EXHIBIT 10.10
CHINA BROADBAND CORP.
2000 STOCK PLAN
SECTION 1. PURPOSE
The purposes of this 2000 Stock Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to certain individuals providing services to the Company
and its Subsidiaries, and to promote the success of the Company's business and
thereby enhance long-term shareholder value. Options granted under the Plan may
be incentive stock options (as defined under Section 422 of the Code) or
nonqualified stock options, as determined by the Administrator at the time of
grant of an option and subject to the applicable provisions of the Code, and the
regulations promulgated thereunder. Awards of Restricted Stock may also be made
under this Plan.
SECTION 2. DEFINITIONS
As used herein, the following definitions shall apply:
2.1 "Administrator" means the Board or any of its Committees appointed as
-------------
permitted under this Plan.
2.2 "Applicable Laws" means the legal requirements relating to stock
----------------
option plans, if any, pursuant to U.S. state corporate laws, U.S. federal and
state securities laws, the Code and the rules of any applicable Stock Exchange.
2.3 "Award" means the grant of Restricted Stock or an Option to an Employee
-----
or Consultant.
2.4 "Award Agreement" means a written agreement between the Company and a
---------------
Participant relating to an Award under the Plan.
2.5 "Board" means the Board of Directors of the Company.
-----
2.6 "Cause" means willful misconduct with respect to, or that is harmful
-----
to, the Company or any of its affiliates including, without limitation,
dishonesty, fraud, unauthorized use or disclosure of confidential information or
trade secrets or other misconduct (including, without limitation, conviction for
a felony), in each case as reasonably determined by the Administrator.
-1-
2.7 "Change in Control" shall mean any of the following:
-----------------
(a) the acquisition of securities of the Company representing
more than 50% of the combined voting power of the Company's then
outstanding securities by any person or group of persons, except a
Permitted Shareholder (as defined below), acting in concert. A
"Permitted Shareholder" means a holder, as of the date of this
Agreement, of voting capital stock of the Company;
(b) a consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to
which shares of the Company's outstanding capital stock are converted
into cash, securities or other property, other than a consolidation or
merger of the Company in which the Company's shareholders immediately
prior to the consolidation or merger have the same proportionate
ownership of voting capital stock of the surviving corporation
immediately after the consolidation or merger;
(c) the sale, transfer or other disposition of all or sub-
stantially all of the assets of the Company; or
(d) in the event that the shares of voting capital stock of
the Company are traded on an established securities market: a public
announcement that any person has acquired or has the right to acquire
beneficial ownership of securities of the Company representing more
than 50% of the combined voting power of the Company's then outstanding
securities, and for this purpose the terms "person" and "beneficial
ownership" shall have the meanings provided in Section 13(d) of the
Exchange Act or related rules promulgated by the Securities and
Exchange Commission; or the commencement of or public announcement of
an intention to make a tender offer or exchange offer for securities of
the Company representing more than 50% of the combined voting power of
the Company's then outstanding securities.
2.8 "Code" means the Internal Revenue Code of 1986, as amended.
----
2.9 "Committee" means a committee of Directors designated by the Board
---------
to administer the Plan. To the extent Rule 16b-3 and/or Code Section 162(m)
apply to the Company, the Committee shall be comprised of not less than such
number of Directors as shall be required to permit Awards granted under the Plan
to qualify under Rule 16b-3, and each member of the Committee shall be an
"outside director" within the meaning of Section 162(m) of the Code. The Company
expects to have the Plan administered in accordance with the requirements for
the award of "qualified performance-based compensation" within the meaning of
Section 162(m) of the Code.
2.10 "Common Stock" means the Common Stock of the Company.
------------
2.11 "Company" means China Broadband Corp., a Nevada corporation.
-------
-2-
2.12 "Consultant" means any person, including an advisor, an advisory board
----------
member or director, who is engaged by the Company or any Parent or Subsidiary to
render services.
2.13 "Continuous Status as an Employee or Consultant" means the absence of
-----------------------------------------------
any interruption or termination of service as an Employee or Consultant.
Continuous Status as an Employee or Consultant shall not be considered
interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other
leave of absence approved by the Administrator, provided that such leave is for
a period of not more than ninety (90) days, unless re-employment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted from time to time; or (iv)
transfers between locations of the Company or between the Company, its
Subsidiaries or their respective successors. For purposes of this Plan, a change
in status from an Employee to a Consultant or from a Consultant to an Employee
will not constitute an interruption of Continuous Status as an Employee or
Consultant.
2.14 "Disability" means permanent and total disability as defined in Code
----------
section 22(e)(3).
2.15 "Employee" means any person, including officers and directors, employed
--------
by the Company or any Parent or Subsidiary of the Company, with the status of
employment determined based upon such minimum number of hours or periods worked
as shall be determined by the Administrator in its discretion, subject to any
requirements of the Code. The payment of a director's fee by the Company to a
director shall not be sufficient to constitute "employment" of such director by
the Company.
2.16 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
2.17 "Fair Market Value" means, as of any date, the fair market value of
-----------------
Common Stock determined as follows:
(a) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation System ("Nasdaq"), its Fair Market Value shall be
the closing sales price for such stock (or the closing bid, if no sales
were reported), as quoted on such system or exchange, or the exchange
with the greatest volume of trading in Common Stock for the last market
trading day prior to the time of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems
reliable;
(b) If the Common Stock is quoted on the Nasdaq (but not on
the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market
Value shall be the mean between the high bid and low asked prices for
the Common Stock for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal, Bloomberg or
such other source as the Administrator deems reliable; or
(c) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith
by the Administrator.
-3-
2.18 "Good Reason" means the occurrence of any of the following events or
-----------
conditions without the Participant's consent:
(a) a change in the Participant's status, title, position or
responsibilities (including reporting responsibilities) that, in the
Participant's reasonable judgment, represents a substantial reduction
in the status, title, position or responsibilities as in effect
immediately prior thereto;
(b) a significant reduction in the Participant's annual base
salary that is not part of a Company-wide reduction of salaries;
(c) the Company's requiring the Participant to be based at any
place outside a 50-mile radius of his or her place of employment prior
to a Change in Control, except for reasonably required travel on the
Company's business that is not materially greater than such travel
requirements prior to the Change in Control; or
(d) the Company's failure to (i) continue in effect any
material compensation or benefit plan (or the substantial equivalent
thereof) in which the Participant was participating at the time of a
Change in Control, including, but not limited to, the Plan, or (ii)
provide the Participant with compensation and benefits at least equal
(in terms of benefit levels and/or reward opportunities) to those
provided for under each employee benefit plan, program and practice as
in effect immediately prior to the Change in Control (or as in effect
following the Change in Control, if greater).
2.19 "Incentive Stock Option" means an Option intended to qualify as an
-----------------------
incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable Option Agreement.
2.20 "Nonqualified Stock Option" means an Option not intended to qualify as
--------------------------
an Incentive Stock Option, as designated in the applicable Option Agreement.
2.21 "Option" means a stock option granted pursuant to the Plan.
------
2.22 "Option Agreement" means a written option agreement between the Company
----------------
and an Optionee.
2.23 "Optioned Stock" means the Common Stock subject to an Option.
--------------
2.24 "Optionee" means an Employee or Consultant who receives an Option.
--------
2.25 "Parent" means a "parent corporation", whether now or hereafter exist-
-----
ing, as defined in Section 424(e) of the Code, or any successor provision.
2.26 "Participant" means an Employee or Consultant designated to be granted
-----------
an Award under the Plan.
-4-
2.27 "Plan" means this 2000 Stock Plan.
----
2.28 "Reporting Person" means an officer, director, or greater than ten
----------------
percent (10%) shareholder of the Company within the meaning of Rule 16a-2 under
the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under
the Exchange Act.
2.29 "Restricted Stock" means Common Stock awarded to a Participant under
----------------
this Plan, subject to applicable restrictions.
2.30 "Restricted Stock Agreement" means a written restricted stock agreement
--------------------------
between the Company and the Restricted Stock Holder.
2.31 "Restricted Stock Award" means the grant of Restricted Stock pursuant
----------------------
to the Plan.
2.32 "Restricted Stock Holder" means a Participant who receives Restricted
-----------------------
Stock pursuant to the Plan.
2.33 "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, as
----------
the same may be amended from time to time, or any successor provision.
2.34 "Securities Act" means the Securities Act of 1933, as amended.
--------------
2.35 "Share" means a share of the Common Stock, as may be adjusted as
-----
permitted under the Plan.
2.36 "Stock Exchange" means any stock exchange or consolidated stock
---------------
price reporting system on which prices for the Common Stock are quoted at any
given time.
2.37 "Subsidiary"means a "subsidiary corporation," whether now or hereafter
----------
existing, as defined in Section 424(f) of the Code, or any successor provision.
SECTION 3. STOCK SUBJECT TO THE PLAN
Subject to the provisions for adjustment under the terms of this Plan,
the maximum aggregate number of shares that may be optioned and sold under the
Plan is Eight Million (8,000,000) shares of Common Stock. The shares may be
authorized, but unissued, or reacquired Common Stock. If an Award should expire
or become unexercisable for any reason without having been exercised in full,
the unpurchased Shares that were subject thereto shall, unless the Plan shall
have been terminated, become available for future grant under the Plan. In
addition, any shares of Common Stock which are retained by the Company upon
exercise of an Award in order to satisfy the exercise price for such Award or
any withholding taxes due with respect to such exercise shall be treated as not
issued and shall continue to be available under the Plan. Shares repurchased by
the Company pursuant to any repurchase right which the Company may have shall
not be available for future grant under the Plan. Notwithstanding the foregoing,
-5-
the number of Shares available for granting Incentive Stock Options under the
Plan shall not exceed Eight Million (8,000,000) shares of Common Stock, subject
to adjustment as provided in the Plan and subject to the provisions of Section
422 or 424 of the Code or any successor provision.
SECTION 4. ADMINISTRATION OF THE PLAN
4.1 Powers of the Administrator. Subject to the provisions of the Plan
----------------------------
and, in the case of a Committee, the specific duties delegated by the Board to
such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any Stock Exchange, the Administrator
shall have the authority, in its discretion:
(a) to determine the Fair Market Value of the Common Stock, in
accordance with the provisions of the Plan;
(b) to select the Consultants and Employees to whom Awards may
from time to time be granted hereunder;
(c) to determine whether and to what extent Awards are granted
hereunder;
(d) to determine the number of shares of Common Stock to be
covered by each such Award granted hereunder;
(e) to approve forms of agreement for use under the Plan;
(f) to determine the number of shares of Restricted Stock to
be granted hereunder;
(g) to construe and interpret the terms of the Plan and Awards
granted under the Plan;
(h) to determine vesting schedules;
(i) to determine whether and under what circumstances an Award
may be settled in Common Stock or other consideration instead of cash;
and
(j) to make any other determination and take any other action
that the Administrator deems necessary or desirable for the
administration of the Plan.
4.2 Effect of Administrator's Decision. All decisions, determinations
-----------------------------------
and interpretations of the Administrator shall be final and binding on all
Participants.
4.3 Administration Pursuant to Section 162(m). The Company expects to have
------------------------------------------
the Plan administered in accordance with the requirements for the award of
"qualified performance-based compensation" within the meaning of Section 162(m)
of the Code, as applicable.
-6-
SECTION 5. ELIGIBILITY FOR AWARDS
5.1 Recipients of Grants. Restricted Stock and Nonqualified Stock
----------------------
Options may be granted to Employees and Consultants. Incentive Stock Options may
be granted only to Employees. An Employee or Consultant who has been granted an
Award may, if he or she is otherwise eligible, be granted additional Awards.
5.2 Type of Award. Each Award shall be designated in the Award Agreement
-------------
as either an Incentive Stock Option or a Nonqualified Stock Option, or as
Restricted Stock. If not so designated, the Award will be treated as a
Nonqualified Stock Option. Notwithstanding any such designations, to the extent
that the aggregate Fair Market Value of the Shares with respect to which Options
designated as Incentive Stock Options are exercisable for the first time by any
Optionee during any calendar year (under all plans of the Company or any Parent
or Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonqualified Stock Options. For purposes of this requirement, Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares subject to an Incentive Stock Option shall
be determined as of the date of the grant of such Option.
SECTION 6. AWARDS OF OPTIONS
6.1 Term of Option. The term of each Option shall be the term stated in
---------------
the Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement. However, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.
6.2 Option Exercise Price. The per share exercise price for the Shares
-----------------------
to be issued pursuant to exercise of an Option shall be such price as is
determined by the Administrator, except that (i) in the case of an Incentive
Stock Option that is granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than one
hundred ten percent (110%) of the Fair Market Value per Share on the date of
grant, and (ii) in the case of an Incentive Stock Option that is granted to any
other Employee, the per Share exercise price shall be no less than one hundred
percent (100%) of the Fair Market Value per Share on the date of grant.
6.3 Consideration. The consideration to be paid for the Shares to be issued
-------------
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist
-7-
entirely of (i) cash or check, (ii) cancellation of indebtedness of the Company
to Optionee, (iii) promissory note (subject to approval by the Company), (iv)
surrender of other Shares that (A) have been owned by Optionee for more than six
months on the date of surrender or such other period as may be required to avoid
a charge to the Company's earnings, and (B) have a Fair Market Value on the date
of surrender equal to the aggregate exercise price of Shares to be purchased by
Optionee as to which such Option shall be exercised, (v) if there is a public
market for the Shares and they are registered under the Securities Act, delivery
of a properly executed exercise notice together with such other documentation as
the Administrator and the broker, if applicable, shall require to effect an
exercise of the Option and delivery to the Company of the sale or loan proceeds
required to pay the aggregate exercise price and any applicable income or
employment taxes, (vi) any combination of the foregoing methods of payment, or
(vii) such other consideration and method of payment for the issuance of Shares
to the extent permitted under Applicable Laws. In making its determination as to
the type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company or result in the recognition of compensation expense (or additional
compensation expense) for financial reporting purposes.
6.4 Vesting of Options
------------------
(a) Vesting Schedule. No Option will be exercisable until it
-----------------
has vested. The Administrator will specify the vesting schedule for
each Option at the time of grant of the Option, prior to the provision
of services with respect to which such Option is granted; provided that
if no vesting schedule is specified at the time of grant, the Option
shall vest in full over the course of four years from date of grant as
follows: twenty five percent (25%) of the total number of Shares
granted under the Option shall vest after one (1) year of Continuous
Status as an Employee or Consultant; and the remaining seventy-five
percent (75%) of the Shares granted under the Option shall vest pro
rata monthly, on the same date of the month as the date of grant of the
option, over the following thirty-six (36) months of Continuous Status
as an Employee or Consultant. The Administrator may specify a vesting
schedule for all or any portion of an Option based on the achievement
of performance objectives with respect to the Company, a Parent or
Subsidiary, and/or Optionee, and as shall be permissible under the
terms of the Plan.
(b) Acceleration of Vesting. The vesting of one or more
-----------------------
outstanding Options may be accelerated by the Administrator at such
times and in such amounts as it determines in its sole discretion. The
vesting of Options may also be accelerated in connection with a
corporate transaction, as described below.
6.5 Procedure for Exercise; Rights as a Shareholder. An Option shall be
------------------------------------------------
deemed to be exercised when written notice of such exercise has been given to
the Company in accordance with the terms of the Option by the person entitled to
exercise the Option and the Company has received full payment for the Shares
with respect to which the Option is exercised. An Option may not be exercised
for a fraction of a Share. Full payment may, as authorized by the Administrator,
consist of any consideration and method of payment as described above. Until the
issuance (as evidenced by the appropriate entry on the books of the Company or
of a duly
-8-
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly upon exercise of the Option. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 9 of the
Plan. Exercise of an Option in any manner shall result in a decrease in the
number of Shares that thereafter may be available, both for purposes of the Plan
and for sale under the Option, by the number of Shares as to which the Option is
exercised.
6.6 Exercise After Termination of Employment or Consulting Relationship
-------------------------------------------------------------------
(a) Termination of Employment or Consulting Relationship.
--------------------------------------------------------
Except as otherwise provided herein, in the event of termination of a
Participant's Continuous Status as an Employee or Consultant with the
Company, such Participant may exercise his or her Option to the extent
that Participant was entitled to exercise it at the date of such
termination, but only within three (3) months after the date of such
termination, or such other longer period of time as is determined by
the Administrator, provided that no Option which is exercised after
such three month period will be treated as an Incentive Stock Option,
and that in no event may an Option be exercised later than the
expiration date of the term of such Option as set forth in the Option
Agreement. To the extent that Participant was not entitled to exercise
the Option at the date of such termination, or if Participant does not
exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate. No termination shall be
deemed to occur and this paragraph shall not apply if (i) Participant
is a Consultant who becomes an Employee; or (ii) Participant is an
Employee who becomes a Consultant; or (iii) Participant transfers
employment among the company and its subsidiaries.
(b) Disability of Participant. Notwithstanding the provisions
-------------------------
set forth above, in the event of termination of a Participant's
Continuous Status as an Employee or Consultant as a result of his or
her Disability, Participant may, but only within twelve (12) months
(or, with respect to a Nonqualified Stock Option, such other longer
period of time, if any, as is determined by the Administrator) after
the date of such termination (but in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement),
exercise the Option to the extent he or she is otherwise entitled to
exercise it at the date of such termination. To the extent that
Participant was not entitled to exercise the Option at the date of
termination, or if Participant does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall
terminate.
(c) Death of Participant. In the event of the death of a
---------------------
Participant during the period of Continuous Status as an Employee or
Consultant, or within thirty (30) days following the termination of
Participant's Continuous Status as an Employee or Consultant, the
Option may be exercised, at any time within twelve (12) months (or,
with respect to a Nonqualified Stock Option, such other longer period
of time, if any, as is
-9-
determined by the Administrator) after the date of death (but in no
event later than the expiration date of the term of such Option as set
forth in the Option Agreement), by Participant's estate or by a
person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent Participant was entitled to
exercise the Option at the date of death or, if earlier, the date of
termination of the Continuous Status as an Employee or Consultant. To
the extent that Participant was not entitled to exercise the Option at
the date of death or termination, as the case may be, or if Participant
or the Participant's estate (or, as applicable, heirs, personal
representative, executor or administrator) does not exercise such
Option to the extent so entitled within the time specified herein, the
Option shall terminate.
6.7 Rule 16b-3. Options granted to Reporting Persons shall comply with
----------
Rule 16b-3 and shall contain such additional conditions or restrictions as may
be required thereunder to qualify for the maximum exemption for Plan
transactions.
6.8 Buyout Provisions. The Administrator may at any time offer to buy out
-----------------
for a payment in cash or Shares, an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to
Optionee at the time that such offer is made.
6.9 Repurchase Rights. Prior to the Company's listing on a recognized
------------------
Stock Exchange, the Company may have the right, as detailed in the Award
Agreement, to repurchase any Shares issued in connection with an Award under
this Plan upon Participant's cessation of Continuous Status as an Employee or
Consultant. Furthermore, the Administrator shall have the discretion to
authorize the issuance of unvested Shares pursuant to the exercise of an Option.
In the event of termination of the Optionee's employment or services, all Shares
issued upon exercise of an Option which are unvested at the time of cessation of
employment or services shall be subject to repurchase at the exercise price paid
for such Shares. The terms and conditions upon which such repurchase right shall
be exercisable (including the period and procedure for exercise) shall be
established by the Administrator and set forth in the agreement evidencing such
right. All of the Company's outstanding repurchase rights under this Section are
assignable by the Company at any time and shall remain in full force and effect
in the event of a Change in Control; provided that if the vesting of Options is
accelerated as permitted under the Plan, the repurchase rights under this
Section shall terminate and all Shares subject to such terminated rights shall
immediately vest in full. The Administrator shall have the discretionary
authority, exercisable either before or after the Optionee's cessation of
employment or services, to cancel the Company's outstanding repurchase rights
with respect to one or more Shares purchased or purchasable by the Optionee
under an Option and thereby accelerate the vesting of such Shares in whole or in
part at any time.
SECTION 7. RESTRICTED STOCK AWARDS
7.1 Grant of Restricted Stock Awards. Each Restricted Stock Award (i)
---------------------------------
shall be for a number of Shares determined by the Administrator, and (ii) shall
require the Restricted Stock Holder to
-10-
maintain Continuous Status as an Employee or Consultant for a restricted period
determined by the Administrator in order for the restrictions related to such
Shares to lapse. The restrictions and the duration of the restricted period will
be set forth in the Restricted Stock Agreement. The restricted period need not
be the same for all Shares subject to the Restricted Stock Award. For vesting
purposes, credit for service as an Employee or Consultant prior to the actual
grant of the Restricted Stock Award may be given as part of the Restricted Stock
Award.
7.2 Consideration for Restricted Stock Awards. Restricted Stock may be sold
-----------------------------------------
or awarded under the Plan for such consideration as the Administrator may
determine, including (without limitation) cash, cash equivalents, full-recourse
promissory notes (subject to approval by the Plan Administrator), past services
and future services.
7.3 Rights of a Restricted Stock Holder. Except for such restrictions,
--------------------------------------
and subject to provisions under the Plan relating to adjustments to Awards,
conditions on issuance of shares, and termination of the Participant's
relationship with the Company, a Restricted Stock Holder shall have all the
rights of a shareholder, including but not limited to the right to receive all
cash dividends paid on such Restricted Stock and the right to vote such
Restricted Stock. Dividends paid in securities or other property or stock
received in connection with a stock split or other distribution with respect to
the Restricted Stock shall be subject to the same restrictions as the Restricted
Stock.
7.4 Vesting of Restricted Stock. The restrictions imposed herein shall
----------------------------
lapse, and the Participant's rights in the Restricted Stock shall vest, in
accordance with the schedule provided in the Restricted Stock Agreement. If not
so specified in such Restricted Stock Agreement, the restrictions shall lapse
according to the following schedule: restrictions on 25% of the Shares shall
lapse after one year of Continuous Service as an Employee or Consultant; the
remaining 75% of Shares shall vest pro rata monthly on the last day of each
calendar month over the following 36 months of Continuous Service as an Employee
or Consultant. Upon the vesting of the Restricted Stock awarded under the Plan,
the Restricted Stock Holder shall be entitled to receive a certificate
representing the number of shares of Restricted Stock as to which restrictions
no longer apply, with the remaining shares of Restricted Stock subject to the
foregoing restrictions. The Restricted Stock Holder shall execute a new stock
power with respect to any remaining Shares which are restricted. The Restricted
Stock Holder shall be entitled to receive certificates for any Restricted Stock
as to which the Restricted Stock Holder's interest has become vested as provided
herein, and the Company shall issue the Restricted Stock Holder such
certificates.
7.5 Termination of Employment or Consulting Relationship. If a Restricted
----------------------------------------------------
Stock Holder ceases to maintain his or her Continuous Status as an Employee or
Consultant for any reason (other than death or Disability), Restricted Stock
theretofore awarded to such Restricted Stock Holder and which at the time of
such termination of his or her Continuous Status as an Employee or Consultant is
subject to the restrictions imposed by this Section shall, upon such termination
of his or her Continuous Status as an Employee or Consultant, be forfeited and
returned to the Company and the Restricted Stock Holder shall have no further
claim to or interest in such Restricted Stock. If a Restricted Stock Holder
ceases to maintain his or her Continuous Status as
-11-
an Employee or Consultant by reason of death or Disability, such Restricted
Stock awarded to such Restricted Stock Holder which, at the time of such
termination of his or her Continuous Status as an Employee or Consultant, is
subject to the restrictions imposed by this Section, shall be free of
restrictions and shall not be forfeited.
7.6 Issuance of Restricted Stock. The Administrator shall request of the
----------------------------
Company that each certificate in respect of Restricted Stock awarded under the
Plan be registered in the name of the Restricted Stock Holder. The Restricted
Stock Holder shall provide a stock power endorsed in blank to the Company and
any certificate representing the Restricted Stock shall bear the following (or a
similar) legend:
"The transferability of this certificate and the securities
represented hereby are subject to the terms and conditions (including
forfeiture) contained in the 2000 Stock Plan of China Broadband Corp.
Copies of such Plan are on file in the offices of China Broadband
Corp."
7.7 Adjustments to Restricted Stock Awards. The Administrator may,
------------------------------------------
in anticipation of a Change in Control, make such adjustments in the terms and
conditions of outstanding Restricted Stock, as the Administrator in its sole
discretion determines are equitably warranted under the circumstances, including
declaring that any Restricted Stock Award not vested shall become fully vested.
The Administrator in its discretion shall have the right to accelerate the time
at which the Restricted Stock shall become vested and may do so as to one or
more Restricted Stock Holders.
7.8 Restricted Stock Agreement. At the time of a Restricted Stock Award,
----------------------------
the Participant shall enter into a Restricted Stock Agreement with the Company
agreeing to the terms and conditions of the Restricted Stock Award and such
other matters as the Company shall in its sole discretion determine.
7.9 Return of Unvested Restricted Stock. Any Shares of Restricted Stock
-------------------------------------
as to which rights have not vested in accordance with this Plan and as to which
a Restricted Stock Holder no longer has any rights under this Plan shall be
returned to the Company which thereafter shall have all rights of ownership and
which may use such shares for further Awards under this Plan.
SECTION 8. STOCK WITHHOLDING TO SATISFY
WITHHOLDING TAX OBLIGATIONS
8.1 Withholding Tax. At the discretion of the Administrator, Participants
----------------
may satisfy withholding obligations as provided in this paragraph. When a
Participant incurs tax liability in connection with an Award, which tax
liability is subject to tax withholding under applicable tax laws (including,
without limitation, income and payroll withholding taxes), and Participant is
obligated to pay the Company an amount required to be withheld under applicable
tax laws, Participant may satisfy the withholding tax obligation by one or some
combination of the following methods: (a) by cash payment, (b) out of
Participant's current compensation, (c) if permitted by the Administrator, in
its discretion, by surrendering to the Company Shares that (i)
-12-
have been owned by Participant for more than six (6) months on the date of
surrender or such other period as may be required to avoid a charge to the
Company's earnings, and (ii) have a fair market value on the date of surrender
equal to (or less than, if other consideration is paid to the Company to satisfy
the withholding obligation) Participant's marginal tax rate times the ordinary
income recognized, plus an amount equal to the Participant's share of any
applicable payroll withholding taxes, or (d) if permitted by the Administrator,
in its discretion, by electing to have the Company withhold from the Shares to
be issued upon exercise of the Award, if any, that number of Shares having a
Fair Market Value equal to the amount required to be withheld. For this purpose,
the Fair Market Value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined (the "Tax Date").
In making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company or result in the recognition of
compensation expense (or additional compensation expense) for financial
reporting purposes.
8.2 Reporting Persons. Any surrender by a Reporting Person of previously
------------------
owned Shares to satisfy tax withholding obligations arising upon exercise of
this Award must comply with the applicable provisions of Rule 16b-3 and shall be
subject to such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.
8.3 Form of Election. All elections by a Participant to have Shares with-
----------------
held to satisfy tax withholding obligations shall be made in writing in a form
acceptable to the Administrator and shall be subject to the following additional
restrictions:
(a) the election must be made on or prior to the applicable
Tax Date;
(b) once made, the election shall be irrevocable as to the
particular Shares of the Award as to which the election is made;
(c) if Participant is a Reporting Person, the election must
comply with the
applicable provisions of Rule 16b-3 and shall be subject to such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions; and
(d) all elections shall be subject to the consent or
disapproval of the Administrator.
8.4 Deferral of Tax Date. In the event the election to have Shares with-
--------------------
held is made by a Participant and the Tax Date is deferred under Section 83 of
the Code because no election is filed under Section 83(b) of the Code,
Participant shall receive the full number of Shares with respect to which the
Award is exercised but such Participant shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.
-13-
SECTION 9. ADJUSTMENTS UPON CHANGES
IN CAPITALIZATION; CORPORATE TRANSACTIONS
9.1 Changes in Capitalization. Subject to any required action by
----------------------------
the shareholders of the Company, the number of Shares covered by each
outstanding Option, and the number of Shares that have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or that
have been returned to the Plan upon cancellation or expiration of an Award, as
well as the price per Share covered by each such outstanding Award, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination, recapitalization or reclassification of 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; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Administrator, whose determination in that respect shall be
final, binding and conclusive. Except as expressly provided herein, no issuance
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to an Award.
9.2 Dissolution or Liquidation. In the event of the proposed dissolution
----------------------------
or liquidation of the Company, the Administrator shall notify Participants at
least fifteen (15) days prior to such proposed action. To the extent not
previously exercised, Awards will terminate immediately prior to the
consummation of such proposed action.
9.3 Change in Control Transactions. Except as otherwise provided in
---------------------------------
the instrument that evidences the Option, in the event of any Change in Control,
each Option that is at the time outstanding shall automatically accelerate so
that each such Option shall, immediately prior to the specified effective date
for the Change in Control, become 100% vested. Notwithstanding the foregoing,
vesting of shares subject to such Option shall not so accelerate if and to the
extent that (i) in the opinion of the Company's accountants, it would render
unavailable "pooling of interest" accounting for a transaction that would
otherwise qualify for such accounting treatment; or (ii) such Option is, in
connection with the Change in Control, either to be assumed by the successor
corporation or parent thereof or to be replaced with a comparable award for the
purchase of shares of the capital stock of the successor corporation or its
parent corporation. If the Administrator determines that such an assumption or
replacement will be made, the Administrator shall give notice of such
determination to the Participants and of the provisions of such assumption or
replacement, and any adjustments made (i) to the number and kind of shares
subject to the outstanding Awards (or to the options in substitution therefore),
(ii) to the exercise prices, and/or (iii) to the terms and conditions of the
stock options. Any such determination shall be made in the sole discretion of
the Administrator and shall be final, conclusive and binding on all
Participants. If such Award is assumed or replaced in the Change in Control and
is not otherwise accelerated at that time, vesting of all of the unvested shares
subject to such Award shall be accelerated in the event the Participant's
employment or services should subsequently terminate within six months following
such Change in Control, unless such employment or
-14-
services are terminated by the Company for Cause or by the Participant
voluntarily without Good Reason. All unexercised Awards shall terminate and
cease to remain outstanding immediately following the consummation of the Change
in Control, except to the extent assumed by the successor corporation or an
affiliate thereof.
9.4 Certain Distributions. In the event of any distribution to the
----------------------
Company's shareholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per share of Common Stock covered by each
outstanding Option to reflect the effect of such distribution.
SECTION 10. GENERAL
10.1 Non-Transferability Of Options. Unless otherwise provided under the
------------------------------
Option Agreement, Options may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution, and may be exercised or purchased during the lifetime
of Optionee, only by Optionee.
10.2 Time Of Granting Options. The date of grant of an Award shall, for all
------------------------
purposes, be the date on which the Administrator makes the determination
granting such Award, or such later date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Award is so granted within a reasonable time after the date of such
grant.
10.3 Conditions Upon Issuance Of Shares. Shares shall not be issued pursuant
----------------------------------
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any Stock Exchange. As a condition to the exercise of an Option,
the Company may require the person exercising such Option to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required by law.
10.4 Amendment and Termination. The Board may at any time amend, alter,
-------------------------
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made that would impair the rights of any Participant
under any grant theretofore made, unless mutually agreed otherwise, which
agreement must be in writing and signed by Participant and the Company. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 or
with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of any Stock Exchange), the Company shall obtain
shareholder approval of any Plan amendment in such a manner and to such a degree
as required.
-15-
10.5 Reservation Of Shares. The Company, during the term of this Plan, will
---------------------
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
10.6 Information To Optionees. At the time of issuance of any securities
------------------------
under the Plan, the Company shall provide to Optionee a copy of the Plan and a
copy of any agreement(s) pursuant to which securities granted under the Plan are
issued.
10.7 Employment Relationship. The Plan shall not confer upon any Participant
-----------------------
any right with respect to continuation of employment or consulting relationship
with the Company, nor shall it interfere in any way with such Participant's
right or the Company's right to terminate his or her employment or consulting
relationship at any time, with or without cause.
10.8 Term Of Plan. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the shareholders of
the Company. It shall continue in effect for a term of ten (10) years unless
sooner terminated as permitted herein.
10.9 Shareholder Approval. Continuance of the Plan shall be subject to
--------------------
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any Stock Exchange upon which the Common Stock is listed and in
accordance with the Company's bylaws. In the event such approval is not obtained
in a timely manner, no Option granted hereunder shall be treated as an Incentive
Stock Option.
This Plan was adopted by the Board on ____________________________.
This Plan was approved by the shareholders of the Company on __________________.
-16-