EXHIBIT 4
CONTINAN COMMUNICATIONS, INC.
2007 STOCK AND OPTION PLAN
1. GENERAL PROVISIONS.
1.1 PURPOSE.
The Continan Communications, Inc. 2007 Stock and Option ("Plan") is
intended to allow designated directors, officers, employees, and certain
non-employees, including consultants (all of whom are sometimes collectively
referred to herein as "Employees") of Continan Communications, Inc., a Nevada
corporation ("Company") and its Subsidiaries (as that term is defined below)
which it may have from time to time to receive certain options ("Stock Options")
to purchase the Company's common stock, one tenth of one cent ($0.001) par value
("Common Stock"), and to receive grants of Common Stock subject to certain
restrictions ("Grants"). As used in this Plan, the term "Subsidiary" shall mean
each corporation which is a "subsidiary corporation" of the Company within the
meaning of Section 424(f) of the Internal Revenue Code of 1986, as amended
("Code"). The purpose of the Plan is to promote the interests of the Company and
its shareholders by attracting and retaining Employees capable of furthering the
future success of the Company and by aligning their economic interests more
closely with those of the Company's shareholders. The services that shall be
compensated for with such Stock Option and Grants shall be bone fide services to
be performed for the Company, which such services shall neither be in connection
with a capital raising function for the Company nor in connection with making a
market in the Common Stock.
1.2 ADMINISTRATION.
1.2.1 The Plan shall be administered by the Company's Board of
Directors ("Directors"). A majority of its members shall constitute a quorum.
The Directors shall be governed by the provisions of the Company's Bylaws and of
Nevada law applicable to the Directors, except as otherwise provided herein or
determined by the Directors.
1.2.2 The Directors shall have full and complete authority to construe
and interpret the Plan, to establish, amend and rescind rules and regulations
relating to the Plan, and to take all such actions and make all such
determinations in connection with the Plan as it may deem necessary or
desirable. The Directors shall, in their discretion, but subject to the express
provisions of the Plan: approve the Employees nominated by the management of the
Company to be granted Grants or Stock Options; to determine the number of Grants
or Stock Options to be granted to an Employee; to determine the time or times at
which Grants or Stock Options shall be granted; to establish the terms and
conditions upon which Grants or Stock Options may be exercised; to remove or
adjust any restrictions and conditions upon Grants 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 Directors, and all of its actions
hereunder, shall be binding and conclusive on all persons for all purposes.
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1.2.3 The Company hereby agrees to indemnify and hold harmless each
member of the Directors and each Employee of the Company, and the estate and
heirs of such member of the Directors or Employee, against all claims,
liabilities, expenses, penalties, damages or other pecuniary losses, including
legal fees, which such member of the Directors 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 Directors or the Directors
shall be liable for any action or determination made in good faith with respect
to the Plan or any Grant or Stock Option granted pursuant to the Plan.
1.3 ELIGIBILITY AND PARTICIPATION.
Employees eligible under the Plan shall be approved by the Directors
from those Employees who, in the opinion of the management of the Company, are
in positions that enable them to make significant and extraordinary
contributions to the long-term performance and growth of the Company. In
selecting Employees to whom Stock Options or Grants 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.
1.4 SHARES SUBJECT TO THE PLAN.
The maximum number of shares of Common Stock that may be issued
pursuant to the Plan shall be Two Million Five Hundred Thousand (2,500,000)
subject to adjustment pursuant to the provisions of paragraph 4.1. If shares of
Common Stock Granted 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. GRANTS OF STOCK OPTIONS.
2.1 GRANTS OF STOCK OPTIONS.
The Directors may grant Stock Options in such amounts, at such times,
and to such Employees nominated by the management of the Company as the
Directors, in their 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 Directors on the date of grant. The
Directors 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 Directors on the date of grant.
The aggregate fair market value (determined as of the time an incentive stock
option is granted) of the Common Stock with respect to which incentive stock
options are exercisable for the first time by any Employee during any one
calendar year (under all plans of the Company and any parent or subsidiary of
the Company) may not exceed the maximum amount permitted under Section 422 of
the Code (currently one hundred thousand dollars ($100,000.00)). Non-statutory
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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 ("Option Agreement") in a form approved by the
Directors, which shall be executed on behalf of the Company and by the Employee
to whom the Stock Option is granted, and which shall be subject to the terms and
conditions of this Plan. In the discretion of the Directors, Stock Options may
include provisions (which need not be uniform), authorized by the Directors in
their discretion, that accelerate an Employee's rights to exercise Stock Options
following a "Change in Control," as such term is defined in paragraph 3.1
hereof. The holder of a Stock Option shall not be entitled to the privileges of
stock ownership as to any shares of Common Stock not actually issued to such
holder.
2.2 PURCHASE PRICE.
The purchase price ("Exercise Price") of shares of Common Stock subject
to each non-statutory Stock Option ("Option Shares") shall be equal to whatever
price is established by the Directors, in its sole discretion, on the date of
the grant. The Exercise Price of Incentive Stock Options shall be the fair
market value of the options on the date of the grant thereof. For an Employee
holding stock possessing more than ten percent (10%) percent of the total
combined voting power of all classes of stock of the Company, the Exercise Price
of an incentive Stock Option shall be at least one hundred ten percent (110%) of
the fair market value of the Common Stock and such option.
2.3 OPTION PERIOD.
The Stock Option period ("Term") shall commence on the date of grant of
the incentive Stock Option and shall be ten (10) years or such shorter period as
is determined by the Directors; the Term for an incentive Stock Option granted
to an Employee holding stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company shall be five (5)
years from the date such option is granted. The Term for Non-statutory Stock
Options shall be whatever period, if any, is set by the Directors. Each Stock
Option shall provide that it is exercisable over its term in such periodic
installments as the Directors 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
who are subject to the reporting requirements of Section 16(a) of the Exchange
Act ("Section 16 Reporting Persons") shall not be exercisable until at least six
(6) months and one day from the date the Stock Option is granted.
2.4 EXERCISE OF OPTIONS.
2.4.1 Each Stock Option may be exercised in whole or in part (but not
as to fractional shares) by delivering it for surrender or endorsement to the
Company, attention of the Corporate Secretary, at the principal office of the
Company, together with payment of the Exercise Price and an executed Notice and
Agreement of Exercise in the form prescribed by paragraph 2.4.2. Payment may be
made (i) in cash, (ii) by cashier's or certified check, (iii) by surrender of
previously owned shares of the Company's Common Stock valued pursuant to
paragraph 2.2 (if the Directors authorize payment in stock in their discretion),
(iv) by withholding from the Option Shares which would otherwise be issuable
upon the exercise of the Stock Option that number of Option Shares equal to the
exercise price of the Stock Option, if such withholding is authorized by the
Directors in their discretion, (v) in the discretion of the Directors, by the
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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 Directors, or (vi) cashless exercise
program as established by the Company.
2.4.2 Exercise of each Stock Option is conditioned upon the agreement
of the Employee to the terms and conditions of this Plan and of such Stock
Option as evidenced by the Employee's execution and delivery of a Notice and
Agreement of Exercise in a form to be determined by the Directors in their
discretion. Such Notice and Agreement of Exercise shall set forth the agreement
of the Employee that: (a) no Option Shares will be sold or otherwise distributed
in violation of the Securities Act of 1933 ("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 is a Section
16 Reporting Person, the Employee will furnish to the Company a copy of each
Form 4 or Form 5 filed by said Employee and will timely file all reports
required under federal securities laws, and (e) the Employee will report all
sales of Option Shares to the Company in writing on a form prescribed by the
Company.
2.4.3 No Stock Option shall be exercisable unless and until any
applicable registration or qualification requirements of federal and state
securities laws, and all other legal 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 Directors, such suspension is
necessary to preclude violation of any requirements of applicable law or
regulatory bodies having jurisdiction over the Company. If any Stock Option
would expire for any reason except the end of its term during such a suspension,
then if exercise of such Stock Option is duly tendered before its expiration,
such Stock Option shall be exercisable and exercised (unless the attempted
exercise is withdrawn) as of the first day after the end of such suspension. The
Company shall have no obligation to file any Registration Statement covering
resales of Option Shares.
2.5 RESTRICTIONS ON TRANSFER.
Each Stock Option granted under this Plan shall be transferable only by
will or the laws of descent and distribution. No interest of any Employee under
the Plan shall be subject to attachment, execution, garnishment, sequestration,
the laws of bankruptcy or any other legal or equitable process. Each Stock
Option granted under this Plan shall be exercisable during an Employee's
lifetime only by such Employee or by such Employee's legal representative.
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3. GRANTS OF SHARES.
3.1 GRANT OF GRANTS.
Subject to the provisions of the Plan, the Directors shall have full
and complete authority, in their discretion, but subject to the express
provisions of this Plan, to (i) grant Grants pursuant to the Plan; (ii)
determine the number of shares of Common Stock subject to each Grant ("Grant
Shares"); (iii) determine the terms and conditions (which need not be identical)
of each Grant, including the consideration to be paid by the Employee for such
Common Stock; (iv) establish and modify performance criteria for Grants; and (v)
make all of the determinations necessary or advisable with respect to Grants
under the Plan. Each Grant under the Plan shall consist of a grant of shares of
Common Stock.
3.2 INCENTIVE AGREEMENTS.
Each Grant granted under the Plan shall be evidenced by a written
agreement ("Agreement") in a form approved by management and executed by the
Company and the Employee to whom the Grant is granted. Each Agreement shall be
subject to the terms and conditions of the Plan and other such terms and
conditions as management may specify.
3.3 WAIVER OF RESTRICTIONS.
The Directors may modify or amend any Grant under the Plan or waive any
restrictions or conditions applicable to such Grants; provided, however, that
the Directors may not undertake any such modifications, amendments or waivers if
the effect thereof materially increases the benefits to any Employee, or
adversely affects the rights of any Employee without his or her consent.
3.4 TERMS AND CONDITIONS OF GRANTS.
3.4.1 Upon receipt of a Grant of shares of Common Stock under the Plan,
an Employee shall be the holder of record of the shares and shall have all the
rights of a shareholder with respect to such shares, subject to the terms and
conditions of the Plan and the Grant.
4. MISCELLANEOUS PROVISIONS.
4.1 ADJUSTMENTS UPON CHANGE IN CAPITALIZATION.
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 Grant, shall be
proportionately adjusted in the event of any increase or decrease in the number
of the issued shares of Common Stock which results from a split-up or
consolidation of shares, payment of a stock dividend or dividends exceeding a
total of five percent (5%) for which the record dates occur in any one fiscal
year, a recapitalization (other than the conversion of convertible securities
according to their terms), a combination of shares or other like capital
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adjustment, so that (i) upon exercise of the Stock Option, the Employee shall
receive the number and class of shares such Employee would have received had
such Employee been the holder of the number of shares of Common Stock for which
the Stock Option is being exercised upon the date of such change or increase or
decrease in the number of issued shares of the Company, and (ii) upon the lapse
of restrictions of the Grant Shares, the Employee shall receive the number and
class of shares such Employee would have received if the restrictions on the
Grant Shares had lapsed on the date of such change or increase or decrease in
the number of issued shares of the Company.
4.1.2 Upon a reorganization, merger or consolidation of the Company
with one or more corporations as a result of which is not the surviving
corporation or in which the Company survives as a wholly-owned subsidiary of
another corporation, or upon a sale of all or substantially all of the property
of the Company to another corporation, or any dividend or distribution to
shareholders of more than ten percent (10%) of the Company's assets, adequate
adjustment or other provisions shall be made by the Company or other party to
such transaction so that there shall remain and/or be substituted for the Option
Shares and Grant Shares provided for herein, the shares, securities or assets
which would have been issuable or payable in respect of or in exchange for such
Option Shares and Grant Shares then remaining, as if the Employee had been the
owner of such shares as of the applicable date. Any securities so substituted
shall be subject to similar successive adjustments.
4.2 WITHHOLDING TAXES.
The Company shall have the right at the time of exercise of any Stock
Option or the grant of an Grant 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 Directors in its sole and absolute discretion in the
particular case: (i) by requiring the Employee to tender a cash payment to the
Company, (ii) by withholding from the Employee's salary, (iii) by withholding
from the Option Shares which would otherwise be issuable upon exercise of the
Stock Option, or from the Grant Shares on their grant or date of lapse of
restrictions, that number of Option Shares or Grant Shares having an aggregate
fair market value (determined in the manner prescribed by paragraph 2.2) as of
the date the withholding tax obligation arises in an amount which is equal to
the Employee's Tax Liability or (iv) by any other method deemed appropriate by
the Directors. 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 Grant Shares and the exercise
of the related Stock Option occur at least six (6) months and one day following
the date of grant of such Stock Option or Grant; and
(b) the withholding of Option Shares or Grant Shares is made either (i)
pursuant to an irrevocable election ("Withholding Election") made by such
Employee at least six months in advance of the withholding of Options Shares or
Grant Shares, or (ii) on a day within a ten (10) day "window period" beginning
on the third business day following the date of release of the Company's
quarterly or annual summary statement of sales and earnings.
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Anything herein to the contrary notwithstanding, a Withholding Election may be
disapproved by the Directors at any time.
4.3 RELATIONSHIP TO OTHER EMPLOYEE BENEFIT PLANS.
Stock Options and Grants granted hereunder shall not be deemed to be
salary or other compensation to any Employee for purposes of any pension,
thrift, profit-sharing, stock purchase or any other employee benefit plan now
maintained or hereafter adopted by the Company.
4.4 AMENDMENTS AND TERMINATION.
The Directors may at any time suspend, amend or terminate this Plan.
For incentive stock options only, 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 under this Plan, (b) materially
increase the number of securities which may be issued under this Plan (except
for adjustments pursuant to paragraph 4.1 hereof), or (c) materially modify the
requirements as to eligibility for participation in the Plan.
4.5 SUCCESSORS IN INTEREST.
The provisions of this Plan and the actions of the Directors shall be
binding upon all heirs, successors and assigns of the Company and of Employees.
4.6 OTHER DOCUMENTS.
All documents prepared, executed or delivered in connection with this
Plan (including, without limitation, Option Agreements and Incentive Agreements)
shall be, in substance and form, as established and modified by the Directors;
provided, however, that all such documents shall be subject in every respect to
the provisions of this Plan, and in the event of any conflict between the terms
of any such document and this Plan, the provisions of this Plan shall prevail.
4.7 NO OBLIGATION TO CONTINUE EMPLOYMENT.
This Plan and grants hereunder shall not impose any obligation on the
Company to continue to employ any Employee. Moreover, no provision of this Plan
or any document executed or delivered pursuant to this Plan shall be deemed
modified in any way by any employment contract between an Employee (or other
employee) and the Company.
4.8 MISCONDUCT OF AN EMPLOYEE.
Notwithstanding any other provision of this Plan, if an Employee
commits fraud or dishonesty toward the Company or 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 Directors, in its sole and
absolute discretion, such Employee shall forfeit all rights and benefits under
this Plan.
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4.9 TERM OF PLAN.
This Plan was adopted by the Directors effective May 1, 2007. No Stock
Options or Grants may be granted under this Plan after May 1, 2017.
4.10 GOVERNING LAW.
This Plan shall be construed in accordance with, and governed by, the
laws of the State of Nevada.
4.11 APPROVALS.
No Stock Option shall be exercisable, or Grant granted, unless and
until the Directors of the Company have approved this Plan and all other legal
requirements have been fully complied with. In addition, no Incentive Stock
Option shall be granted until approved by a majority of the issued and
outstanding Common Stock of the Company.
4.12 ASSUMPTION AGREEMENTS.
The Company will require each successor, (direct or indirect, whether
by purchase, merger, consolidation or otherwise), to all or substantially all of
the business or assets of the Company, prior to the consummation of each such
transaction, to assume and agree to perform the terms and provisions remaining
to be performed by the Company under each Incentive Agreement and Stock Option
and to preserve the benefits to the Employees thereunder. Such assumption and
agreement shall be set forth in a written agreement in form and substance
satisfactory to the Directors (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
Directors shall require and approve, in order to preserve such benefits to the
Employees. Without limiting the generality of the foregoing, the Directors may
require an Assumption Agreement to include satisfactory undertakings by a
successor:
(a) to provide liquidity to the Employees 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 Granted 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 Directors
may require and approve, in their discretion.
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4.13 COMPLIANCE WITH RULE 16B-3.
Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3. To the extent that any provision of the Plan or action
by the Directors fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Board.
IN WITNESS WHEREOF, this Plan has been executed as of the 1st day of
May 2007.
CONTINAN COMMUNICATIONS, INC.
By: /s/ Claude C. Buchert
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Claude C. Buchert, Chief Executive Officer
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