2002 NON-QUALIFIED STOCK OPTION PLAN
OF
TEXXON, INC.
________________________________________________________________________________
1. GRANT OF OPTIONS; GENERALLY. In accordance with the provisions
hereinafter set forth in this stock option plan, the name of which is the 2002
Non-Qualified Stock Option Plan of Texxon, Inc. (the "Plan"), the Board of
Directors (the "Board") of Texxon, Inc.(the "Corporation") is hereby authorized
to issue from time to time on the Corporation's behalf to any one or more
Eligible Persons, as hereinafter defined, options to acquire shares of the
Corporation's $.001 par value common stock (the "Stock").
2. INTENTION. It is the intention of Texxon, Inc. that this plan be
in strict adherence to Rule 405 of the Securities Act of 1933, as amended.
3. TYPE OF OPTIONS. The Board, in its discretion, is authorized to
issue options hereinafter referred to collectively as "Options".
4. AMOUNT OF STOCK. The aggregate number of shares of Stock which
may be purchased pursuant to the exercise of Options shall be 5,000,000 shares.
If an Option ceases to be exercisable, in whole or in part, the shares of Stock
underlying such Option shall continue to be available under this Plan. Further,
if shares of Stock are delivered to the Corporation as payment for shares of
Stock purchased by the exercise of an Option granted under this Plan, such
shares of Stock shall also be available under this Plan. If there is any change
in the number of shares of Stock due to the declaration of stock dividends,
recapitalization resulting in stock split-ups, or combinations or exchanges of
shares of Stock, or otherwise, the number of shares of Stock available for
purchase upon the exercise of Options, the shares of Stock subject to any Option
and the exercise price of any outstanding Option shall be appropriately adjusted
by the Board. However, the number of Options covered by this Plan shall not be
affected. The Board shall give notice of any adjustments to each Eligible Person
granted an Option under this Plan, and such adjustments shall be effective and
binding on all Eligible Persons. If because of one or more recapitalizations,
reorganizations or other corporate events, the holders of outstanding Stock
receive something other than shares of Stock then, upon exercise of an Option,
the Eligible Person will receive what the holder would have owned if the holder
had exercised the Option immediately before the first such corporate event and
not disposed of anything the holder received as a result of the corporate event.
5. ELIGIBLE PERSONS. An Eligible Person means (i) any individual who
has been employed by the Corporation or by any subsidiary of the Corporation,
(ii) any director of the Corporation or any subsidiary of the Corporation or
(iii) any consultant of the Corporation or any subsidiary of the Corporation,
who is a natural person, who will provide bona fide services to the corporation
and the services are not in connection with the offer or sale of securities in a
capital raising transaction and do not directly or indirectly promote or
maintain a market for the corporation's securities.
6. GRANT OF OPTIONS. The Board has the right to issue the Options
established by this Plan to Eligible Persons. The Board shall follow the
procedures prescribed for it elsewhere in this Plan. A grant of Options shall be
set forth in a writing signed on behalf of the Corporation. The writing shall
identify the terms which govern the Option. The terms shall be determined by the
Board, and may include, among other terms, the number of shares of Stock that
may be acquired pursuant to the exercise of the Options, when the Options may be
exercised, the period for which the Option is granted and including the
expiration date, the effect on the Options if the Eligible Person terminates
employment and whether the Eligible Person may deliver shares of Stock to pay
for the shares of Stock to be purchased by the exercise of the Option. However,
no term shall be set forth in the writing which is inconsistent with any of the
terms of this Plan. The terms of an Option granted to an Eligible Person may
differ from the terms of an Option granted to another Eligible Person, and may
differ from the terms of an earlier Option granted to the same Eligible Person.
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7. OPTION PRICE. The option price per share shall be determined by
the Board at the time any Option is granted.
8. CONSIDERATION. The Board shall only issue options for valid
consideration consistent with 18 O.S. 1033.
9. PURCHASE OF SHARES. An Option shall be exercised by the tender to
the Corporation of the full purchase price of the Stock with respect to which
the Option is exercised and written notice of the exercise, a form of which is
attached as Exhibit B. The purchase price of the Stock shall be in United States
dollars, payable in cash, check, Promissory Note secured by the Shares issued
through exercise of the related Options, or in property or Corporation stock, if
so permitted by the Board in accordance with the discretion granted in Paragraph
5 hereof, having a value equal to such purchase price. The Corporation shall not
be required to issue or deliver any certificates for shares of Stock purchased
upon the exercise of an Option prior to (i) if requested by the Corporation, the
filing with the Corporation by the Eligible Person of a representation in
writing that it is the Eligible Person's then present intention to acquire the
Stock being purchased for investment and not for resale, and/or (ii) the
completion of any registration or other qualification of such shares under any
government regulatory body, which the Corporation shall determine to be
necessary or advisable.
10. ADMINISTRATION OF PLAN. In addition to granting Options and to
exercising the authority granted to it elsewhere in this Plan, the Board is
granted the full right and authority to interpret and construe the provisions of
this Plan, promulgate, amend and rescind rules and procedures relating to the
implementation of the Plan and to make all other determinations necessary or
advisable for the administration of the Plan, consistent, however, with the
intent of the Corporation that Options granted or awarded pursuant to the Plan
comply with the provisions herein. All determinations made by the Board shall be
final, binding and conclusive on all persons including the Eligible Person, the
Corporation and its stockholders, employees, officers and directors and
consultants. No member of the Board will be liable for any act or omission in
connection with the administration of this Plan unless it is attributable to
that member's willful misconduct.
11. RESTRICTIONS ON ISSUANCE OF STOCK. The Corporation shall not be
obligated to sell or issue any shares of Stock pursuant to the exercise of an
Option unless the Stock with respect to which the Option is being exercised is
at that time effectively registered or exempt from registration under the
Securities Act of 1933, as amended, and any other applicable laws, rules and
regulations. The Corporation may condition the exercise of an Option granted in
accordance herewith upon receipt from the Eligible Person, or any other
purchaser thereof, of a written representation that at the time of such exercise
it is his then present intention to acquire the shares of Stock for investment
and not with a view to, or for sale in connection with, any distribution
thereof; except that, in the case of a legal representative of an Eligible
Person, "distribution" shall be defined to exclude distribution by will or under
the laws of descent and distribution. Prior to issuing any shares of Stock
pursuant to the exercise of an Option, the Corporation shall take such steps as
it deems necessary to satisfy any withholding tax obligations imposed upon it by
any level of government.
12. EXERCISE IN THE EVENT OF DEATH OR TERMINATION OF EMPLOYMENT.
(a) If an optionee shall die (i) while an employee of the
Corporation or a Subsidiary or (ii) within three months after termination of his
employment with the Corporation or a Subsidiary because of his disability, or
retirement or otherwise, his Options may be exercised, to the extent that the
optionee shall have been entitled to do so on the date of his death or such
termination of employment, by the person or persons to whom the optionee's right
under the Option pass by will or applicable law, or if no such person has such
right, by his executors or administrators, at any time, or from time to time. In
the event of termination of employment because of his death while an employee or
because of disability, his Options may be exercised not later than the
expiration date specified in Paragraph 5 or one year after the optionee's death,
whichever date is earlier, or in the event of termination of employment because
of retirement or otherwise, not later than the expiration date specified in
Paragraph 5 hereof or one year after the optionee's death, whichever date is
earlier.
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(b) If an optionee's employment by the Corporation or a Subsidiary
shall terminate because of his disability and such optionee has not died within
the following three months, he may exercise his Options, to the extent that he
shall have been entitled to do so at the date of the termination of his
employment, at any time, or from time to time, but not later than the expiration
date specified in Paragraph 5 hereof or one year after termination of
employment, whichever date is earlier.
(c) If an optionee's employment shall terminate by reason of his
retirement in accordance with the terms of the Corporation's tax-qualified
retirement plans if any, or with the consent of the Board or involuntarily other
than by termination for cause, and such optionee has not died within the
following three months, he may exercise his Option to the extent he shall have
been entitled to do so at the date of the termination of his employment, at any
time and from to time, but not later than the expiration date specified in
Paragraph 5 hereof or thirty (30) days after termination of employment,
whichever date is earlier. For purposes hereof, termination for cause shall
mean; (i) termination of employment for cause as defined in the optionee's
Employment Agreement or (ii) in the absence of an Employment Agreement for the
optionee, termination of employment by reason of the optionee's commission of a
felony, fraud or willful misconduct which has resulted, or is likely to result,
in substantial and material damage to the Corporation or a Subsidiary, all as
the Board in its sole discretion may determine.
(d) If an optionee's employment shall terminate for any reason other
than death, disability, retirement or otherwise, all right to exercise his
Option shall terminate at the date of such termination of employment absent
specific provisions in the optionee's Option Agreement.
13. CORPORATE EVENTS. In the event of the proposed dissolution or
liquidation of the Corporation, a proposed sale of all or substantially all of
the assets of the Corporation, a merger or tender for the Corporation's shares
of Common Stock the Board of Directors may declare that each Option granted
under this Plan shall terminate as of a date to be fixed by the Board of
Directors; provided that not less than thirty (30) days written notice of the
date so fixed shall be given to each Eligible Person holding an Option, and each
such Eligible Person shall have the right, during the period of thirty (30) days
preceding such termination, to exercise his Option as to all or any part of the
shares of Stock covered thereby, including shares of Stock as to which such
Option would not otherwise be exercisable. Nothing set forth herein shall extend
the term set for purchasing the shares of Stock set forth in the Option.
14. NO GUARANTEE OF EMPLOYMENT. Nothing in this Plan or in any
writing granting an Option will confer upon any Eligible Person the right to
continue in the employ of the Eligible Person's employer, or will interfere with
or restrict in any way the right of the Eligible Person's employer to discharge
such Eligible Person at any time for any reason whatsoever, with or without
cause.
15. NONTRANSFERABILITY. No Option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution.
During the lifetime of the optionee, an Option shall be exercisable only by him.
16. NO RIGHTS AS STOCKHOLDER. No optionee shall have any rights as a
stockholder with respect to any shares subject to his Option prior to the date
of issuance to him of a certificate or certificates for such shares.
17. AMENDMENT AND DISCONTINUANCE OF PLAN. The Corporation's Board of
Directors may amend, suspend or discontinue this Plan at any time. However, no
such action may prejudice the rights of any Eligible Person who has prior
thereto been granted Options under this Plan. The Corporation's Board of
Directors in its sole discretion, is authorized to seek the approval of the
Corporation's stockholders for any other changes it proposes to make to this
Plan.
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18. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant
and exercise of Options thereunder, and the obligation of the Corporation to
sell and deliver Stock under such options, shall be subject to all applicable
federal and state laws, rules, and regulations and to such approvals by any
government or regulatory agency as may be required. The Corporation shall not be
required to issue or deliver any certificates for shares of Stock prior to (a)
the listing of such shares on any stock exchange or over-the-counter market on
which the Stock may then be listed and (b) the completion of any registration or
qualification of such shares under any federal or state law, or any ruling or
regulation of any government body which the Corporation shall, in its sole
discretion, determine to be necessary or advisable. Moreover, no Option may be
exercised if its exercise or the receipt of Stock pursuant thereto would be
contrary to applicable laws.
19. DISPOSITION OF SHARES. In the event any share of Stock acquired
by an exercise of an Option granted under the Plan shall be transferable other
than by will or by the laws of descent and distribution within two years of the
date such Option was granted or within one year after the transfer of such Stock
pursuant to such exercise, the optionee shall give prompt written notice thereof
to the Corporation.
20. NAME. The Plan shall be known as the "2002 Non-Qualified Stock
Option Plan of Texxon, Inc."
21. NOTICES. Any notice hereunder shall be in writing and sent by
certified mail, return receipt requested or by facsimile transmission (with
electronic or written confirmation of receipt) and when addressed to the
Corporation shall be sent to it at its office, 331 East Chilton Drive, Chandler,
AZ 85225, subject to the right of either party to designate at any time
hereafter in writing some other address, facsimile number or person to whose
attention such notice shall be sent.
22. HEADINGS. The headings preceding the text of Sections and
subparagraphs hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Plan nor shall they affect its meaning,
construction or effect.
23. EFFECTIVE DATE. This Plan, the 2002 Non-Qualified Stock Option
Plan of Texxon, Inc., was adopted by the Board of Directors of the Corporation
on August 23, 2002. The effective date of the Plan shall be the same date.
24. TERM OF PLAN. No options shall be granted pursuant to this Plan,
the 2002 Non-Qualified Stock Option Plan of Texxon, Inc. after the expiration of
ten years from the effective date of this Plan.
Dated as of October 1, 2002.
TEXXON, INC.
By:___________________________
Name: ________________________
Its: President
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Exhibit A
Non-Qualified Stock Option Grant Form
TEXXON, INC.
331 East Chilton Drive
Chandler, AZ 85225
Date: ________________
============================
- ----------------------------
Dear ______________:
The Board of Directors of TEXXON, INC.(the "Corporation") is pleased
to award you an Option pursuant to the provisions of the 2002 Non-Qualified
Stock Option Plan (the "Plan"). This letter will describe the Option granted to
you. Attached to this letter is a copy of the Plan. The terms of the Plan also
set forth provisions governing the Option granted to you. Therefore, in addition
to reading this letter you should also read the Plan. Your signature on this
letter is an acknowledgment to us that you have read and understand the Plan and
that you agree to abide by its terms. All terms not defined in this letter shall
have the same meaning as in the Plan.
1. TYPE OF OPTION. You are granted an NSO. Please see in particular
Section 11 of the Plan.
2. RIGHTS AND PRIVILEGES. Subject to the conditions hereinafter set
forth, we grant you the right to purchase __________ shares of Stock at
$__________ per share, the current fair market value of a share of Stock. The
right to purchase the shares of Stock accrues in __________ installments over
the time periods described below:
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
3. TIME OF EXERCISE. The Option may be exercised at any time and
from time to time beginning when the right to purchase the shares of Stock
accrues and ending when they terminate as provided in Section 5 of this letter.
4. METHOD OF EXERCISE. The Options shall be exercised by written
notice to the Chief Executive Office of the Corporation at the Corporation's
principal place of business. The notice shall set forth the number of shares of
Stock to be acquired and shall include payment of the exercise price. We shall
make delivery of the shares of Stock subject to the conditions described in the
Plan.
Payment of the Exercise Price may be made in the following form(s):
[ ] Your personal check, a cashier's check or a money order.
[ ] In shares of Company Stock which have been owned by you or your
representative for more than twelve (12) months and which are
surrendered to the Company in good form for transfer.
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[ ] By delivering a Company-approved form of irrevocable direction to
a securities broker approved by the Company to sell all or part of
the Shares subject to the Option and to deliver to the Company from
the sale proceeds an amount sufficient to pay the Exercise Price and
any withholding taxes. The balance of the sale proceeds, if any,
will be delivered to you.
5. TERMINATION OF OPTION. To the extent not exercised, the Option
shall terminate upon the first to occur of the following dates:
(a) __________, 200___, being __________ years from the date of
grant pursuant to the provisions of Section 2 of this Agreement; or
(b) The expiration of three months following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan for any reason, other than by reason of death or permanent
disability. As used herein, "permanent disability" means your inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months; or
(c) The expiration of 12 months following the date your employment
terminates with the Corporation and any of its subsidiaries included in the
Plan, if such employment termination occurs by reason of your death or by reason
of your permanent disability (as defined above).
6. SECURITIES LAWS.
The Option and the shares of Stock underlying the Option have not
been registered under the Securities Act of 1933, as amended (the "Act"). The
Corporation has no obligations to ever register the Option or the shares of
Stock underlying the Option. All shares of Stock acquired upon the exercise of
the Option shall be "restricted securities" as that term is defined in Rule 144
promulgated under the Act. The certificate representing the shares shall bear an
appropriate legend restricting their transfer. Such shares cannot be sold,
transferred, assigned or otherwise hypothecated without registration under the
Act or unless a valid exemption from registration is then available under
applicable federal and state securities laws and the Corporation has been
furnished with an opinion of counsel satisfactory in form and substance to the
Corporation that such registration is not required.
7. BINDING EFFECT. The rights and obligations described in this
letter shall inure to the benefit of and be binding upon both of us, and our
respective heirs, personal representatives, successors and assigns.
8. DATE OF GRANT. The Option shall be treated as having been granted
to you on the date of this letter even though you may sign it at a later date.
Very truly yours,
TEXXON, INC.
By:________________________________
Name: _____________________________
Its: President
AGREED AND ACCEPTED:
- ----------------------------------------
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Exhibit B
Notice of Exercise of Non-Qualified Stock Option
Texxon, Inc.
Attn: Chief Executive Officer
Re: Exercise of Stock Option
Dear Sir or Madam:
Pursuant to the Stock Option Agreement dated __________, 200____ (the "STOCK
OPTION AGREEMENT") and the Company's 2002 Non-Qualified Stock Option Plan (the
"PLAN"), I hereby elect to purchase _____________ Shares of Stock at an
aggregate Exercise Price of $__________. I enclose payment and/or other
documents (check all that are applicable) as follows:
[ ] My check in the amount of $___________;
[ ] Shares of Company Stock which have been owned by me or my
representative for more than twelve (12) months and which are hereby
surrendered to the Company in good form for transfer.
[ ] An approved form of irrevocable direction to a securities broker
approved by the Company to sell all or part of the Shares subject to
the Option and to deliver to the Company from the sale proceeds an
amount sufficient to pay the Exercise Price and any withholding
taxes and to deliver the balance of the sale proceeds, if any, to
me.
Any Shares to be issued hereunder are to be registered in the name(s) of:
- --------------------------------------------
Name
- --------------------------------------------
Address
- --------------------------------------------
City, State and Zip
- --------------------------------------------
Tax ID#
I understand there may be tax consequences as a result of the purchase or
disposition of the Shares, I have consulted with any tax consultants I wished to
consult and I am not relying on the Company for any tax advice. I understand
that my exercise is governed by my Stock Option Agreement and the Plan and agree
to abide by and be bound by their terms and conditions. I represent that the
Shares are being acquired solely for my own account, and not as a nominee for
any other party, and for investment. I will not offer, sell or otherwise dispose
of any such Shares except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or in violation of
applicable state securities laws.
Dated: __________, _____. ____________________________________
Signature
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Print Name
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