Exhibit 4.5
ESSXSPORT CORP.
2004 PROFESSIONAL/EMPLOYEE/CONSULTANT STOCK COMPENSATION PLAN
1. Purpose
The purpose of this Plan is to provide compensation in the form of Common Stock
of the Company to eligible professionals, employees or consultants that have
previously rendered services or that will render services during the term of
this Professional/Employee/Consultant Stock Compensation Plan (hereinafter
referred to as the Plan.) Additionally, the Plan is designed to provide for
incentive stock options for eligible recipients
2. Definitions
As used in the Plan, the following definitions apply to the terms indicated
below:
(a) "Board of Directors" shall mean the Board of Directors of Essxsport
Corp., a Nevada corporation.
(b) "Cause", when used in connection with the termination of a Participant's
employment with the Company, shall mean the termination of the Participant's
employment by the Company by reason of (i) the conviction of the Participant by
a court of competent jurisdiction as to which no further appeal can be taken of
a crime involving moral turpitude; (ii) the proven commission by the Participant
of an act of Fraud upon the Company; (iii) the willful and proven
misappropriation of any funds or property of the Company by the Participant;
(iv) the willful, continued and unreasonable failure by the Participant to
perform duties assigned to him and agreed to by him; (v) the knowing engagement
by the Participant in any direct, material conflict of interest with the Company
without compliance with the Company's conflict of interest policy, if any, then
in effect; (vi) the knowing engagement by the Participant, without the written
approval of the Board of Directors of the Company, in any activity which
competes with the business of the Company or which would result in a material
injury to the Company; or (vii) the knowing engagement in any activity which
would constitute a material violation of the provisions of the Company's
Policies and Procedures Manual, if any, then in effect.
(c) "Cash Bonus" shall mean an award of a bonus payable in cash pursuant to
Section 15 hereof.
(d) "Change in Control" shall mean:
(1) a "change in control" of the Company, as that term is contemplated in
the federal securities laws; or
(2) the occurrence of any of the following events:
(A) any Person becomes, after the effective date of this Plan, the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding securities;
provided, that the acquisition of additional voting securities, after the
effective date of this Plan, by any Person who is, as of the effective date of
this Plan, the beneficial owner, directly or indirectly, of 20% or more of the
combined voting power of the Company's then outstanding securities, shall not
constitute a "Change in Control" of the Company for purposes of this Section
2(d).
(B) a majority of individuals who are nominated by the Board of
Directors for election to the Board of Directors on any date, fail to be elected
to the Board of Directors as a direct or indirect result of any proxy fight or
contested election for positions on the Board of Directors, or
(C) the Board of Directors determines in its sole and absolute
discretion that there has been a change in control of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Common Stock" shall mean the Company's Common Stock, par value $.001
per share.
8
(g) "Company" shall mean Essxsport Corp. a Nevada corporation, and each of
its Subsidiaries, and its successors.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(i) the "Fair Market Value" of a share of Common Stock on any date shall be
(i) the closing sales price on the immediately preceding business day of a share
of Common Stock as reported on the principal securities exchange on which shares
of Common Stock are then listed or admitted to trading or (ii) if not so
reported, the average of the closing bid and asked prices for a share of Common
Stock on the immediately preceding business day as quoted on the National
Association of Securities Dealers Automated Quotation System ("Nasdaq") or
(iii)the Over the Counter Bulletin Board ("OTCBB") or (iv) if not quoted on
Nasdaq, the average of the closing bid and asked prices for a share of Common
Stock as quoted by the National Quotation Bureau's "Pink Sheets" or the National
Association of Securities Dealers' OTC Bulletin Board System. If the price of a
share of Common Stock shall not be so reported, the Fair Market Value of a share
of Common Stock shall be determined by the Board in its absolute discretion.
(j) "Incentive Award" shall mean an Option, a share of Restricted Stock, a
share of Phantom Stock, a share of unrestricted stock or Cash Bonus granted
pursuant to the terms of the Plan.
(k) "Incentive Stock Option" shall mean an Option which is an "incentive
stock option" within the meaning of Section 422 of the Code and which is
identified as an Incentive Stock Option in the agreement by which it is
evidenced.
(l) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option and which is identified as a Non-Qualified Stock Option
in the agreement by which it is evidenced.
(m) "Option" shall mean an option to purchase shares of Common Stock of the
Company granted pursuant to Section 7 hereof. Each Option shall be identified as
either an Incentive Stock Option or a Non-Qualified Stock Option in the
agreement by which it is evidenced.
(n) "Participant" shall mean a Professional, Employee or Consultant of the
Company who is eligible to participate in the Plan and to whom an Incentive
Award is granted pursuant to the Plan, and, upon his death, his successors,
heirs, executors and administrators, as the case may be, to the extent permitted
hereby.
(o) "Person" shall mean a "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act, and the rules and regulations in effect from time
to time thereunder.
(p) a share of "Phantom Stock" shall represent the right to receive in cash
the Fair Market Value of a share of Common Stock of the Company, which right is
granted pursuant to Section 16 (a) hereof and subject to the terms and
conditions contained therein.
(q) "Plan" shall mean the 2004 PROFESSIONAL/EMPLOYEE/CONSULTANT STOCK
COMPENSATION PLAN, and as it may be amended from time to time.
(r) "Qualified Domestic Relations Order" shall mean a qualified domestic
relations order as defined in the Code, in Title I of the Employee Retirement
Income Security Act, or in the rules and regulations as may be in effect from
time to time thereunder.
(s) a share of "Restricted Stock" shall mean a share of Common Stock which
is granted pursuant to the terms of Section 6 hereof and which is subject to the
restrictions set forth in Section 6 hereof for so long as such restrictions
continue to apply to such share.
(t) "Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
(u) "Stock compensation" shall mean a grant of a bonus payable in shares of
Common Stock pursuant to Section 14 hereof.
(v) "Subsidiary" or "Subsidiaries" shall mean any and all corporations in
which at the pertinent time the Company owns, directly or indirectly, stock
vested with 50% or more of the total combined voting power of all classes of
stock of such corporations within the meaning of Section 424(f) of the Code.
9
(w) "Vesting Date" shall mean the date established by the Board on which a
share of Restricted Stock or Phantom Stock may vest.
3. Administration
(a) This Plan shall be administered by the Board of Directors who may from time
to time issue orders or adopt resolutions, not inconsistent with the provisions
of this Plan, to interpret the provisions and supervise the administration of
this Plan. The Company's Secretary, Bonnie Caldwell, shall act as Plan
Administrator, and will make initial determinations as to which consultants,
employees, professionals or advisors will be considered eligible to receive
shares under this Plan, and will provide a list to the Board of Directors. All
final determinations shall be by the affirmative vote of a majority of the
members of the Board of Directors at a meeting called for such purpose, or
reduced to writing and signed by a majority of the members of the Board. Subject
to the Corporation's Bylaws, all decisions made by the Directors in electing
eligible professionals, employees and consultants, establishing the number of
shares, and construing the provisions of this Plan shall be final, conclusive
and binding on all persons including the Corporation, shareholders,
professionals, employees and consultants.
(b) The Board of Directors may from time to time appoint a PEC Plan Committee,
consisting of at least one Director and one officer, none of whom shall be
eligible to participate in the Plan while members of the Board. The Board of
Directors may delegate to such Board power to select the particular Consultants
that are to receive shares, and to determine the number of shares to be
allocated to each such eligible party.
(c) If the SEC Rules and or regulations relating to the issuance of Common Stock
under a Form S-8 should change during the terms of this Plan, the Board of
Directors shall have the power to alter this Plan to conform to such changes.
4. Eligibility
(a) Shares shall be granted only to Professionals, Employees and Consultants
that are within that class for which Form S-8 is applicable.
(b) No individual or entity shall be granted more than 6,500,000 shares of
unrestricted Common Stock under this Plan.
5. Shares Subject to the Plan
The total number of shares of Common Stock to be subject to this Plan is
40,000,000. The shares subject to the Plan will be registered with the SEC on or
about March 4, 2004 in a Form S-8 Registration.
6. Stock Subject to the Plan
Under the Plan, the Board may grant to Participants (i) Options, (ii) shares of
Restricted Stock, (iii) shares of Phantom Stock, (iv) Unrestricted Stock
Compensation and (v) Cash Bonuses.
The Board may grant Options, shares of Restricted Stock, shares of Phantom Stock
and Unrestricted stock compensation under the Plan with respect to a number of
shares of Common Stock that in the aggregate at any time does not exceed 20% of
that number of shares of Common Stock which equals 20% of the total number of
Shares of Common Stock outstanding immediately after the completion of the first
business combination transaction between the Company and a third party
acquisition candidate. The grant of a Cash Bonus shall not reduce the number of
shares of Common Stock with respect to which Options, shares of Restricted
Stock, shares of Phantom Stock or Unrestricted stock compensation may be granted
pursuant to the Plan.
If any outstanding Option expires, terminates or is canceled for any reason, the
shares of Common Stock subject to the unexercised portion of such Option shall
again be available for grant under the Plan. If any shares of Restricted Stock
or Phantom Stock, or any shares of Common Stock granted in a Stock compensation
are forfeited or canceled for any reason, such shares shall again be available
for grant under the Plan.
Shares of Common Stock issued under the Plan may be either newly issued or
treasury shares, at the discretion of the Board.
10
7. Options
The Board may grant Options pursuant to the Plan, which Options shall be
evidenced by agreements in such form as the Board shall from time to time
approve. Options shall comply with and be subject to the following terms and
conditions:
(a) Identification of Options
All Options granted under the Plan shall be clearly identified in the agreement
evidencing such Options as either Incentive Stock Options or as Non-Qualified
Stock Options.
(b) Exercise Price
The exercise price of any Non-Qualified Stock Option granted under the Plan
shall be such price as the Board shall determine on the date on which such
Non-Qualified Stock Option is granted; provided, that such price may not be less
than the minimum price required by law. Except as provided in Section 7(d)
hereof, the exercise price of any Incentive Stock Option granted under the Plan
shall be not less than 100% of the Fair Market Value of a share of Common Stock
on the date on which such Incentive Stock Option is granted.
(c) Term and Exercise of Options
(1) Each Option shall be exercisable on such date or dates, during such
period and for such number of shares of Common Stock as shall be determined by
the Board on the day on which such Option is granted and set forth in the
agreement evidencing the Option; provided, however, that no Option shall be
exercisable after the expiration of ten years from the date such Option was
granted; and, provided, further, that each Option shall be subject to earlier
termination, expiration or cancellation as provided in the Plan.
(2) Each Option shall be exercisable in whole or in part with respect to
whole shares of fully paid and nonassessable Common Stock. The partial exercise
of an Option shall not cause the expiration, termination or cancellation of the
remaining portion thereof. Upon the partial exercise of an Option, the agreement
evidencing such Option shall be returned to the Participant exercising such
Option together with the delivery of the certificates described in Section
7(c)(5) hereof.
(3) An Option shall be exercised by delivering notice to the Company's
principal office, to the attention of its Secretary, no fewer than five business
days in advance of the effective date of the proposed exercise. Such notice
shall be accompanied by the agreement evidencing the Option, shall specify the
number of shares of Common Stock with respect to which the Option is being
exercised and the effective date of the proposed exercise, and shall be signed
by the Participant. The Participant may withdraw such notice at any time prior
to the close of business on the business day immediately preceding the effective
date of the proposed exercise, in which case such agreement shall be returned to
the Participant. Payment for shares of Common Stock purchased upon the exercise
of an Option shall be made on the effective date of such exercise either (i) in
cash, by certified check, bank cashier's check or wire transfer or (ii) subject
to the approval of the Board, in shares of Common Stock owned by the Participant
and valued at their Fair Market Value on the effective date of such exercise, or
(iii) partly in shares of Common Stock with the balance in cash, by certified
check, bank cashier's check or wire transfer. Any payment in shares of Common
Stock shall be effected by the delivery of such shares to the Secretary of the
Company, duly endorsed in blank or accompanied by stock powers duly executed in
blank, together with any other documents and evidences as the Secretary of the
Company shall require from time to time.
(4) Any Option granted under the Plan may be exercised by a broker-dealer
acting on behalf of a Participant if (i) the broker-dealer has received from the
Participant or the Company a duly endorsed agreement evidencing such Option and
instructions signed by the Participant requesting the Company to deliver the
shares of Common Stock subject to such Option to the broker-dealer on behalf of
the Participant and specifying the account into which such shares should be
deposited, (ii) adequate provision has been made with respect to the payment of
any withholding taxes due upon such exercise and (iii) the broker-dealer and the
Participant have otherwise complied with Section 220.3(e)(4) of Regulation T, 12
CFR Part 220.
11
(5) Certificates for shares of Common Stock purchased upon the exercise
of an Option shall be issued in the name of the Participant and delivered to the
Participant as soon as practicable following the effective date on which the
Option is exercised; provided, however, that such delivery shall be effected for
all purposes when a stock transfer agent of the Company shall have deposited
such certificates in the United States mail, addressed to the Participant.
(6) During the lifetime of a Participant each Option granted to him shall
be exercisable only by him. No Option shall be assignable or transferable
otherwise than by will or by the laws of descent and distribution.
(d) Limitations on Grant of Incentive Stock Options
(1) The aggregate Fair Market Value of shares of Common Stock with
respect to which "incentive stock options" (within the meaning of Section 422,
without regard to Section 422(d) of the Code) are exercisable for the first time
by a Participant during any calendar year under the Plan (and any other stock
option plan of the Company, or any subsidiary of the Company shall not exceed
$100,000. Such Fair Market Value shall be determined as of the date on which
each such Incentive Stock Option is granted. If such aggregate Fair Market Value
of shares of Common Stock underlying such Incentive Stock Options exceeds
$100,000, then Incentive Stock Options granted hereunder to such Participant
shall, to the extent and in the order required by Regulations promulgated under
the Code (or any other authority having the force of Regulations), automatically
be deemed to be Non-Qualified Stock Options, but all other terms and provisions
of such Incentive Stock Options shall remain unchanged. In the absence of such
Regulations (and authority), or if such Regulations (or authority) require or
permit a designation of the options which shall cease to constitute Incentive
Stock Options, Incentive Stock Options shall, to the extent of such excess and
in the order in which they were granted, automatically be deemed to be
Non-Qualified Stock Options, but all other terms and provisions of such
Incentive Stock Options shall remain unchanged.
(2) No Incentive Stock Option may be granted to an individual if, at the
time of the proposed grant, such individual owns, directly or indirectly (based
on the attribution rules in Section 424(d) of the Code) stock possessing more
than ten percent of the total combined voting power of all classes of stock of
the Company or any of its subsidiaries, unless (i) the exercise price of such
Incentive Stock Option is at least 110% of the Fair Market Value of a share of
Common Stock at the time such Incentive Stock Option is granted and (ii) such
Incentive Stock Option is not exercisable after the expiration of five years
from the date such Incentive Stock Option is granted.
(e) Acceleration of Exercise Date Upon Change in Control
Upon the occurrence of a Change in Control, each Option granted under the Plan
and outstanding at such time shall become fully and immediately exercisable and
shall remain exercisable until its expiration, termination or cancellation
pursuant to the terms of the Plan.
8. Death of Professional, Employee or Consultant
If a Professional, Employee or Consultant dies while he is a Professional
Employee or Consultant of the Corporation or of any subsidiary, or within 90
days after such termination, the shares, to the extent that the Professional,
Employee or Consultant was to be issued shares under the plan, may be issued to
his personal representative or the person or persons to whom his rights under
the plan shall pass by his will or by the applicable laws of descent and
distribution.
9. Termination of Professional, Employee or Consultant, Retirement or Disability
If a Professional, Employee or Consultant shall cease to be retained by the
Corporation for any reason (including retirement and disability) other than
death after he shall have continuously been so retained for his specified term,
he may, but only within the three-month period immediately following such
termination, request his pro-rata number of shares for his services already
rendered.
10. Leak out provision: For the benefit of the Company's shareholders, all
shares issued from the PEC PLAN will subject to a leak out provision as defined
herein, and in the employment agreement or consultant contract of each
Professional, Employee or Consultant. The Plan Administrator, at its sole
discretion, can increase the maximum number of shares to be released into the
marketplace by each recipient, but cannot go below the threshold amount of the
lower of 2,500 shares per recipient per month, or 25% of the recipient's total
holdings. The discretional increase can be made by the Plan Administrator to up
to no more than 20,000 shares per recipient per month. As shares under the PEC
PLAN shall be earned out, and placed in Escrow to be released to recipients in
accordance with their contracts or agreements with the company and at the
direction of the Plan Administrator.
12
11. Escrow Agent. The escrow agent for the PEC PLAN shares is the Law Office of
William B. Barnett located at 15233 Ventura Boulevard Suite 410, Sherman Oaks,
California 91403.
12. Termination of the Plan
This Plan shall terminate five years after its adoption by the Board of
Directors. At such time, any shares which remain unsold, shall be removed from
registration by means of a post-effective amendment to the Form S-8.
13. Effective Date of the Plan
This Plan shall become effective upon its adoption by the Board of Directors.
14. Stock Compensation
The Board may, in its absolute discretion, grant stock compensation, without
restrictions on resale, in such amounts as it shall determine from time to time.
Unrestricted stock shall be paid at such time and subject to such conditions as
the Board shall determine at the time of the grant of such stock compensation.
Certificates for shares of Common Stock granted as a stock compensation shall be
issued in the name of the Participant to whom such grant was made and delivered
to such Participant as soon as practicable after the date on which such Stock
compensation is required to be paid.
15. Cash Bonuses
The Board may, in its absolute discretion, grant in connection with any grant of
Restricted Stock or stock compensation or at any time thereafter, a cash bonus,
payable promptly after the date on which the Participant is required to
recognize income for federal income tax purposes in connection with such
Restricted Stock or Stock Bonus, in such amounts as the Board shall determine
from time to time; provided, however, that in no event shall the amount of a
Cash Bonus exceed the Fair Market Value of the related shares of Restricted
Stock or Stock compensation on such date. A Cash Bonus shall be subject to such
conditions as the Board shall determine at the time of the grant of such Cash
Bonus.
16. Adjustment Upon Changes in Common Stock
(a) Outstanding Restricted Stock and Phantom Stock
Unless the Board in its absolute discretion otherwise determines, if a
Participant receives any securities or other property (including dividends paid
in cash) with respect to a share of Restricted Stock, the Issue Date with
respect to which occurs prior to such event, but which has not vested as of the
date of such event, as a result of any dividend, stock split recapitalization,
merger, consolidation, combination, exchange of shares or otherwise, such
securities or other property will not vest until such share of Restricted Stock
vests, and shall be held by the Company pursuant to Paragraph 16 (d)(2) hereof.
The Board may, in its absolute discretion, adjust any grant of shares of
Restricted Stock, the Issue Date with respect to which has not occurred as of
the date of the occurrence of any of the following events, or any grant of
shares of Phantom Stock, to reflect any dividend, stock split, recapitalization,
merger, consolidation, combination, exchange of shares or similar corporate
change as the Board may deem appropriate to prevent the enlargement or dilution
of rights of Participants under the grant.
(b) Outstanding Options, Increase or Decrease in Issued Shares Without
Consideration
Subject to any required action by the shareholders of the Company, in the
event of any increase or decrease in the number of issued shares of Common Stock
resulting from a subdivision or consolidation of shares of Common Stock or the
payment of a stock dividend (but only on the shares of Common Stock), or any
other increase or decrease in the number of such shares effected without receipt
of consideration by the Company, the Board shall proportionally adjust the
number of shares and the exercise price per share of Common Stock subject to
each outstanding Option.
13
(c) Outstanding Options, Certain Mergers
Subject to any required action by the shareholders of the Company, if the
Company shall be the surviving corporation in any merger or consolidation
(except a merger or consolidation as a result of which the holders of shares of
Common Stock receive securities of another corporation), each Option outstanding
on the date of such merger or consolidation shall entitle the Participant to
acquire upon exercise the securities which a holder of the number of shares of
Common Stock subject to such Option would have received in such merger or
consolidation.
(d) Outstanding Options, Certain Other Transactions
In the event of a dissolution or liquidation of the Company, a sale of all or
substantially all of the Company's assets, a merger or consolidation involving
the Company in which the Company is not the surviving corporation or a merger or
consolidation involving the Company in which the Company is the surviving
corporation but the holders of shares of Common Stock receive securities of
another corporation and/or other property, including cash, the Board shall, in
its absolute discretion, have the power to:
(1) cancel, effective immediately prior to the occurrence of such event, each
Option outstanding immediately prior to such event (whether or not then
exercisable), and, in full consideration of such cancellation, pay to the
Participant to whom such Option was granted an amount in cash, for each share of
Common Stock subject to such Option equal to the excess of (A) the value, as
determined by the Board in its absolute discretion, of the property (including
cash) received by the holder of a share of Common Stock as a result of such
event over (B) the exercise price of such Option; or
(2) provide for the exchange of each Option outstanding immediately prior to
such event (whether or not then exercisable) for an option on some or all of the
property for which such Option is exchanged and, incident thereto, make an
equitable adjustment as determined by the Board in its absolute discretion in
the exercise price of the option, or the number of shares or amount of property
subject to the option or, if appropriate, provide for a cash payment to the
Participant to whom such Option was granted in partial consideration for the
exchange of the Option.
(e) Outstanding Options, Other Changes
In the event of any change in the capitalization of the Company or corporate
change other than those specifically referred to in Sections 16(b), (c) or (d)
hereof, the Board may, in its absolute discretion, make such adjustments in the
number and class of shares subject to Options outstanding on the date on which
such change occurs and in the per share exercise price of each such Option as
the Board may consider appropriate to prevent dilution or enlargement of rights.
(f) No Other Rights
Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock of any
class, the payment of any dividend, any increase or decrease in the number of
shares of stock of any class or any dissolution, liquidation, merger or
consolidation of the Company or any other corporation. Except as expressly
provided in the Plan, 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 of shares of Common Stock subject to an Incentive Award or the exercise
price of any Option.
17. Rights as a Shareholder
No person shall have any rights as a shareholder with respect to any shares
of Common Stock covered by or relating to any Incentive Award granted pursuant
to this Plan until the date of the issuance of a stock certificate with respect
to such shares. Except as otherwise expressly provided in Section 16 hereof, no
adjustment to any Incentive Award shall be made for dividends or other rights
for which the record date occurs prior to the date such stock certificate is
issued.
14
18. No Special Employment Rights; No Right to Incentive Award
Nothing contained in the Plan or any Incentive Award shall confer upon any
Participant any right with respect to the continuation of his employment by the
Company or interfere in any way with the right of the Company, subject to the
terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of an Incentive
Award.
No person shall have any claim or right to receive an Incentive Award
hereunder. The Board's granting of an Incentive Award to a Participant at any
time shall neither require the Board to grant an Incentive Award to such
Participant, or any other Participant, or other person at any time nor preclude
the Board from making subsequent grants to such Participant or any other
Participant or other person.
19. Securities Matters
(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any shares of Common Stock to be issued
hereunder or to effect similar compliance under any state laws. Not withstanding
anything herein to the contrary, the Company shall not be obligated to cause to
be issued or delivered any certificates evidencing shares of Common Stock
pursuant to the Plan unless and until the Company is advised by its counsel that
the issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authority and the requirements of
any securities exchange on which shares of Common Stock are traded. The Board
may require, as a condition of the issuance and delivery of certificates
evidencing shares of Common Stock pursuant to the terms hereof, that the
recipient of such shares make such covenants, agreements and representations,
and that such certificates bear such legends, as the Board, in its sole
discretion, deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall only be effective at
such time as counsel to the Company shall have determined that the issuance and
delivery of shares of Common Stock pursuant to such exercise is in compliance
with all applicable laws, regulations of governmental authorities and the
requirements of any securities exchange on which shares of Common Stock are
traded. The Company may, in its sole discretion, defer the effectiveness of any
exercise of an Option granted hereunder in order to allow the issuance of shares
of Common Stock pursuant thereto to be made pursuant to registration or an
exemption from registration or other methods for compliance available under
federal or state securities laws. The Company shall inform the Participant in
writing of its decision to defer the effectiveness of the exercise of an Option
granted hereunder. During the period that the effectiveness of the exercise of
an Option has been deferred, the Participant may, by written notice, withdraw
such exercise and obtain the refund of any amount paid with respect thereto.
20. Withholding Taxes
Whenever shares of Common Stock are to be issued upon the exercise of an
Option, the occurrence of the Issue Date or Vesting Date with respect to a share
of Restricted Stock or the payment of a Stock compensation, the Company shall
have the right to require the Participant to remit to the Company in cash an
amount sufficient to satisfy federal, state and local withholding tax
requirements, if any, attributable to such exercise, occurrence or payment prior
to the delivery of any certificate or certificates for such shares. In addition,
upon the grant of a Cash Bonus or the making of a payment with respect to a
share of Phantom Stock, the Company shall have the right to withhold from any
cash payment required to be made pursuant thereto an amount sufficient to
satisfy the federal, state and local withholding tax requirements, if any,
attributable to such exercise or grant.
21. Amendment of the Plan
The Board of Directors may at any time suspend or discontinue the Plan or
revise or amend it in any respect whatsoever, provided, however, that without
approval of the shareholders no revision or amendment shall (i) except as
provided in Section 16 hereof, increase the number of shares of Common Stock
that may be issued under the Plan, (ii) materially increase the benefits
accruing to individuals holding Incentive Awards granted pursuant to the Plan or
(iii) materially modify the requirements as to eligibility for participation in
the Plan.
15
22. No Obligation to Exercise
The grant to a Participant of an Option shall impose no obligation upon such
Participant to exercise such Option.
23. Transfers Upon Death
Upon the death of a Participant, outstanding Incentive Awards granted to
such Participant may be exercised only by the executors or administrators of the
Participant's estate or by any person or persons who shall have acquired such
right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Incentive Award,
or the right to exercise any Incentive Award, shall be effective to bind the
Company unless the Board shall have been furnished with (a) written notice
thereof and with a copy of the will and/or such evidence as the Board may deem
necessary to establish the validity of the transfer and (b) an agreement by the
transferee to comply with all the terms and conditions of the Incentive Award
that are or would have been applicable to the Participant and to be bound by the
acknowledgments made by the Participant in connection with the grant of the
Incentive Award.
24. Expenses and Receipts
The expenses of the Plan shall be paid by the Company. Any proceeds received
by the Company in connection with any Incentive Award will be used for general
corporate purposes.
25. Failure to Comply
In addition to the remedies of the Company elsewhere provided for herein,
failure by a Participant to comply with any of the terms and conditions of the
Plan or the agreement executed by such Participant evidencing an Incentive
Award, unless such failure is remedied by such Participant within ten days after
having been notified of such failure by the Board, shall be grounds for the
cancellation and forfeiture of such Incentive Award, in whole or in part as the
Board, in its absolute discretion, may determine.
CERTIFICATION OF ADOPTION
(By the Board of Directors)
The undersigned, being the Chief Executive Officer of Essxsport Corp. hereby
certifies that the foregoing Plan was adopted by a unanimous vote of the Board
of Directors on March 3, 2004.
/s/ Bruce Caldwell
- --------------------------------------------
Bruce Caldwell, Chief Executive Officer
16