EXHIBIT 10
STOCK INCENTIVE PLAN
CYBER GROUP NETWORK CORPORATION STOCK INCENTIVE PLAN
1. GENERAL PROVISIONS
1.1 PURPOSE.
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The Stock Incentive Plan (the "Plan") is intended to allow
designated officers and employees (all of whom are sometimes collectively
referred to herein as "Employees") and certain Non-Employee Attorneys and
Consultants (all of whom are sometimes collectively referred to as "Selected
Persons") of CYBER GROUP NETWORK CORPORATION ("CGPN") and its Subsidiaries which
it may have from time to time (CGPN and such Subsidiaries are referred to herein
as the "Company") to receive certain options ("Stock Options") to purchase CGPN
common stock, $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
CGPN within the meaning of Section 424(f) of the Internal Revenue Code of 1986,
as amended (the "Code"). The main purpose of this Plan is to provide Employees
and Selected Persons 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 and Selected Persons
of exceptional ability. The Plan is expanded to include employee Directors of
the Company for granting said employee Directors the right to receive the same
salary paid to non-employee Directors in the form of Company stock.
1.2 ADMINISTRATION.
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1.2.1 The Plan shall be administered by the Compensation
Committee (the "Committee") of, or appointed by, the Board of Directors of
CGPN(the "Board"). The Plan will be administered by a combination of two or more
officers and/or directors of the Company, including individuals who are both
officers and directors of the Company. Each member of the Committee shall be a
"disinterested person" as that term is defined in Rule 16b-3 promulgated by the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"), but no action of the Committee shall
be invalid if this requirement is not met. 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 CGPN By-Laws 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 and Selected Persons 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 or Selected Person; 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
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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.
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Employees eligible under the Plan shall be approved by the
Committee from those Employees and officers and Selected Persons 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 and officers and Selected
Persons 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 supervisors. No member of the Committee shall be eligible to
participate under the Plan or under any other Company plan if such participation
would contravene the standard of paragraph 1.2.1 above relating to
"disinterested persons."
1.4 SHARES SUBJECT TO THE PLAN.
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The maximum number of shares of Common Stock that may be issued
pursuant to the Plan shall be 50,000,000, 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.
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The Committee may grant Stock Options in such amounts, at such times,
and to such Employees and Selected Persons 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
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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 or Selected Person
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 $100,000.00). Non-statutory stock options
shall not be subject to the limitations relating to incentive 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 or Selected
Person 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," upon termination of such Employee
employment by the Company without "Cause" or by the Employee for "Good Reason,"
as such terms are 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.
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The purchase price (the "Exercise Price") of shares of Common Stock
subject to each Stock Option ("Option Shares") shall equal the fair market value
("Fair Market Value") of such shares on the date of grant of such Stock Option.
Notwithstanding the foregoing, the Exercise Price of Option Shares subject to an
incentive stock option granted to an Employee or Selected Person who at the time
of grant owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or of any parent or Subsidiary shall be
at least equal to 110% of the Fair Market Value of such shares on the date of
grant of such Stock Option. The Fair Market Value of a share of Common Stock on
any date shall be equal to the closing price (or if no closing price is
reported, the average of the last bid and asked prices) of the Common Stock for
the last preceding day on which CGPN's shares were traded, and the method for
determining the closing price shall be determined by the Committee.
2.3 OPTION PERIOD.
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The Stock Option period (the "Term") shall commence on the date of
grant of the Stock Option and shall be ten years or such shorter period as is
determined by the Committee. Notwithstanding the foregoing, the Term of an
incentive stock option granted to an Employee or Selected Person who at the time
of grant owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or of any parent or Subsidiary shall not
exceed five years. Each Stock Option shall provide that it is exercisable over
its term in such periodic installments as the Committee in its sole discretion
may determine. 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 and Selected Persons 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 months and one
day from the date the Stock Option is granted unless the Committee adjusts the
waiting period as they deem appropriate. The adjustment of the
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waiting period is to give the Company an ability to attract and retain qualified
individuals
2.4 EXERCISE OF OPTIONS.
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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 having an
aggregate fair market value (determined in the manner prescribed by paragraph
2.2) as of the date of the exercise of the Stock Option equal to the exercise
price of the Stock Option, if such withholding is authorized by the Committee in
its discretion, or (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.
2.4.2 Exercise of each Stock Option is conditioned upon the
agreement of the Employee or Selected Person to the terms and conditions of this
Plan and of such Stock Option as evidenced by the Employee's or Selected
Person'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 or Selected Person
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
imprinted 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 or Selected Person is a
Section 16 Reporting Person, said person will furnish to the Company a copy of
each Form 4 or Form 5 filed by said Employee or Selected Person and will timely
file all reports required under federal securities laws, and (e) the Employee or
Selected Person 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 requirements, 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
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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 CONTINUOUS EMPLOYMENT.
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Except as provided in paragraph 2.7 below, an Employee may not
exercise a Stock Option unless from the date of grant to the date of exercise
such Employee remains continuously in the employ of the Company. For purposes of
this paragraph 2.5, the period of continuous employment of an Employee with the
Company shall be deemed to include (without extending the term of the Stock
Option) any period during which such Employee is on leave of absence with the
consent of the Company, provided that such leave of absence shall not exceed
three months and that such Employee returns to the employ of the Company at the
expiration of such leave of absence. If such Employee fails to return to the
employ of the Company at the expiration of such leave of absence, such
Employee's employment with the Company shall be deemed terminated as of the date
such leave of absence commenced. The continuous employment of an Employee with
the Company shall also be deemed to include any period during which such
Employee is a member of the Armed Forces of the United States, provided that
such Employee returns to the employ of the Company within 90 days (or such
longer period as may be prescribed by law) from the date such Employee first
becomes entitled to discharge. If an Employee does not return to the employ of
the Company within 90 days (or such longer period as may be prescribed by law)
from the date such Employee first becomes entitled to discharge, such Employee's
employment with the Company shall be deemed to have terminated as of the date
such Employee's military service ended.
2.6 RESTRICTIONS ON TRANSFER.
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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 or Selected Person 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 or Selected Person's lifetime only by such
Employee or Selected Person or by such Employee's or Selected Persons legal
representative.
2.7 TERMINATION OF EMPLOYMENT.
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2.7.1 Upon an Employee's or Selected Persons Retirement,
Disability or death, (a) all Stock Options to the extent then presently
exercisable shall remain in full force and effect and may be exercised pursuant
to the provisions thereof, including expiration at the end of the fixed term
thereof, and (b) unless otherwise provided by the Committee, all Stock Options
to the extent not then presently exercisable by such Employee or Selected Person
shall terminate as of the date of such termination of employment and shall not
be exercisable thereafter.
2.7.2 Upon the termination of the employment of an Employee or
Selected Person with the Company for any reason other than the reasons set forth
in paragraph 2.7.1 hereof, (a) all Stock Options to the extent then presently
exercisable by such Employee or Selected Person shall remain
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exercisable only for a period of 90 days after the date of such termination of
employment (except that the 90-day period shall be extended to 12 months if the
Employee or Selected Person shall die during such 90-day period), and may be
exercised pursuant to the provisions thereof, including expiration at the end of
the fixed term thereof, and (b) unless otherwise provided by the Committee, all
Stock Options to the extent not then presently exercisable by such Employee or
Selected Person shall terminate as of the date of such termination of employment
and shall not be exercisable thereafter.
2.7.3 For purposes of this Plan:
(a) "Retirement" shall mean an Employee's or Selected
Person's retirement from the employ of the Company on or after the date on which
such Employee or Selected Person attains the age of sixty-five (65) years; and
(b) "Disability" shall mean total and permanent
incapacity of an Employee or Selected Person, due to physical impairment or
legally established mental incompetence, to perform the usual duties of such
Employee's or Selected Person's employment with the Company, which disability
shall be determined: (i) on medical evidence by a licensed physician designated
by the Committee, or (ii) on evidence that the Employee or Selected Person has
become entitled to receive primary benefits as a disabled employee under the
Social Security Act in effect on the date of such disability.
3. PROVISIONS RELATING TO AWARDS
3.1 GRANT OF AWARDS.
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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 pursuant 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
or Selected Person for such Common Stock, which may, in the Committee's
discretion, consist of the delivery of the Employee's or Selected Person'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,
and for the early expiration of the Restriction Period upon an Employee's or
Selected Person's death, Disability or Retirement as defined in paragraph 2.7.3,
or, following a Change of Control, upon termination of an Employee's or Selected
Person's employment by the Company without "Cause" or by the Employee or
Selected Person for "Good Reason," as those terms are defined herein. For
purposes of this Plan:
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"CHANGE OF CONTROL" shall be deemed to occur (a) on the date the
Company first has actual knowledge that any person (as such term is used in
Sections 13(d) and 14(d) (2) of the Exchange Act) has become the beneficial
owner (as defined in Rule 13(d)-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 40% or more of the
combined voting power of the Company's then outstanding securities, or (b) on
the date the shareholders of the Company approve (i) a merger of the Company
with or into any other corporation in which the Company is not the surviving
corporation or in which the Company survives as a subsidiary of another
corporation, (ii) a consolidation of the Company with any other corporation, or
(iii) the sale or disposition of all or substantially all of the Company's
assets or a plan of complete liquidation.
"CAUSE," when used with reference to termination of the
employment of an Employee or Selected Person by the Company for "Cause," shall
mean:
(a) the individual's continuing wilful and material breach of
his or her duties to the Company after he or she receives a demand from the
Chief Executive of the Company or any other officer specifying the manner in
which he or she has wilfully and materially breached such duties, other than any
such failure resulting from Disability of the individual or his or her
resignation for "Good Reason," as defined herein; or
(b) the conviction of a felony; or
(c) the commission of fraud in the course of his or her
employment with the Company, such as embezzlement or other material and
intentional violation of law against the Company; or
(d) the gross misconduct causing material harm to the
Company.
"GOOD REASON" shall mean any one or more of the following,
occurring following or in connection with a Change of Control and within 90
days prior to the Employee's or Selected Persons resignation, unless the
Employee or Selected Person shall have consented thereto in writing:
(a) the assignment to the Employee of duties inconsistent
with his or her executive status prior to the Change of Control or a substantive
change in the officer or officers to whom he or she reports from the officer or
officers to whom he or she reported immediately prior to the Change of Control;
or
(b) the elimination or reassignment of a majority of the
duties and responsibilities that were assigned to the Employee or Selected
Person immediately prior to the Change of Control; or
(c) a reduction by the Company in the Employee's annual base
salary as in effect immediately prior to the Change of Control; or
(d) the Company's requiring the Employee or Selected Person
to be based anywhere outside a 35-mile radius from his or her place of
employment immediately prior to the Change
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of Control, except for required travel on the Company's business to an extent
substantially consistent with the Employee's or Selected Persons business travel
obligations immediately prior to the Change of Control; or
(e) the failure of the Company to grant the Employee a
performance bonus reasonably equivalent to the same percentage of salary the
Employee normally received prior to the Change of Control, given comparable
performance by the Company and the Employee; or
(f) the failure of the Company to obtain a satisfactory
Assumption Agreement (as defined in paragraph 4.12 of the Plan) from a
successor, or the failure of such successor to perform such Assumption
Agreement.
3.2 INCENTIVE AGREEMENTS.
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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 or Selected Person 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.
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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 Selected Person, or adversely affects the rights of any Employee or Selected
Person without his or her consent.
3.4 TERMS AND CONDITIONS OF AWARDS.
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3.4.1 Upon receipt of an Award of shares of Common Stock under
the Plan, even during the Restriction Period, an Employee or Selected Person
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 If an Employee's or Selected Persons employment with the
Company terminates prior to the expiration of the Restriction Period for an
Award, subject to any provisions of the Award with respect to the Employee's or
Selected Persons death, Disability or Retirement, or Change of Control, all
shares of Common Stock subject to the Award shall be immediately forfeited by
the Employee or Selected Person and reacquired by the Company, and the Employee
or Selected Person shall have no further rights with respect to the Award. In
the discretion of the Committee, an Incentive Agreement may
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provide that, upon the forfeiture by an Employee or Selected Person of Award
Shares, the Company shall repay to the Employee or Selected Person the
consideration (if any) which the Employee or Selected Person paid for the Award
Shares on the grant of the Award. In the discretion of the Committee, an
Incentive Agreement may also provide that such repayment shall include an
interest factor on such consideration from the date of the grant of the Award to
the date of such repayment.
3.4.4 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 or Selected Person
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.
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4.1.1 The number and class of shares subject to each outstanding
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 5% for which the record dates occur in any one fiscal year, a
recapitalization (other than the conversion of convertible securities according
to their terms), a combination of shares or other like capital adjustment, so
that (i) upon exercise of the Stock Option, the Employee or Selected Person
shall receive the number and class of shares such Employee or Selected Person
would have received had such Employee or Selected Person 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 or Selected Person shall receive the number and class of
shares such Employee or Selected Person 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. Notwithstanding the
above, the Committee may in its discretion, not subject the employee's stock
options and/or awards to any decreases in the in the number of shares issued
resulting from stock splits, dividends, recapitalization and/or any other
actions of the Company that reduce the number of shares outstanding. In the
event of adjustments that increase the number of shares outstanding, the
employee's stock options and/or awards will be proportionately adjusted.
4.1.2 Upon a reorganization, merger or consolidation of the
Company with one or more corporations as a result of which CGPN is not the
surviving corporation or in which CGPN 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 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
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respect of or in exchange for such Option Shares and Award Shares then
remaining, as if the Employee or Selected Person had been the owner of such
shares as of the applicable date. Any securities so substituted shall be subject
to similar successive adjustments. The Committee may in its discretion, not
subject the number of shares allocated to the Plan to any changes in the number
of shares issued resulting from stock splits, dividends, recapitalization and/or
any other action of the Company that affect the number of shares outstanding.
4.2 WITHHOLDING TAXES.
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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 or Selected Person to tender a cash payment to the
Company, (ii) by withholding from the Employee's salary or Selected Person's
payment, (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 or Selected Person'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 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 or Selected Person at least six months in advance of the
withholding of Options Shares or Award Shares, or (ii) on a day within a ten-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.
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Stock Options and Awards granted hereunder shall not be deemed to
be salary or other compensation to any Employee or Selected Person 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.
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The Board of Directors may at any time suspend, amend or
terminate this Plan. No amendment or modification of this Plan may be adopted,
except subject to stockholder approval, which would: (a) materially increase the
benefits accruing to Employees or Selected Persons and officers 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.
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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, Selected Persons and officers.
4.6 OTHER DOCUMENTS.
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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.
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This Plan and grants hereunder shall not impose any obligation on
the Company to continue to employ any Employee or Selected Person. 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) or Selected Person and the Company.
4.8 MISCONDUCT OF AN EMPLOYEE.
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Notwithstanding any other provision of this Plan, if an Employee
or Selected Person commits fraud or dishonesty toward the Company or wrongfully
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 individual shall forfeit all rights
and benefits under this Plan.
4.9 TERM OF PLAN.
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This Plan was adopted by the Board effective July 29, 2002. No
Stock Options or Awards may be granted under this Plan after July 31, 2012.
4.10 GOVERNING LAW.
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This Plan shall be construed in accordance with, and governed by,
the laws of the State of Nevada.
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4.11 SHAREHOLDER APPROVAL.
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No Stock Option shall be exercisable, or Award granted, unless
and until the Shareholders of the Company have approved this Plan and all other
legal requirements have been fully complied with. Approval may be by Consent of
Shareholders without meeting.
4.12 Assumption Agreements.
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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 and
officers and non employee directors 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,
Selected Persons and officers. 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 and Selected Persons 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.
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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 effective as of the 29th
day of July, 2002.
CYBER GROUP NETWORK CORPORATION
By:
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Richard Serrano, President
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