stock
and stock based awards held by employees of another corporation who become
employees of the Company as a result of a merger or consolidation of the
employing corporation with the Company or the acquisition by the Company of
property or stock of the employing corporation. The substitute Awards shall be
granted on such terms and conditions as the Board considers appropriate in the
circumstances. The shares which may be delivered under such substitute Awards
shall be in addition to the maximum number of shares provided for in Section
5(a).
Section 6. Stock Options
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(a) General.
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(i) Subject to the provisions of the Plan, the Board may award
Incentive Stock Options and Nonstatutory Stock Options, and determine the number
of shares to be covered by each Option, the option price therefor, the
conditions and limitations applicable to the exercise of the Option and the
restrictions, if any, applicable to the shares of Common Stock issuable
thereunder.
(ii) The Board shall establish the exercise price at the time
each Option is awarded.
(iii) Subject to Section 10(a), each Option shall be
exercisable at such times and subject to such terms and conditions as the Board
may specify in the applicable Award. The Board may impose such conditions with
respect to the exercise of Options, including conditions relating to applicable
federal or state securities laws, as it considers necessary or advisable.
(iv) Options granted under the Plan shall provide for the
payment of the exercise price by delivery of cash or check in an amount equal to
the exercise price of such Options or by delivery of shares of Common Stock of
the Company owned by the optionee for at least six months (valued at Fair Market
Value) and, to the extent permitted by the Board at or after the award of the
Option, may provide for payment by (A) delivery of other property acceptable to
the Board (valued at fair market value), (B) delivery of a promissory note of
the optionee to the Company on terms determined by the Board, (C) delivery of an
irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the exercise price or delivery of irrevocable
instructions to a broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price, (D) payment of such other lawful
consideration as the Board may determine, or (E) any combination of the
foregoing.
(v) The Board may provide for the automatic award of an Option
upon the delivery of shares to the Company in payment of the exercise price of
an Option for up to the number of shares so delivered.
(vi) The Board may at any time accelerate the time at which
all or any part of an Option may be exercised.
(b) Incentive Stock Options.
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Options granted under the Plan which are intended to be ISOs shall be
subject to the following additional terms and conditions:
(i) All ISOs granted under the Plan shall, at the time of
grant, be specifically designated as such in the option agreement covering such
Award. All Options designated as ISOs shall be interpreted in a manner
consistent with the requirements of Code Section 422.
(ii) While the Company shall take reasonable measures to
assure that an Option intended to be an ISO shall be so treated for federal
income tax purposes, it makes no assurances to anyone that any Option intended
to be an ISO shall be taxed as an ISO. Without limiting the foregoing, Options
intended to be ISOs which are exercised after the period permitted by Code
Section 422 shall not be taxed as ISOs.
(iii) ISOs may only be awarded to employees of Nova or a
corporation which, with respect to Nova, is a "parent corporation" or
"subsidiary corporation" within the meaning of Code Sections 424(e) and (f).
Furthermore, except as otherwise provided in Code Section 422, if a Participant
is no longer employed by Nova or a parent corporation or subsidiary corporation
of Nova, the Participant's Option shall cease to be treated as an ISO.
(iv) Subject to clause (v), the Option exercise price per
share of Common Stock covered by an ISO shall be no less than the Fair Market
Value of a share of Common Stock on the date of grant of the Option.
(v) In the case of an individual who at the time the Option is
granted owns stock possessing more than 10% of the total combined voting power
of all classes of the stock of Nova or of a parent or subsidiary corporation of
Nova (a "10% Holder"), (1) the Option exercise price of the Common Stock covered
by any ISO granted to such person shall in no event be less than 110% of the
Fair Market Value of the Common Stock on the date the ISO is granted and (2) the
term of an ISO granted to such person may not exceed five years from the date of
grant.
(vi) The aggregate Fair Market Value (determined at the time
an ISO is granted) of the Common Stock covered by ISOs exercisable for the first
time by an employee during any calendar year (under all plans of the Company)
may not exceed $100,000.
Section 7. Stock Appreciation Rights
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(a) The Board may grant Stock Appreciation Rights entitling recipients
on exercise of the SAR to receive an amount, in cash or Stock or a combination
thereof (such form to be determined by the Board), determined in whole or in
part by reference to appreciation in the Fair Market Value of the Stock between
the date of the Award and the exercise of the Award. A Stock Appreciation Right
shall entitle the Participant to receive, with respect to each share of Stock as
to which the SAR is exercised, the excess of the share's Fair Market Value on
the date of exercise over its Fair Market Value on the date the SAR was granted.
(b) Stock Appreciation Rights may be granted in tandem with, or
independently of, Options granted under the Plan. A Stock Appreciation Right
granted in tandem with an Option which is not an Incentive Stock Option may be
granted either at or after the time the Option is granted. A Stock Appreciation
Right granted in tandem with an Incentive Stock Option may be granted only at
the time the Option is granted.
(c) When Stock Appreciation Rights are granted in tandem with Options,
the following provisions shall apply:
(i) The Stock Appreciation Right shall be exercisable only at
such time or times, and to the extent, that the related Option is exercisable
and shall be exercisable in accordance with the procedure required for exercise
of the related Option.
(ii) The Stock Appreciation Right shall terminate and no
longer be exercisable upon the termination or exercise of the related Option,
except that a Stock Appreciation Right granted with respect to less than the
full number of shares covered by an Option shall not be reduced until the number
of shares as to which the related Option has been exercised or has terminated
exceeds the number of shares not covered by the Stock Appreciation Right.
(iii) The Option shall terminate and no longer be exercisable
upon the exercise of the related Stock Appreciation Right.
(iv) The Stock Appreciation Right shall be transferable only
with the related Option.
(v) A Stock Appreciation Right granted in tandem with an
Incentive Stock Option may be exercised only when the market price of the Stock
subject to the Option exceeds the exercise price of such Option.
(d) A Stock Appreciation Right not granted in tandem with an Option
shall become exercisable at such time or times, and on such conditions, as the
Board may specify.
(e) The Board may at any time accelerate the time at which all or any
part of the SAR may be exercised.
Section 8. Performance Shares
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(a) The Board may make Performance Share Awards entitling recipients to
acquire shares of Stock upon the attainment of specified performance goals. The
Board may make Performance Share Awards independent of or in connection with the
granting of any other Award under the Plan. The Board in its sole discretion
shall determine the performance goals applicable under each such Award, the
periods during which performance is to be measured, and all other limitations
and conditions applicable to the awarded Performance Shares.
(b) A Participant receiving a Performance Share Award shall have the
rights of a stockholder only as to shares actually received by the Participant
under the Plan and not with respect to shares subject to an Award but not
actually received by the Participant. A Participant shall be entitled to receive
a stock certificate evidencing the acquisition of shares of Stock under a
Performance Share Award only upon satisfaction of all conditions specified in
the Agreement evidencing the Performance Share Award.
(c) The Board may at any time accelerate or waive any or all of the
goals, restrictions or conditions imposed under any Performance Share Award.
Section 9. Restricted Stock
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(a) The Board may grant Restricted Stock Awards entitling recipients to
acquire shares of Stock, subject to the right of the Company to repurchase all
or part of such shares at their purchase price (or to require forfeiture of such
shares if purchased at no cost) from the recipient in the event that conditions
specified by the Board in the applicable Award are not satisfied prior to the
end of the applicable Restricted Period or Restricted Periods established by the
Board for such Award. Conditions for repurchase (or forfeiture) may be based on
continuing employment or service or achievement of pre-established performance
or other goals and objectives.
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Board during the
applicable Restricted Period. Shares of Restricted Stock shall be evidenced in
such manner as the Board may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the Participant
and, unless otherwise determined by the Board, deposited by the Participant,
together with a stock power endorsed in blank, with the Company (or its
designee). At the expiration of the Restricted Period, the Company (or such
designee) shall deliver such certificates to the Participant or if the
Participant has died, to the Participants' Designated Beneficiary.
(c) The purchase price for each share of Restricted Stock shall be
determined by the Board. Such purchase price may be paid in cash or such other
lawful consideration as is determined by the Board.
(e) The Board may at any time accelerate the expiration of the
Restricted Period applicable to all, or any particular, outstanding shares of
Restricted Stock.
(f) Notwithstanding the foregoing, the Board may award to Participants
Restricted Stock for services rendered or to be rendered by such Participant
pursuant to the terms of any agreement between the Company and such Participant,
which award is not requested to contain any repurchase rights or forfeiture
provisions.
Section 10. General Provisions Applicable to Awards
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(a) Maximum Term. No Award shall have a term exceeding ten years,
measured from the date of the Award grant.
(b) Documentation. Each Award under the Plan shall be evidenced by an
instrument delivered to the Participant specifying the terms and conditions
thereof and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Board considers necessary or advisable. Such
instruments may be in the form of agreements to be executed by both the Company
and the Participant, or certificates, letters or similar documents, acceptance
of which shall evidence agreement to the terms thereof and of this Plan.
(c) Board Discretion. Each type of Award may be made alone, in addition
to or in relation to any other type of Award. The terms of each type of Award
need not be identical and the Board need not treat Participants uniformly.
Except as otherwise provided by the Plan or a particular Award, any
determination with respect to an Award may be made by the Board at the time of
the Award grant or at any time thereafter.
(d) Termination of Status. The Board shall determine and specify in the
Award documentation the effect on an Award of the disability, death, retirement,
authorized leave of absence or other termination of employment or other status
of a Participant and the extent to which, and the period during which, the
Participant's legal representative, guardian or Designated Beneficiary may
exercise rights under such Award.
(e) Dilutions and Other Adjustments. In the event of any stock dividend
or split, issuance or repurchase of stock or securities convertible into or
exchangeable for shares of stock, grants of options, warrants or rights to
purchase stock, recapitalization, combination, exchange or similar change
affecting 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, the Board in its sole discretion may equitably adjust any or all of (i)
the number and kind of shares in respect of which Awards may be made under the
Plan, (ii) the number and kind of shares subject to outstanding Awards, and
(iii) the award, exercise or conversion price with respect to any of the
foregoing, and may make any other equitable adjustments or take such other
equitable action as the Board, in its discretion, shall deem appropriate,
including, if considered appropriate by the Board, making provision for a cash
payment with respect to an outstanding Award. Such adjustments or actions shall
be conclusive and binding for all purposes. In the event of a change in the
Common Stock which is limited to a change in the designation thereof to "Capital
Stock" or other similar designation, or to a change in the par value thereof, or
from no par value to par value (or vice versa), without increase or decrease in
the number of issued shares, the shares resulting from any such change shall be
deemed to be Common Stock within the meaning of the Plan. For purposes hereof,
the conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration."
In the event that the Company or the division, subsidiary or other
affiliated entity for which a Participant performs services is sold, merged,
consolidated, reorganized or liquidated, the Board may take any one or more of
the following actions as to outstanding Awards: (i) provide that such Awards
shall be assumed, or substantially equivalent Awards shall be substituted, by
the acquiring or succeeding corporation (or an affiliate thereof) on such terms
as the Board determines to be appropriate, (ii) upon written notice to
Participants, provide that all unexercised Options or SARs shall terminate
immediately prior to the consummation of such transaction unless exercised by
the Participant within a specified period following the date of such notice,
(iii) in the event of a sale or similar transaction under the terms of which
holders of the Common Stock of the Company receive a payment for each share
surrendered in the transaction (the "Sales Price"), make or provide for a
payment to each Option and/or SAR holder equal to the amount by which (A) the
Sales Price times the number of shares of Common Stock subject to Participant's
outstanding, vested Options or SARs exceeds (B) the aggregate exercise price of
all such outstanding, vested Options or SARs, in exchange for the termination of
such Options or SARs, (iv) or make such other adjustments, if any, as the Board
determines to be necessary or advisable to provide each Participant with a
benefit substantially similar to that to which the Participant would have been
entitled had such event not occurred.
(h) Withholding. The Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in respect of Awards under the Plan no later than the date of the
event creating the tax liability. In the Board's discretion, and subject to such
conditions as the Board may establish, such tax obligations may be paid in whole
or in part in shares of Common Stock, including shares retained from the Award
creating the tax obligation, valued at their Fair Market Value. The Company may,
to the extent permitted by law, deduct any such tax obligations from any payment
of any kind otherwise due to the Participant.
(i) Foreign Nationals. Awards may be made to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Board considers
necessary or advisable to achieve the purposes of the Plan and comply with
applicable laws and/or achieve favorable tax results under foreign tax laws.
(j) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the same or
a different type, changing the date of exercise or realization and converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Board
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
(k) Conditions on Delivery of Stock. The Company shall not be obligated
to deliver any shares of Stock pursuant to the Plan or to remove restrictions
from shares previously delivered under the Plan (i) until all conditions of the
Award have been satisfied or removed, (ii) until, in the opinion of the
Company's counsel, all applicable federal and state laws and regulations have
been complied with, and (iii) if the outstanding Stock is at the time listed on
any stock exchange, until the shares to be delivered have been listed or
authorized to be listed on such exchange upon official notice of issuance. If
the sale of Stock has not been registered under the Securities Act of 1933, as
amended, the Company may require, as a condition to exercise of the Award, such
representations or agreements as the Company may consider appropriate to avoid
violation of such Act and may require that the certificates evidencing such
Stock bear an appropriate legend restricting transfer. Except to the extent as
may be specified in the documentation with respect to a particular Award grant,
the Company shall be under no obligation to register or qualify any shares of
Common Stock subject to Awards under any federal or state securities law or on
any exchange.
Section 11. Miscellaneous
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(a) No Right To Employment or Other Status. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment by or the
right to continue to provide services to the Company. The Company expressly
reserves the right at any time to dismiss a Participant free from any liability
or claim under the Plan, except as may be expressly provided in the applicable
Award.
(b) No Rights As Stockholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the record holder thereof.
(c) No Restriction on the Right of the Company to Effect Corporate
Changes. The Plan and the Options granted hereunder shall not affect in any way
the right or power of Nova or its stockholders to make or authorize any or all
adjustments, recapitalization, reorganizations or other changes in Nova's or the
Company's capital structure or its business, or any merger or consolidation of
Nova or the Company, or any issue of stock or of options, warrants or rights to
purchase stock or of bonds, debentures, preferred or prior preference stocks
whose rights are superior to or affect the Common Stock or the rights of holders
thereof or which are convertible into or exchangeable for Common Stock, or the
dissolution or liquidation of Nova or the Company, or any sale or transfer of
all or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
(d) Exclusion from Benefit Computations. Except as expressly specified
in the applicable plan or program, no amount or shares of Common Stock payable
upon exercise of an Award granted under the Plan shall be considered salary,
wages or compensation for purposes of determining the amount or nature of
benefits that a Participant is entitled to receive under any Company benefit
plan or program.
(e) Effective Date and Term. Subject to the approval of the
stockholders of the Company, the Plan is effective as of May 15, 2003, the date
as of when it was adopted by the Board. Prior to such stockholder approval,
Awards incorporating provisions authorized by the Plan may be made under the
Plan, but shall be expressly subject to such approval. No Award may be made
under the Plan after the tenth anniversary of the Plan's effective date, but
Awards granted before such date may extend beyond that date.
(f) Amendment of Plan. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time; provided, however, that no amendment
shall be made without stockholder approval if such approval is necessary to
comply with any applicable tax or regulatory requirement. Prior to any such
approval, Awards may be made under the Plan expressly subject to such approval.
(g) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the state of Delaware.