EXHIBIT 4.1
DND TECHNOLOGIES, INC.
STOCK OPTION PLAN
1. PURPOSE OF PLAN.
(a) General Purpose. The purpose of the DND TECHNOLOGIES, INC. STOCK
OPTION PLAN ("Plan") is to further the interests of DND TECHNOLOGIES, INC., a
Nevada corporation (the "Corporation"), and its subsidiaries (i) by providing an
incentive based form of compensation to the directors, officers, key employees
and service providers of the Corporation and of its subsidiaries, and (ii) by
encouraging such persons to invest in shares of the Corporation's Common Stock,
thereby acquiring a proprietary interest in its business and the business of its
subsidiaries and an increased personal interest in its continued success and
progress.
(b) Incentive Stock Options. Some one or more of the options granted under
the Plan may be intended to qualify as an "incentive stock option" as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
any grant of such an option shall clearly specify that such option is intended
to so qualify. If no such specification is made, an option granted hereunder
shall not be intended to qualify as an "incentive stock option." The employees
eligible to be considered for the grant of incentive stock options hereunder are
any persons regularly employed by the Corporation in a managerial capacity on a
full-time, salaried basis.
2. STOCK AND MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN.
(a) Description of Stock and Maximum Shares Allocated. The stock subject
to the provisions of the Plan and issuable upon exercise of options granted
under the Plan are shares of the Corporation's Common Stock, $.001 par value,
which may be either unissued or treasury shares, as the Corporation's Board of
Directors (the "Board") may from time to time determine. Subject to adjustment
as provided in Section 7, the aggregate number of shares of Common Stock covered
by the Plan and issuable upon exercise of all options granted hereunder shall be
5,000,000 shares, which shares shall be reserved for use upon the exercise of
options to be granted from time to time.
(b) Restoration of Unpurchased Shares. If an option expires or terminates
for any reason prior to its exercise in full and before the term of the Plan
expires, the shares subject to, but not issued under such option shall again be
available for other options thereafter granted.
3. ADMINISTRATION; AMENDMENTS.
(a) Administration by Committee. The Plan shall be administered by the
Board or whenever the Board has at least two members who are not either
employees or officers of the Corporation or of any parent or subsidiary of the
Corporation ("Independent Directors") by a committee of not less than two
persons who are Independent Directors (the "Committee"), with full power to
administer the Plan, to interpret the Plan and to establish and amend rules and
regulations
for its administration. (The term "Committee" as used throughout this Plan shall
refer to the Board or a committee of two Independent Directors, whichever is
administering the Plan at the time).
(b) Exercise Price. Upon the grant of any option, the Committee shall
specify the exercise price for the shares issuable upon exercise of options
granted, which exercise price shall in no event be less than 100% of the Fair
Market Value per share on the date such option is granted.
(c) Fair Market Value. The Fair Market Value of a share of Common Stock on
any particular day shall be determined as follows:
(1) If the shares are listed or admitted to trading on any
securities exchange, the fair market value shall be the average sales
price on such day on the New York Stock Exchange, or if the shares have
not been listed or admitted to trading on the New York Stock Exchange, on
such other securities exchange on which such stock is then listed or
admitted to trading, or if no sale takes place on such day on any such
exchange, the average of the closing bid and asked price on such day as
officially quoted on any such exchange;
(2) If the shares are not then listed or admitted to trading on any
securities exchange, the fair market value shall be the average sales
price on such day or, if no sale takes place on such day, the average of
the reported closing bid and asked price on such date, in the
over-the-counter market as furnished by the National Association of
Securities Dealers Automated Quotation ("NASDAQ"), or if NASDAQ at the
time is not engaged in the business of reporting such prices, as furnished
by any similar firm then engaged in such business and selected by the
Board; or
(3) If the shares are not then listed or admitted to trading in the
over-the-counter market, the fair market value shall be the amount
determined by the Board in a manner consistent with Treasury Regulation
Section 20-2031-2 promulgated under the Code or in such other manner
prescribed by the Secretary of the Treasury or the Internal Revenue
Service.
(4) If the Committee determines that the price as determined in
Section 3(c)(1) - (3) above does not represent the fair market value of a
share of Common Stock, the Committee may then consider such other factors
as it deems appropriate and then fix the Fair Market Value for the
purposes of this Plan.
(d) Interpretation. The interpretation and construction by the Committee
of the terms and provisions of this Plan and of the agreements governing options
and rights granted under the Plan shall be final and conclusive. No member of
the Committee shall be liable for any action taken or determination made in good
faith.
(e) Amendments to Plan. The Committee may, without action on the part of
the stockholders of the Corporation, make such amendments to, changes in and
additions to the Plan as it may, from time to time, deem proper and in the best
interests of the Corporation; provided that the Committee may not, without
consent of the holder, take any action which disqualifies any option
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granted under the Plan as an incentive stock option for treatment as such or
which adversely affects or impairs the rights of the holder of any option
outstanding under the Plan.
(f) Termination of the Plan. This Plan may be abandoned, suspended, or
terminated at any time by the Board; provided, however, that abandonment,
suspension, or termination of this Plan shall not affect any Options then
outstanding under this Plan.
4. PARTICIPANTS; DURATION OF PLAN.
(a) Eligibility and Participation. Options may be granted in the total
amount for the period as allocated by the Board as provided in Section 4(b)
below only to persons who at the time of grant are directors, key employees of,
or service providers to the Corporation or others who qualify under the general
purpose of the Plan stated above in Section 1, whether or not such persons are
also members of the Board; provided, however, that no incentive stock option may
be granted to a director of the Corporation unless such person is also an
executive employee of the Corporation.
(b) Allotment. The Board shall determine the aggregate number of shares of
Common Stock which may be optioned from time to time but the Compensation
Committee shall have sole authority to determine the number of shares and the
recipient thereof to be optioned at any time. The Compensation Committee shall
not be required to grant all options allocated by the Board for any given period
if it determines, in its sole and exclusive judgment, that such grant is not in
the best interests of the Corporation. The grant of an option to any person
shall neither entitle such individual to, nor disqualify such individual from,
participation in any other grant of options under the Plan.
(c) Limitation on Grant of Incentive Stock Options. Notwithstanding any
other provision of this Plan, no person shall be granted an "incentive stock
option" under this Plan which would cause such person's "annual vesting amount"
to exceed $100,000.00. With respect to any calendar year, a person's "annual
vesting amount" is the aggregate fair market value of stock subject to incentive
stock options with respect to which such options are first exercisable during
such calendar year. For purposes of the foregoing, the aggregate fair market
value of stock with respect to which "incentive stock options" are first
exercisable during any calendar year shall be determined by taking into account
all such options granted to such person under all incentive stock option plans
of the Corporation or of any of its parent or subsidiary corporations.
(d) Duration of Plan. The term of the Plan, unless previously terminated
by the Board, is ten years or August 11, 2013. No option shall be granted under
the Plan unless granted within ten years after the adoption of the Plan by the
Board, but options outstanding on that date shall not be terminated or otherwise
affected by virtue of the Plan's expiration.
(e) Approval of Stockholders. If the Board issues any incentive stock
options, solely for the purposes of compliance with the Code provisions
pertaining to incentive stock options, the Plan shall be submitted to the
stockholders of the Corporation for their approval at a regular meeting to be
held within twelve months after adoption of the Plan by the Board. Stockholder
approval shall be evidenced by the affirmative vote of the holders of a majority
of the shares of Common Stock
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present in person or by proxy and voting at the meeting. If the stockholders
decline to approve the Plan at such meeting or if the Plan is not approved by
the stockholders within twelve months after its adoption by the Board, no
incentive stock options may be issued under the Plan but all options granted
under the Plan shall remain in full force and effect regardless of Shareholder
approval and the Plan may be used for future nonincentive stock option
issuances. If shareholders fail to approve the Plan, all previously issued
incentive stock options shall be automatically converted to nonincentive stock
options.
5. TERMS AND CONDITIONS OF OPTIONS AND RIGHTS.
(a) Individual Agreements. Options granted under the Plan shall be
evidenced by agreements in such form as the Board from time to time approves,
which agreements shall substantially comply with and be subject to the terms of
the Plan, including the terms and conditions of this Section 5.
(b) Required Provisions. Each agreement shall state (i) the total number
of shares to which it pertains, (ii) the exercise price for the shares covered
by the option, (iii) the time at which the option becomes exercisable, (iv) the
scheduled expiration date of the option, (v) the vesting period(s) for such
options, and (vi) the timing and conditions of issuance of any stock option
exercise.
(c) Period. No option granted under the Plan shall be exercisable for a
period in excess of ten years from the date of its grant. All options granted
shall be subject to earlier termination in the event of termination of
employment, retirement or death of the holder as provided in Section 6 or as
otherwise set forth in the agreement granting the option. Unless otherwise
provided in the agreement granting the Stock Option itself, an option may be
exercised in full or in part at any time or from time to time during the term
thereof, or provide for its exercise in stated installments at stated times
during such term.
(d) No Fractional Shares. Options shall be granted and exercisable only
for whole shares; no fractional shares will be issuable upon exercise of any
option granted under the Plan.
(e) Method of Exercising Option. The method for exercising options granted
to former employees of the Corporation or of its subsidiaries shall be set forth
in the agreement granting the option itself. All other options shall be
exercised by written notice to the Corporation, addressed to the Corporation at
its principal place of business. Such notice shall state the election to
exercise the option and the number of shares with respect to which it is being
exercised, and shall be signed by the person exercising the option. Such notice
shall be accompanied by payment in full of the exercise price for the number of
shares being purchased. Payment may be made in cash or by bank cashier's check,
or if required by the terms of the option itself, by allocating compensation due
to the Grantee by the Corporation or by any of its subsidiaries to the
Corporation as payment for the exercise price. In lieu of cash, if permitted by
the option itself, such payment may be made in whole or in part with shares of
the same class of stock as are then subject to the option, delivered in lieu of
cash concurrently with such exercise, the shares so delivered to be valued on
the basis of the fair market value of the stock (determined in a manner
specified in the instrument evidencing the option)
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on the day preceding the date of exercise. Alternatively, if permitted by the
option itself, the Grantee may, in lieu of using previously outstanding shares
therefore, use some of the shares as to which the option is then being
exercised. The Corporation shall deliver a certificate or certificates
representing the option shares to the purchaser as soon as practicable after
payment for those shares has been received. If an option is exercised by any
person other than the optionholder, such notice shall be accompanied by
appropriate proof of the right of such person to exercise the option. All shares
that are purchased and paid for in full upon the exercise of an option shall be
fully paid and non-assessable.
(f) No Rights of a Stockholder. An optionholder shall have no rights as a
stockholder with respect to shares covered by an option. No adjustment will be
made for dividends with respect to an option for which the record date is prior
to the date a stock certificate is issued upon exercise of an option. Upon
exercise of an option, the holder of the shares of Common Stock so received
shall have all rights of a stockholder of the Corporation as of the date of
issuance.
(g) Effect of Plan on Employment Status. The fact that the Committee has
granted an Option to an Optionee under this Plan shall not confer on such
Optionee any right to employment with the Corporation or to a position as an
officer or an employee of the Corporation, nor shall it limit the right of the
Corporation to remove such Optionee from any position held by the Optionee or to
terminate the Optionee's employment at any time.
(h) Compliance with Law. No shares of Corporation Common Stock shall be
issued or transferred upon the exercise of any option unless and until all legal
requirements applicable to the issuance or transfer of such shares have been
completed.
(i) Other Provisions. The option agreements may contain such other
provisions as the Board deems necessary to effectuate the sense and purpose of
the Plan, including covenants on the holder's part not to compete and remedies
to the Corporation in the event of the breach of any such covenant.
6. TERMINATION OF EMPLOYMENT; ASSIGNABILITY; DEATH.
(a) Termination of Employment. Except as otherwise set forth in this
Section 6(a), if any optionholder ceases to be a director or employee of the
Corporation or of any subsidiary of the Corporation, or ceases to render
services pursuant to a consulting, management or other agreement, other than for
death, disability or discharge for cause, such holder (or successors or
transferees) may, within six months after the date of termination, but in no
event after the stated expiration date, purchase some or all of the shares with
respect to which such optionholder was entitled to exercise such option, on the
date such employment, directorship, or consulting relationship terminated and
the option shall thereafter be void for all purposes. Any termination of an
agreement pursuant to which services are rendered to the Corporation or of any
subsidiary of the Corporation by any party who is an optionholder, without a
renewal of that agreement or entry into a similar successor agreement, may be
treated as a termination of the employment of the third party.
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(b) Assignability. Options granted under the Plan and the privileges
conferred thereby shall not be assignable or transferable, unless the Committee
provides otherwise. Options shall be exercisable by such transferee as set forth
in this Section 6.
(c) Disability. If the employment or directorship of the optionholder is
terminated due to disability, the optionholder (or transferee of the
optionholder) may exercise the options, in whole or in part, to the extent they
were exercisable on the date when the optionholder's employment or directorship
terminated, at any time prior to the expiration date of the options or within
one year of the date of termination of employment or directorship, whichever is
earlier. For purposes of this Plan, the term "disability" shall be defined in
the same manner as such term is defined in Section 22(e)(3) of the Code.
(d) Discharge for Cause. If the employment or directorship of the
optionholder with the Corporation or any of its subsidiaries is terminated due
to discharge for cause, the options shall terminate upon receipt by the
optionholder of notice of such termination or the effective date of the
termination, whichever is earlier. Discharge for cause shall include discharge
for personal dishonesty, willful misconduct in performance of duties, failure,
impairment or inability to perform required duties, breach of fiduciary duty or
conviction of any felony or crime of moral turpitude. The Compensation Committee
shall have the sole and exclusive right to determine whether the optionholder
has been discharged for cause for purposes of the Plan and the date of such
discharge.
(e) Death of Holder. If optionholder dies while in the Corporation's or
any of its subsidiaries' employ or while rendering consulting services to the
Corporation or to any of its subsidiaries, an option shall be exercisable within
twelve months after the date of death, but in no event after the stated
expiration date thereof, by the person or persons ("successors") to whom the
holder's rights pass under will or by the laws of descent and distribution or by
transferees of the optionholders, as the case may be, but only to the extent
that the holder was entitled to exercise the option at the date of death. An
option may be exercised (and payment of the option price made in full) by the
successors or transferees only after written notice to the Corporation,
specifying the number of shares to be purchased or rights to be exercised. Such
notice shall comply with the provisions of Section 5(e).
7. CERTAIN ADJUSTMENTS.
(a) Capital Adjustments. Except as limited by Section 422 of the Code, the
aggregate number of shares of Common Stock subject to the Plan, the number of
shares covered by outstanding options, and the price per share stated in such
options shall be proportionately adjusted for any increase or decrease in the
number of outstanding shares of Common Stock of the Corporation resulting from a
subdivision or consolidation of shares or any other capital adjustment or the
payment of a stock dividend or any other increase or decrease in the number of
such shares effected without receipt by the Corporation of consideration
therefor in money, services or property.
(b) Corporate Reorganizations. Upon the dissolution or liquidation of the
Corporation, or upon a reorganization, merger or consolidation of the
Corporation as a result of which the outstanding securities of the class then
subject to options hereunder are changed into or exchanged
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for cash or property or securities not of the Corporation's issue, or any
combination thereof, or upon a sale of substantially all of the property of the
Corporation to, or the acquisition of stock representing more than eighty
percent (80%) of the voting power of the stock of the Corporation then
outstanding by another corporation or by a group of persons who are required to
file a Form 13D under the Securities Exchange Act of 1934 ("34 Act"), the Plan
shall terminate, and all options theretofore granted hereunder shall terminate,
unless provision be made in writing in connection with such transaction for the
continuance of the Plan or for the assumption of options covering the stock of a
successor employer corporation, or a parent or a subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices, in which
event the Plan and options theretofore granted shall continue in the manner and
under the terms so provided. If the Plan and unexercised options shall terminate
pursuant to the foregoing sentence, all persons entitled to exercise any
unexercised portions of options then outstanding shall have the right, at such
time prior to the consummation of the transaction causing such termination as
the Corporation shall designate, to exercise the unexercised portions of their
options, including the portions thereof which would, but for this paragraph
entitled "Corporate Reorganizations," not yet be exercisable.
8. COMPLIANCE WITH LEGAL REQUIREMENTS.
(a) For Investment Only. If, at the time of exercise of this option, there
is not in effect as to the Option Shares being purchased a registration
statement under the Securities Act of 1933, as amended (or any successor
statute) (collectively, the "1933 Act"), then the exercise of this option shall
be effective only upon receipt by the Corporation from the key employee or
service provider (or his legal representatives or heirs) of a written
representation that the option shares are being purchased for investment and not
for distribution.
(b) Listing and Registration of Option Shares. Any Option granted under
the Plan shall be subject to the requirement that if at any time the Committee
shall determine, in its discretion, that the listing, registration, or
qualification of the shares covered thereby upon any securities exchange or
under any state or federal law or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the granting of such Option or the issuance or purchase of shares
thereunder, such Option may not be exercised in while or in part unless and
until such listing, registration, qualification, consent, or approval shall have
been effected or obtained free of any conditions not acceptable to the
Committee.
(c) Compliance with Section 16 of the Securities Exchange Act of 1934. It
is the intention of the Corporation that the Plan and Options hereunder satisfy
and be interpreted in a manner, that, in the case of Optionees, satisfies the
applicable requirements of Rule 16b-3 promulgated under Section 16(b) of the
Exchange Act, so that such persons will be entitled to the benefits of Rule
16b-3 or other exemptive rules under Section 16 of the Exchange Act and will not
be subject to avoidable liability thereunder. If any provision of the Plan or of
any Option Agreement would otherwise frustrate or conflict with the intent
expressed in this Paragraph 8(c), that provision to the extent possible shall be
interpreted and deemed amended so as to avoid such conflict. To the extent of
any remaining irreconcilable conflict with such intent, the provision shall be
deemed void as applicable to any person who is subject to Section 16 of the
Exchange Act.
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9. APPLICATION OF FUNDS.
The proceeds received by the Corporation from the sale of Common Stock
pursuant to the exercise of options will be used for general corporate purposes.
10. WITHHOLDING OF TAXES.
The Corporation shall have the right to deduct from any other compensation
of the option holder any federal, state or local income taxes (including FICA)
required by law to be withheld with respect to the granting or exercise of any
options.
11. EXPENSES OF ADMINISTRATION OF PLAN.
All costs and expenses incurred in the operation and administration of
this Plan shall be borne by the Corporation or one or more of its subsidiaries.
12. GOVERNING LAW.
Without regard to the principles of conflicts of laws, the laws of the
State of Arizona shall govern and control the validity, interpretation,
performance, and enforcement of this Plan.
13. INSPECTION OF PLAN.
A copy of this Plan, and any amendments thereto or modification thereof,
shall be maintained by the Secretary of the Corporation and shall be shown to
any proper person making inquiry about it.
DATED as of the 11th day of August, 2003.
DND TECHNOLOGIES, INC.,
a Nevada corporation
By /s/ Douglas Dixon
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Douglas Dixon
Chief Executive Officer
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