EXHIBIT 10.4
RESOLUTION ADOPTING STOCK OPTION PLAN
YUKON GOLD CORPORATION, INC.
Yukon Gold Corporation, Inc., a Delaware corporation (the Company),
hereby establishes and adopts the following 2003 Stock Option Plan (the Plan).
RECITALS
WHEREAS, the Company desires to encourage high levels of performance by
those individuals who are key to the success of the Company and its subsidiaries
and affiliates, to attract and retain individuals who are highly motivated and
who will contribute to the success of the Company and to encourage such
individuals to remain as managers, officers, directors, employees, consultants
and/or advisors of the Company and its subsidiaries and affiliates by increasing
their proprietary interest in the Company's growth and success.
WHEREAS, to attain these ends, the Company has formulated the Plan
embodied herein to authorize the granting of stock options ("Options") to those
individuals whose judgement, initiative and efforts are, have been or are
expected to be responsible for the success of the Company.
NOW, THEREFORE, the Company hereby constitutes, establishes and adopts
the following Plan and agrees to the following provisions:
ARTICLE 1.
PURPOSE OF THE PLAN
1.1. Purpose. The purpose of the Plan is to assist the Company and its
subsidiaries and affiliates in attracting and retaining selected individuals to
serve as directors, officers, consultants, advisors and employees of the Company
who will contribute to the Company's success, and to achieve long-term
objectives that will inure to the benefit of all stockholders of the Company
through the additional incentive inherent in the ownership of the Company's
shares of common stock, par value $0.0001 per share ("Shares"). Options granted
under the Plan will be either "incentive stock options," intended to qualify as
such under the provisions of section 422 of the Internal Revenue Code of 1986,
as from time to time amended (the "Code"), or nonqualified stock options." For
the purposes of the Plan, the term "subsidiary" shall mean "subsidiary
corporation," as such term is defined in section 424(f) of the Code, and
"affiliate" shall have the meaning set forth in Rule 12b-2 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
ARTICLE 2.
SHARES SUBJECT TO OPTIONS
2.1. Number of Shares. Subject to the adjustment provisions of Section
5.10 hereof, the aggregate number of Shares which may be issued under Options
under the Plan shall not exceed 5,000,000. No Options of purchase fractional
Shares shall be granted and no fractional shares shall be issued under the Plan.
For purposes of this Section 2.1, the Shares that shall be counted toward such
limitation shall include all Shares issued or issuable pursuant to Options that
have been or may be exercised.
2.2. Shares Subject to Terminated Options. The Shares covered by any
unexercised portions of terminated Options granted under Article 4 and Shares
subject to any Options that are otherwise surrendered by the Participant without
receiving any payment or other benefit with respect thereto may again be subject
to new nonqualified Options under the Plan (but not "incentive stock options").
In the event the purchase price of an Option is paid in whole or in part through
the delivery of Shares, the number of Shares issuable in connection with the
exercise of the Option shall not again be available for the grant of Options
under the Plan.
2.3. Character of Shares. Shares delivered under the Plan may be
authorized and previously unissued Shares acquired by the Company, or both.
ARTICLE 3.
ELIGIBILITY AND ADMINISTRATION
3.1. Options to Employees, Directors and Others.
(a) Participants who receive (I) Options under Article 4 hereof
("Optionees") shall consist of such officers, key employees, consultants,
advisors and directors of the Company or any of its subsidiaries or affiliates
as the Committee (hereinafter defined) shall select from time to time, provided,
however, that an Option that is intended to qualify as an "incentive stock
option" may be granted only to an individual that is an employee of the Company
or any of its subsidiaries. The Committee's designation of an Optionee in any
year shall not require the Committee to designate such person to receive Options
or grants in any other year. The designation of an Optionee to receive Options
under one portion of the Plan shall not require the Committee to include such
Optionee under other portions of the Plan.
(b) No Option that is intended to qualify as an "incentive stock
option" may be granted to any employee who, at the time of such grant, owns,
directly or indirectly (within the meaning of sections 422(b)(6) and 424(d) of
the Code), shares of stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any of its
subsidiaries or affiliates, unless at the time of such grant, (i) the option
price is fixed at no less than 110% of the Fair Market Value (as defined below)
of the Shares subject to such Option, determined on the date of the grant, and
(ii) the exercise of such Option is prohibited by its terms after the expiration
of five years from the date such Option is granted.
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3.2 Administration.
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board") or, if so determined by the Board, by a committee
appointed by the Board (the Board or such committee administering the Plan
hereinafter referred to as the "Committee"). The Board may remove from, add
members to, or fill vacancies on the Committee.
Any grant of Options to a member of the Committee who is not
also an employee shall be on terms consistent with grants made to other members
of the Board who are not members of the Committee and who are not employees,
except where such grant is awarded or ratified by the Board.
(b) The Committee is authorized, subject to the provisions of the Plan,
to establish such rules and regulations as it may deem appropriate for the
conduct of meetings and proper administration of the Plan.
(c) Subject to the provisions of the Plan, the Committee shall have
authority, in its sole discretion, to grant Options under the Plan, to interpret
the provisions of the Plan and, subject to the requirements of applicable law,
including (if applicable) Rule 16b-3 of the Exchange Act, to prescribe, amend,
and rescind rules and regulations relating to the Plan or any Options thereunder
as it may deem necessary or advisable. All decisions made by the Committee
pursuant to the provisions of the Plan shall be final, conclusive and binding on
all persons, including the Company, its stockholders, directors and employees,
and other Plan participants.
3.3. Stockholders Agreement. As a condition to the grant or exercise of
any Option, the Committee may require the Optionee to enter into a stockholders
agreement or other agreement with the Company under such terms and conditions as
may reasonably be required by the Company.
ARTICLE 4.
OPTIONS
4.1. Grant of Options. The Committee, in its sole discretion, shall
determine, within the limitations of the Plan, those officers, key employees,
consultants, advisors and directors of the Company or any of its subsidiaries or
affiliates to whom Options are to be granted under the Plan, the number of
Shares that may be purchased under each such Option and the option price, and
shall designate such Options at the time of the grant as either "incentive stock
options" or "nonqualified stock options"; provided, however, that Options
granted to employees of an affiliate (that is not also a subsidiary) or to
non-employees of the Company may only be "nonqualified stock options."
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4.2. Stock Option Certificates; etc. All Options granted pursuant to
Article 4 (a) shall be authorized by the Committee and (b) shall be evidenced in
writing by stock option certificates ("Stock Option Certificates") in such form
and containing such terms and conditions as the Committee shall determine that
are not inconsistent with the provisions of the Plan, and, with respect to any
Stock Option Certificate granting Options that are intended to qualify as
"incentive stock options," are not inconsistent with Section 422 of the Code.
The granting of an Option pursuant to the Plan shall impose no obligation on the
recipient to exercise such Option. Any individual who is granted an Option
pursuant to this Article 4 may hold more than one Option granted pursuant to
such Article at the same time and may hold both "incentive stock options" and
"nonqualified stock options" at the same time. To the extent that any Option
does not qualify as an "incentive stock option" (whether because of its
provisions, the time or manner of its exercise or otherwise) such Option or the
portion thereof which does not so qualify shall constitute a separate
"nonqualified stock option."
4.3. Option Price. Subject to Section 3.1(b), the option exercise price
per each Share purchasable under any "incentive stock option" granted pursuant
to this Article 4, shall not be less than 100% of the Fair Market Value (as
hereinafter defined) of such Share on the date of the grant of such Option. The
option price per each Share purchasable under any "nonqualified stock option"
granted pursuant to this Article 4 shall be such amount as the Committee shall
determine at the time of the grant of such Option.
4.4. Other Provisions. Options granted pursuant to this Article 4 shall
be made in accordance with the terms and provisions of Article 5 hereof and any
other applicable terms and provisions of the Plan.
ARTICLE 5.
GENERALLY APPLICABLE PROVISIONS
5.1. Option Period. Subject to Section 3.1(b), the period for which an
Option is exercisable shall not exceed ten years from the date such Option is
granted. After the Option is granted, the option period may no be reduced,
subject to expiration in accordance with its terms.
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5.2. Fair Market Value. If the shares are listed or admitted to trading
on a securities exchange registered under the Exchange Act, unless otherwise
required by any applicable provision of the Code, the "Fair Market Value" of a
Share as of a specified date shall mean the per Share closing price of the
Shares for the day immediately preceding the date as of which the Fair Market
Value is being determined (or if there was no reported closing price on such
date, on the last preceding date on which the closing price was reported)
reported on the principal securities exchange on which the Shares are listed or
admitted to trading. If the Shares are not listed or admitted to trading on any
such exchange but are listed as a national market security on the Nasdaq Stock
Market, Inc. ("NASDAQ"), traded in the over-the-counter market or listed or
traded on any similar system then in use, the Fair Market Value of a Share shall
be the last sales price for the day immediately preceding the date as of which
the Fair Market Value is being determined (or if there was no reported sale on
such date, on the last preceding date on which any reported sale occurred)
reported on such system. If the Shares are not listed or admitted to trading on
any such exchange, are not listed as national market security on NASDAQ and are
not traded in the over-the-counter market or listed or traded on any similar
system then in use, but are quoted on NASDAQ or any similar system then in use,
the Fair Market Value of a Share shall be the average of the closing high bid
and low asked quotations on such system for the Shares on the date in question.
If the Shares are not publicly traded, Fair Market Value shall be determined by
the Committee in its sole discretion and good faith using appropriate criteria.
An Option shall be considered granted on the date the Committee acts to grant
the Option or such later date as the Committee shall specify.
5.3 Exercise of Options. Vested Options granted under the Plan shall be
exercised by the Optionee thereof (or by his executors, administrators, guardian
or legal representative, as provided in Sections 5.6 and 5.7 hereof) as to all
or part of the Shares covered thereby, by the giving of written notice of
exercise to the Company, specifying the number of Shares to be purchased,
accompanied by payment of the full purchase price for the Shares being
purchased. Full payment of such purchase price shall be made at the time of
exercise and shall be made (i) in cash or by certified check or bank check or
wire transfer of immediately available funds, (ii) with the consent of the
Committee, by delivery of a promissory note in favor of the Company upon such
terms and conditions as determined by the Committee, (iii) with the consent of
the Committee, by tendering previously acquired Shares (valued at its Fair
Market Value, as determined by the Committee as of the date of tender) that have
been owned for a period of at least six months (or such other period to avoid
accounting charges against the Company's earnings), (iv) if Shares are traded on
a national securities exchange, NASDAQ or quoted on a national quotation system
sponsored by the National Association of Securities Dealers, Inc. and the
Committee authorizes this method of exercise, through the delivery of
irrevocable instructions to a broker approved by the Committee to deliver
promptly to the Company an amount equal to the purchase price, or (v) with the
consent of the Committee, any combination of (i), (ii), (iii) and (iv). Such
notice of exercise, accompanied by such payment, shall be delivered to the
Company at its principal business office or such other office as the Committee
may from time to time direct, and shall be in such form, containing such further
provisions consistent with the provisions of the Plan, as the Committee may from
time to time prescribe. In no event may any Option granted hereunder be
exercised for a fraction of a Share. The Company shall affect the transfer of
Shares purchased pursuant to an Option as soon as practicable, and, within a
reasonable time thereafter, such transfer shall be evidenced on the books of the
Company. No person exercising an Option shall have any of the rights of a holder
of Shares subject to an Option until certificates for such Shares shall have
been issued following the exercise of such Option. No adjustment shall be made
for cash dividends or other rights for which the record date is prior to the
date of such issuance.
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5.4. Non-Transferability of Options. Except as provided in Section 5.8,
no Option shall be assignable or transferable by the Optionee, other than by
will or the laws of descent and distribution, and may be exercised during the
life of the Optionee only by the Optionee or his guardian or legal
representative.
5.5. Termination of Employment. Unless the Committee otherwise
determines, in the event of the termination of employment with the Company of an
Optionee who is an employee or the separation from service with the Company of
an Optionee who is an advisor, consultant or non-employee director of the
Company for any reason (other than death or disability), any Option(s) granted
to such Optionee under this Plan and not previously exercised or expired shall
be deemed canceled and terminated on the day of such termination or separation.
Notwith-standing the foregoing, in the event of the termination of employment or
separation from service with the Company of an Optionee for any reason other
than death or disability, under conditions satisfactory to the Company, the
Committee may, in its sole discretion, allow any Options granted to such
Optionee under the Plan and not previously exercised or expired, to the extent
vested on the date of such termination, to be exercisable for a period of time
to be specified by the Committee, provided, however, that in no instance may the
term of the Option, as so extended, exceed the maximum term established pursuant
to Section 5.1 above.
5.6. Death. In the event an Optionee dies while employed by the Company
or any of its subsidiaries or affiliates or while serving as a director of the
Company or any of its subsidiaries or affiliates, as the case may be, any
Option(s) granted to him not previously expired or exercised shall, to the
extent exercisable on the date of death, be exercisable by the estate of such
Optionee or by any person who acquired such Option by bequest or inheritance, at
any time within one year after the death of the Optionee, provided, however,
that in no instance may the term of the Option, as so extended, exceed the
maximum term established pursuant to Section 3.1(b)(ii) or 5.1 above.
5.7. Disability. In the event of the termination of employment with the
Company of an Optionee, or the separation from service with the Company of an
Optionee who is a director of the Company, due to total disability, the
Optionee, or his guardian or legal representative, shall have the unqualified
right to exercise any Option that has not expired or been previously exercised
and that the Optionee was eligible to exercise as of the first date of total
disability (as determined by the Committee), at any time within one year after
such termination or separation, provided, however, that in no instance may the
term of the Option, as so extended, exceed the maximum term established pursuant
to Section 3.1(b)(ii) or 5.1 above. The term "total disability" shall for
purposes of this Plan, be defined in the same manner as such term is defined in
Section 22(e)(3) of the Code.
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5.8. Other Provisions. Notwithstanding anything in this Plan to the
contrary, if the Board determines that the Plan cannot, or that an Option need
not, satisfy the requirements of Rule 16b-3 of the Exchange Act (such that
grants of Options are not exempt from Section 16(b) of the Exchange Act), then
the Committee shall have the authority to waive or modify those provisions of
the Plan which are intended to satisfy such Rule 16b-3 requirements.
Notwithstanding Section 5.4 of this Plan to the contrary, only with the express
written consent of the Committee, which consent may be given or withheld for any
or no reason in the Committee's sole discretion, an Optionee who has been
granted "nonqualified stock options" can transfer any or all of such options to
any one or more of the following persons: (i) the spouse, parent, issue, spouse
of issue, or issue of spouse ("issue" shall include all descendants whether
natural or adopted) of such Optionee; or (ii) a trust for the benefit of those
persons described in clause (i) above or for the benefit of such Optionee, or
for the benefit of any such persons and such Optionee; or (iii) any entity in
which the Optionee or its transferee is a beneficial owner; provided, however,
that such trans-feree shall be bound by all of the terms and conditions of this
Plan and shall execute an agreement satisfactory to the Company evidencing such
obligation; and provided further, however, that such Optionee shall remain bound
by the terms and conditions of this Plan.
5.9. Terms of Grant. Notwithstanding anything in Section 5.5, 5.6 or
5.7 to the contrary, the Committee may grant an Option under such terms and
conditions as may be provided in the Share Option Certificate given to the
Optionee, provided, however, that in no instance may the term of the Option, as
so granted, exceed the maximum term established pursuant to Section 5.1 above.
5.10. Adjustments. In the event that the Committee shall determine that
any dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities, the issuance of warrants
or other rights to purchase Shares or other securities, or other similar
corporate transaction or event affects the Shares with respect to which Options
have been or may be issued under the Plan, such that an adjustment is determined
in good faith by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as the Committee may
deem equitable, adjust any or all of (i) the number and type of Shares that
thereafter may be made the subject of Options, (ii) the number and type of
Shares subject to outstanding Options, and (iii) the grant or exercise price
with respect to any Option, or, if deemed appropriate, make provision for a cash
payment to the holder of any outstanding Option; provided, in each case, that
with respect to "incentive stock options," no such adjustment shall be
authorized to the extent that such adjustment would cause such options to
violate section 422(b) of the Code or any successor provision; and provided
further, that the number of Shares subject to any Option denominated in Shares
shall always be a whole number. In the event of any reorganization, merger,
consolidation, split-up, spin-off, or other business combination involving the
Company (each such event, a "Reorganization"), a majority of the Board may cause
any Option outstanding as of the effective date of the Reorganization to be
cancelled in consideration of a cash payment or alternate Option made to the
holder of such cancelled Option equal in value to the Fair Market Value of such
cancelled Option. The determination of such fair market value shall be made by
the Board, in its sole discretion.
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5.11. Amendment and Modification of the Plan. The Board may, from time
to time, alter, amend, suspend or terminate the Plan as it shall deem advisable,
subject to any requirement for stockholder approval imposed by applicable law or
any rule of any stock exchange or quotation system on which Shares are listed or
quoted; provided that the Board may not amend the Plan in any manner that would
result in noncompliance with Rule 16b-3 of the Exchange Act (if applicable) or
any applicable law, except as otherwise provided in Sections 3.2 or 5.8 hereof;
and further provided that the Board may not, without the approval of the
Company's stockholders, amend the Plan to increase the number of Shares that may
be the subject of Options under the Plan (except for adjustments pursuant to
Section 5.10 hereof). In addition, no amendments to, or termination of, the Plan
shall in any way impair the rights of an Optionee under any Option previously
granted without such Optionee's consent.
ARTICLE 6.
MISCELLANEOUS
6.1. Tax Withholding. The Company shall have the right to make all
payments or distributions made pursuant to the Plan to an Optionee (or permitted
transferee) net of any applicable federal, state and local taxes required to be
withheld or paid as a result of the grant of any Option, exercise of an Option
or any other event occurring pursuant to this Plan. The Company shall have the
right to withhold from such Optionee (or permitted transferee) such withholding
taxes as may be required by law, or to otherwise require the Optionee (or
permitted transferee) to pay such withholding taxes. If the Optionee (or
permitted transferee) shall fail to make such tax payments as are required, the
Company or its subsidiaries or affiliates shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to such Optionee (or permitted transferee) or to take such other action as
may be necessary to satisfy such withholding obligations. In satisfaction of the
requirement to pay withholding taxes, the Optionee (or permitted transferee) may
make a written election, which may be accepted or rejected in the discretion of
the Committee, to have withheld a portion of the Shares then issuable to the
Optionee (or permitted transferee) pursuant to the Plan, having an aggregate
Fair Market Value equal to the withholding taxes.
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6.2. Right of Discharge Reserved. Nothing in the Plan nor the grant of
an Option hereunder shall confer upon any employee, director or other individual
the right to continue in the employment or service of the Company or any
subsidiary or affiliate of the Company or affect any right that the Company or
any subsidiary or affiliate of the Company may have to terminate the employment
or service of (or to demote or to exclude from future Options under the Plan)
any such employee, director or other individual at any time for any reason.
Except as specifically provided by the Committee, the Company shall not be
liable for the loss of existing or potential profit with respect to an Option in
the event of termination of an employment or other relationship even if the
termination is in violation of an obligation of the Company or any subsidiary or
affiliate of the Company to the Optionee.
6.3. Nature of Payments. All Options granted pursuant to the Plan are
in consideration of services performed or to be performed for the Company or any
subsidiary or affiliate of the Company. Except to the extent required under
applicable law, any income or gain realized pursuant to Options under the Plan
shall not constitute compensation for purposes of any of the employee benefit
plans of the Company or any subsidiary or affiliate of the Company except as may
be determined by the Committee or by the Board or by the directors of the
applicable subsidiary or affiliate of the Company.
6.4. Severability. If any provision of the Plan shall be held unlawful
or otherwise invalid or unenforceable in whole or in part, such unlawfulness,
invalidity or unenforceability shall not affect any other provision of the Plan
or part thereof, each of which shall remain in full force and effect. If the
making of any payment or the provision of any other benefit required under the
Plan shall be held unlawful or otherwise invalid or unenforceable, such
unlawfulness, invalidity or unenforceability shall not prevent any other payment
or benefit from being made or provided under the Plan, and if the making of any
payment in full or the provision of any other benefit required under the Plan in
full would be unlawful or otherwise invalid or unenforceable, then such
unlawfulness, invalidity or unenforceability shall not prevent such payment or
benefit from being made or provided in part, to the extent that it would not be
unlawful, invalid or unenforceable, and the maximum payment or benefit that
would not be unlawful, invalid or unenforceable shall be made or provided under
the Plan.
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6.5. Gender and Number. In order to shorten and to improve the
understand-ability of the Plan document by eliminating the repeated usage of
such phrases as "his or her," any masculine terminology herein shall also
include the feminine, and the definition of any term herein in the singular
shall also include the plural except when otherwise indicated by the context.
6.6. Governing Law. The Plan and all determinations made and actions
taken thereunder, to the extent not otherwise governed by the Code of the laws
of the United States, shall be governed by the laws of the State of New York and
construed accordingly.
6.7. Effective Date of Plan; Termination of Plan. The Plan shall be
effective on the date of approval of the Plan by the Board. Notwithstanding the
foregoing, no Option intended to qualify as an "incentive stock option" shall be
granted hereunder unless and until the Plan shall be approved by the holders of
a majority of the Shares entitled to vote thereon within 12 months after the
date of adoption of the Plan by the Board. In the event that such shareholder
approval is not obtained, each Option granted under the Plan that is intended to
qualify as an "incentive stock option" shall, notwithstanding any of the
preceding provisions of the Plan, automatically be deemed a "nonqualified stock
option." Options may be granted under the Plan at any time and from time to time
on or prior to December 31, 2010, on which date the Plan will expire except as
to Options then outstanding under the Plan. Such outstanding Options shall
remain in effect until they have been exercised or terminated, or have expired.
6.8. Captions. The captions in this Plan are for convenience of
reference only, and are not intended to narrow, limit or affect the substance or
interpretation of the provisions contained herein.
Adopted this __________ day of ___________________, _____________.
Yukon Gold Corporation, Inc.
Per:/s/ J. Paul Hines
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