PTS, INC.
2004/C EMPLOYEE BONUS STOCK PLAN
1. GENERAL PROVISIONS.
1.1 PURPOSE. This 2004/C Employee Bonus Stock Plan (the "Plan") is intended to
allow designated employees (all of whom are sometimes collectively referred
to herein as the "Employees," or individually as the "Employee") of PTS,
Inc., a Nevada corporation (the "Company") including its Subsidiaries, if
any, (as that term is defined below) which it may have from time to time
(the Company including any such Subsidiaries is referred to herein as the
"Company") to receive certain options (the "Stock Options") to purchase
common stock of the Company, par value $0.001 per share (the "Common
Stock"), and to receive grants of the Common Stock subject to certain
restrictions (the "Awards"). As used in this Plan, the term "Subsidiary"
shall mean each corporation which is a "subsidiary corporation" of the
Company within the meaning of Section 424(f) of the Internal Revenue Code
of 1986, as amended (the "Code"). The purpose of this Plan is to provide
the Employees with equity-based compensation incentives who make
significant and extraordinary contributions to the long-term growth and
performance of the Company, and to attract and retain the Employees.
1.2 ADMINISTRATION.
1.2.1The Plan shall be administered by the Board of Directors of the Company or
the Compensation Committee of, or appointed by, the Board (referred to
herein as the "Committee"). If appointed, the Committee shall select one of
its members as Chairman and shall act by vote of a majority of a quorum, or
by unanimous written consent. A majority of its members shall constitute a
quorum. The Committee shall be governed by the provisions of the Company's
bylaws and of Nevada law as applicable to boards of directors of
corporations, except as otherwise provided herein or determined by the
Board.
1.2.2 If appointed, the Committee shall have full and complete authority, in its
discretion, but subject to the express provisions of this Plan (a) to
approve the Employees nominated by the management of the Company to be
granted Awards or Stock Options; (b) to determine the number of Awards or
Stock Options to be granted to an Employee; (c) to determine the time or
times at which Awards or Stock Options shall be granted; (d) to establish
the terms and conditions upon which Awards or Stock Options may be
exercised; (e) to remove or adjust any restrictions and conditions upon
Awards or Stock Options; (f) to specify, at the time of grant, provisions
relating to exercisability of Stock Options and to accelerate or otherwise
modify the exercisability of any Stock Options; and (g) to adopt such
rules and regulations and to make all other determinations deemed
necessary or desirable for the administration of this Plan. All
interpretations and constructions of this Plan by the Committee, and all
of its actions hereunder, shall be binding and conclusive on all persons
for all purposes.
1.2.3 The Company hereby agrees to indemnify and hold harmless each Committee
member and each Employee, and the estate and heirs of such Committee
member or Employee, against all claims, liabilities, expenses, penalties,
damages or other pecuniary losses, including legal fees, which such
Committee member or Employee, his estate or heirs may suffer as a result
of his responsibilities, obligations or duties in connection with this
Plan, to the extent that insurance, if any, does not cover the payment of
such items. No member of the Committee or the Board shall be liable for
any action or determination made in good faith with respect to this Plan
or any Award or Stock Option granted pursuant to this Plan.
1.3 ELIGIBILITY AND PARTICIPATION. The Employees eligible under this Plan
shall be approved by the Committee from those Employees who, in the
opinion of the management of the Company, are in positions which enable
them to make significant contributions to the long-term performance and
growth of the Company. In selecting the Employees to whom Award or Stock
Options may be granted, consideration shall be given to factors such as
employment position, duties and responsibilities, ability, productivity,
length of service, morale, interest in the Company and recommendations of
supervisors.
1.4 SHARES SUBJECT TO THIS PLAN. The maximum number of shares of the Common
Stock that may be issued pursuant to this Plan shall be 180,000,000 subject
to adjustment pursuant to the provisions of Paragraph 4.1. If shares of the
Common Stock awarded or issued under this Plan are reacquired by the
Company due to a forfeiture or for any other reason, such shares shall be
cancelled and thereafter shall again be available for purposes of this
Plan. If a Stock Option expires, terminates or is cancelled for any reason
without having been exercised in full, the shares of the Common Stock not
purchased thereunder shall again be available for purposes of this Plan.
2. PROVISIONS RELATING TO STOCK OPTIONS.
2.1 GRANTS OF STOCK OPTIONS. The Committee may grant Stock Options in such
amounts, at such times, and to the Employees nominated by the management
of the Company as the Committee, in its discretion, may determine. The
Committee has the discretion to grant Stock Options which constitute
"incentive stock options" within the meaning of Section 422 of the Code,
if so designated by the Committee on the date of grant, or do not
constitute incentive stock options, and any such Stock Options shall be
designated non-statutory stock options by the Committee on the date of
grant. The aggregate Fair Market Value (determined as of the time an
incentive stock option is granted) of the Common Stock with respect to
which incentive stock options are exercisable for the first time by any
Employee during any one calendar year (under all plans of the Company and
any parent or subsidiary of the Company) may not exceed the maximum amount
permitted under Section 422 of the Code (currently, $100,000.00).
Non-statutory stock options shall not be subject to the limitations
relating to incentive stock options contained in the preceding sentence.
Each Stock Option shall be evidenced by a written agreement (the "Option
Agreement") in a form approved by the Committee, which shall be executed
on behalf of the Company and by the Employee to whom the Stock Option is
granted, and which shall be subject to the terms and conditions of this
Plan. In the discretion of the Committee, Stock Options may include
provisions (which need not be uniform), authorized by the Committee in its
discretion, that accelerate an Employee's rights to exercise Stock Options
following a "Change in Control," upon termination of the Employee's
employment by the Company without "Cause" or by the Employee for "Good
Reason," as such terms are defined in Paragraph 3.1 hereof. The holder of
a Stock Option shall not be entitled to the privileges of stock ownership
as to any shares of the Common Stock not actually issued to such holder.
2.2 PURCHASE PRICE. The purchase price (the "Exercise Price") of shares of the
Common Stock subject to an Incentive Stock Option (the "Option Shares")
shall not be less than 85 percent of the Fair Market Value of the Common
Stock on the date of exercise. For an Employee holding greater than 10
percent of the total voting power of all stock of the Company, either
Common or Preferred, the Exercise Price of an incentive stock option shall
be at least 110 percent of the Fair Market Value of the Common Stock on
the date of the grant of the option. As used herein, "Fair Market Value"
means, if the Common Stock trades on a national exchange, the average of
the highest and lowest reported sales prices of the Common Stock on the
date with respect to which the Fair Market Value is to be determined, or,
if not listed on a national exchange, the average of the bid price of the
Common Stock during the last five trading days immediately preceding the
last trading day prior to the date with respect to which the Fair Market
Value is to be determined. If the Common Stock is not then publicly
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traded, then the Fair Market Value of the Common Stock shall be the book
value of the Company per share as determined on the last day of the last
fiscal quarter or year end closest to the date when the determination is
to be made. For the purpose of determining book value hereunder, book
value shall be determined from the balance sheet of the Company, or if
there is no balance sheet by adding as of the applicable date called for
herein the capital surplus, and undivided profits of the Company, and
after having deducted any reserves theretofore established; the sum of
these items shall be divided by the number of shares of the Common Stock
and the number of shares of common stock into which any debt or preferred
shares outstanding as of said date are convertible, and the quotient thus
obtained shall represent the book value of each share of the Common Stock
of the Company.
2.3 OPTION PERIOD. The Stock Option period (the "Term") shall commence on the
date of grant of the Stock Option and shall the period as determined by
the Committee not to exceed ten years. Each Stock Option shall provide
that it is exercisable over its term in such periodic installments as the
Committee in its sole discretion may determine. Such provisions need not
be uniform. Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") exempts persons normally subject to the
reporting requirements of Section 16(a) of the Exchange Act (the "Section
16 Reporting Persons") pursuant to a qualified employee stock option plan
from the normal requirement of not selling until at least six months and
one day from the date the Stock Option is granted.
2.4 EXERCISE OF OPTIONS.
2.4.1 Each Stock Option may be exercised in whole or in part (but not as to
fractional shares) by delivering it for surrender or endorsement to the
Company, attention of the Corporate Secretary, at the principal office of
the Company, together with payment of the Exercise Price and an executed
Notice and Agreement of Exercise in the form prescribed by Paragraph
2.4.2. Payment may be made (a) in cash, (b) by cashier's or certified
check, (c) by surrender of previously owned shares of the Common Stock
valued pursuant to Paragraph 2.2 (if the Committee authorizes payment in
stock in its discretion), (d) by withholding from the Option Shares which
would otherwise be issuable upon the exercise of the Stock Option that
number of Option Shares equal to the exercise price of the Stock Option,
if such withholding is authorized by the Committee in its discretion, or
(e) in the discretion of the Committee, by the delivery to the Company of
the optionee's promissory note secured by the Option Shares, bearing
interest at a rate sufficient to prevent the imputation of interest under
Sections 483 or 1274 of the Code, and having such other terms and
conditions as may be satisfactory to the Committee.
2.4.2 Exercise of each Stock Option is conditioned upon the agreement of the
Employee to the terms and conditions of this Plan and of such Stock Option
as evidenced by the Employee's execution and delivery of a Notice and
Agreement of Exercise in a form to be determined by the Committee in its
discretion. Such Notice and Agreement of Exercise shall set forth the
agreement of the Employee that (a) no Option Shares will be sold or
otherwise distributed in violation of the Securities Act of 1933, as
amended (the "Securities Act") or any other applicable federal or state
securities laws, (b) each Option Share certificate may be imprinted with
legends reflecting any applicable federal and state securities law
restrictions and conditions, (c) the Company may comply with said
securities law restrictions and issue "stop transfer" instructions to its
Transfer Agent and Registrar without liability, (d) if the Employee is a
Section 16 Reporting Person, the Employee will furnish to the Company a
copy of each Form 4 or Form 5 filed by said Employee and will timely file
all reports required under federal securities laws, and (e) the Employee
will report all sales of Option Shares to the Company in writing on a form
prescribed by the Company.
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2.4.3 No Stock Option shall be exercisable unless and until any applicable
registration or qualification requirements of federal and state securities
laws, and all other legal requirements, have been fully complied with. The
Company will use reasonable efforts to maintain the effectiveness of a
Registration Statement under the Securities Act for the issuance of Stock
Options and shares acquired thereunder, but there may be times when no
such Registration Statement will be currently effective. The exercise of
Stock Options may be temporarily suspended without liability to the
Company during times when no such Registration Statement is currently
effective, or during times when, in the reasonable opinion of the
Committee, such suspension is necessary to preclude violation of any
requirements of applicable law or regulatory bodies having jurisdiction
over the Company. If any Stock Option would expire for any reason except
the end of its term during such a suspension, then if exercise of such
Stock Option is duly tendered before its expiration, such Stock Option
shall be exercisable and exercised (unless the attempted exercise is
withdrawn) as of the first day after the end of such suspension. The
Company shall have no obligation to file any Registration Statement
covering resales of Option Shares.
2.5 CONTINUOUS EMPLOYMENT. Except as provided in Paragraph 2.7 below, an
Employee may not exercise a Stock Option unless from the date of grant to
the date of exercise the Employee remains continuously in the employ of
the Company. For purposes of this Paragraph 2.5, the period of continuous
employment of an Employee with the Company shall be deemed to include
(without extending the term of the Stock Option) any period during which
the Employee is on leave of absence with the consent of the Company,
provided that such leave of absence shall not exceed three months and that
the Employee returns to the employ of the Company at the expiration of
such leave of absence. If the Employee fails to return to the employ of
the Company at the expiration of such leave of absence, the Employee's
employment with the Company shall be deemed terminated as of the date such
leave of absence commenced. The continuous employment of an Employee with
the Company shall also be deemed to include any period during which the
Employee is a member of the Armed Forces of the United States, provided
that the Employee returns to the employ of the Company within 90 days (or
such longer period as may be prescribed by law) from the date the Employee
first becomes entitled to a discharge from military service. If an
Employee does not return to the employ of the Company within 90 days (or
such longer period as may be prescribed by law) from the date the Employee
first becomes entitled to a discharge from military service, the
Employee's employment with the Company shall be deemed to have terminated
as of the date the Employee's military service ended.
2.6 RESTRICTIONS ON TRANSFER. Each Stock Option granted under this Plan shall
be transferable only by will or the laws of descent and distribution. No
interest of any Employee under this Plan shall be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other
legal or equitable process. Each Stock Option granted under this Plan
shall be exercisable during an Employee's lifetime only by the Employee or
by the Employee's legal representative.
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2.7 TERMINATION OF EMPLOYMENT.
2.7.1 Upon an Employee's Retirement, Disability (both terms being defined below)
or death, (a) all Stock Options to the extent then presently exercisable
shall remain in full force and effect and may be exercised pursuant to the
provisions thereof, including expiration at the end of the fixed term
thereof, and (b) unless otherwise provided by the Committee, all Stock
Options to the extent not then presently exercisable by the Employee shall
terminate as of the date of such termination of employment and shall not
be exercisable thereafter.
2.7.2 Upon the termination of the employment of an Employee with the Company for
any reason other than the reasons set forth in Paragraph 2.7.1 hereof, (a)
all Stock Options to the extent then presently exercisable by the Employee
shall remain exercisable only for a period of 90 days after the date of
such termination of employment (except that the 90 day period shall be
extended to 12 months if the Employee shall die during such 90 day
period), and may be exercised pursuant to the provisions thereof,
including expiration at the end of the fixed term thereof, and (b) unless
otherwise provided by the Committee, all Stock Options to the extent not
then presently exercisable by the Employee shall terminate as of the date
of such termination of employment and shall not be exercisable thereafter.
2.7.3 For purposes of this Plan:
(a) "Retirement" shall mean an Employee's retirement from the employ of
the Company on or after the date on which the Employee attains the
age of 65 years; and
(b) "Disability" shall mean total and permanent incapacity of an
Employee, due to physical impairment or legally established mental
incompetence, to perform the usual duties of the Employee's
employment with the Company, which disability shall be determined
(i) on medical evidence by a licensed physician designated by the
Committee, or (ii) on evidence that the Employee has become entitled
to receive primary benefits as a disabled employee under the Social
Security Act in effect on the date of such disability.
3. PROVISIONS RELATING TO AWARDS.
3.1 GRANT OF AWARDS. Subject to the provisions of this Plan, the Committee
shall have full and complete authority, in its discretion, but subject to
the express provisions of this Plan, to (1) grant Awards pursuant to this
Plan, (2) determine the number of shares of the Common Stock subject to
each Award (the "Award Shares"), (3) determine the terms and conditions
(which need not be identical) of each Award, including the consideration
(if any) to be paid by the Employee for such the Common Stock, which may,
in the Committee's discretion, consist of the delivery of the Employee's
promissory note meeting the requirements of Paragraph 2.4.1, (4) establish
and modify performance criteria for Awards, and (5) make all of the
determinations necessary or advisable with respect to Awards under this
Plan. Each Award under this Plan shall consist of a grant of shares of the
Common Stock subject to a restriction period (after which the restrictions
shall lapse), which shall be a period commencing on the date the Award is
granted and ending on such date as the Committee shall determine (the
"Restriction Period"). The Committee may provide for the lapse of
restrictions in installments, for acceleration of the lapse of
restrictions upon the satisfaction of such performance or other criteria
or upon the occurrence of such events as the Committee shall determine,
and for the early expiration of the Restriction Period upon an Employee's
death, Disability or Retirement as defined in Paragraph 2.7.3, or,
following a Change of Control, upon termination of an Employee's
employment by the Company without "Cause" or by the Employee for "Good
Reason," as those terms are defined herein. For purposes of this Plan:
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"Change of Control" shall be deemed to occur (a) on the date the Company
first has actual knowledge that any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act) has become the beneficial
owner (as defined in Rule 13(d)-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 40 percent or more
of the combined voting power of the Company's then outstanding securities,
or (b) on the date the stockholders of the Company approve (i) a merger of
the Company with or into any other corporation in which the Company is not
the surviving corporation or in which the Company survives as a subsidiary
of another corporation, (ii) a consolidation of the Company with any other
corporation, or (iii) the sale or disposition of all or substantially all
of the Company's assets or a plan of complete liquidation.
"Cause," when used with reference to termination of the employment of an
Employee by the Company for "Cause," shall mean:
(a) The Employee's continuing willful and material breach of his duties
to the Company after he receives a demand from the Chief Executive
of the Company specifying the manner in which he has willfully and
materially breached such duties, other than any such failure
resulting from Disability of the Employee or his resignation for
"Good Reason," as defined herein; or
(b) The conviction of the Employee of a felony; or
(c) The Employee's commission of fraud in the course of his employment
with the Company, such as embezzlement or other material and
intentional violation of law against the Company; or
(d) The Employee's gross misconduct causing material harm to the
Company.
"Good Reason" shall mean any one or more of the following, occurring
following or in connection with a Change of Control and within 90 days
prior to the Employee's resignation, unless the Employee shall have
consented thereto in writing:
(a) The assignment to the Employee of duties inconsistent with his
executive status prior to the Change of Control or a substantive
change in the officer or officers to whom he reports from the
officer or officers to whom he reported immediately prior to the
Change of Control; or
(b) The elimination or reassignment of a majority of the duties and
responsibilities that were assigned to the Employee immediately
prior to the Change of Control; or
(c) A reduction by the Company in the Employee's annual base salary as
in effect immediately prior to the Change of Control; or
(d) The Company requiring the Employee to be based anywhere outside a
35-mile radius from his place of employment immediately prior to the
Change of Control, except for required travel on the Company's
business to an extent substantially consistent with the Employee's
business travel obligations immediately prior to the Change of
Control; or
(e) The failure of the Company to grant the Employee a performance bonus
reasonably equivalent to the same percentage of salary the Employee
normally received prior to the Change of Control, given comparable
performance by the Company and the Employee; or
(f) The failure of the Company to obtain a satisfactory Assumption
Agreement (as defined in Paragraph 4.12 of this Plan) from a
successor, or the failure of such successor to perform such
Assumption Agreement.
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3.2 INCENTIVE AGREEMENTS. Each Award granted under this Plan shall be
evidenced by a written agreement (an "Incentive Agreement") in a form
approved by the Committee and executed by the Company and the Employee to
whom the Award is granted. Each Incentive Agreement shall be subject to
the terms and conditions of this Plan and other such terms and conditions
as the Committee may specify.
3.3 WAIVER OF RESTRICTIONS. The Committee may modify or amend any Award under
this Plan or waive any restrictions or conditions applicable to the Award;
provided, however, that the Committee may not undertake any such
modifications, amendments or waivers if the effect thereof materially
increases the benefits to any Employee, or adversely affects the rights of
any Employee without his consent.
3.4 TERMS AND CONDITIONS OF AWARDS. Upon receipt of an Award of shares of the
Common Stock under this Plan, even during the Restriction Period, an
Employee shall be the holder of record of the shares and shall have all
the rights of a stockholder with respect to such shares, subject to the
terms and conditions of this Plan and the Award.
3.4.1 Except as otherwise provided in this Paragraph 3.4, no shares of the
Common Stock received pursuant to this Plan shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period applicable to such shares. Any purported disposition of
such the Common Stock in violation of this Paragraph 3.4.2 shall be null
and void.
3.4.2 If an Employee's employment with the Company terminates prior to the
expiration of the Restriction Period for an Award, subject to any
provisions of the Award with respect to the Employee's death, Disability
or Retirement, or Change of Control, all shares of the Common Stock
subject to the Award shall be immediately forfeited by the Employee and
reacquired by the Company, and the Employee shall have no further rights
with respect to the Award. In the discretion of the Committee, an
Incentive Agreement may provide that, upon the forfeiture by an Employee
of Award Shares, the Company shall repay to the Employee the consideration
(if any) which the Employee paid for the Award Shares on the grant of the
Award. In the discretion of the Committee, an Incentive Agreement may also
provide that such repayment shall include an interest factor on such
consideration from the date of the grant of the Award to the date of such
repayment.
3.4.3 The Committee may require under such terms and conditions as it deems
appropriate or desirable that (a) the certificates for the Common Stock
delivered under this Plan are to be held in custody by the Company or a
person or institution designated by the Company until the Restriction
Period expires, (b) such certificates shall bear a legend referring to the
restrictions on the Common Stock pursuant to this Plan, and (c) the
Employee shall have delivered to the Company a stock power endorsed in
blank relating to the Common Stock.
4. MISCELLANEOUS PROVISIONS.
4.1 ADJUSTMENTS UPON CHANGE IN CAPITALIZATION.
4.1.1 At the discretion of the board of directors, the number and class of
shares subject to each outstanding Stock Option, the Exercise Price
thereof (but not the total price), the maximum number of Stock Options
that may be granted under this Plan, the minimum number of shares as to
which a Stock Option may be exercised at any one time, and the number and
class of shares subject to each outstanding Award, may be retained or may
be, at the option of the board of directors, proportionately adjusted in
the event of any increase or decrease in the number of the issued shares
of the Common Stock which results from a split-up or consolidation of
shares, payment of a stock dividend or
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dividends exceeding a total of five percent for which the record dates
occur in any one fiscal year, a recapitalization (other than the
conversion of convertible securities according to their terms), a
combination of shares or other like capital adjustment, so that (a) upon
exercise of the Stock Option, the Employee shall receive the number and
class of shares the Employee would have received had the Employee been the
holder of the number of shares of the Common Stock for which the Stock
Option is being exercised upon the date of such change or increase or
decrease in the number of issued shares of the Company, and (b) upon the
lapse of restrictions of the Award Shares, the Employee shall receive the
number and class of shares the Employee would have received if the
restrictions on the Award Shares had lapsed on the date of such change or
increase or decrease in the number of issued shares of the Company.
4.1.2 Upon a reorganization, merger or consolidation of the Company with one or
more corporations as a result of which the Company is not the surviving
corporation or in which the Company survives as a wholly-owned subsidiary
of another corporation, or upon a sale of all or substantially all of the
property of the Company to another corporation, or any dividend or
distribution to stockholders of more than 10 percent of the Company's
assets, adequate adjustment or other provisions shall be made by the
Company or other party to such transaction so that there shall remain
and/or be substituted for the Option Shares and Award Shares provided for
herein, the shares, securities or assets which would have been issuable or
payable in respect of or in exchange for such Option Shares and Award
Shares then remaining, as if the Employee had been the owner of such
shares as of the applicable date. Any securities so substituted shall be
subject to similar successive adjustments.
4.2 WITHHOLDING TAXES. The Company shall have the right at the time of
exercise of any Stock Option, the grant of an Award, or the lapse of
restrictions on Award Shares, to make adequate provision for any federal,
state, local or foreign taxes which it believes are or may be required by
law to be withheld with respect to such exercise (the "Tax Liability"), to
ensure the payment of any such Tax Liability. The Company may provide for
the payment of any Tax Liability by any of the following means or a
combination of such means, as determined by the Committee in its sole and
absolute discretion in the particular case (1) by requiring the Employee
to tender a cash payment to the Company, (2) by withholding from the
Employee's salary, (3) by withholding from the Option Shares which would
otherwise be issuable upon exercise of the Stock Option, or from the Award
Shares on their grant or date of lapse of restrictions, that number of
Option Shares or Award Shares having an aggregate Fair Market Value
(determined in the manner prescribed by Paragraph 2.2) as of the date the
withholding tax obligation arises in an amount which is equal to the
Employee's Tax Liability or (4) by any other method deemed appropriate by
the Committee. Satisfaction of the Tax Liability of a Section 16 Reporting
Person may be made by the method of payment specified in clause (3) above
only if the following two conditions are satisfied:
(a) The withholding of Option Shares or Award Shares and the exercise of
the related Stock Option occur at least six months and one day
following the date of grant of such Stock Option or Award; and
(b) The withholding of Option Shares or Award Shares is made either (i)
pursuant to an irrevocable election (the "Withholding Election")
made by the Employee at least six months in advance of the
withholding of Options Shares or Award Shares, or (ii) on a day
within a 10-day "window period" beginning on the third business day
following the date of release of the Company's quarterly or annual
summary statement of sales and earnings.
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Anything herein to the contrary notwithstanding, a Withholding Election
may be disapproved by the Committee at any time.
4.3 RELATIONSHIP TO OTHER EMPLOYEE BENEFIT PLANS. Stock Options and Awards
granted hereunder shall not be deemed to be salary or other compensation
to any Employee for purposes of any pension, thrift, profit-sharing, stock
purchase or any other employee benefit plan now maintained or hereafter
adopted by the Company.
4.4 AMENDMENTS AND TERMINATION. The Board of Directors may at any time
suspend, amend or terminate this Plan. No amendment, except as provided in
Paragraph 2.8, or modification of this Plan may be adopted, except subject
to stockholder approval, which would (1) materially increase the benefits
accruing to the Employees under this Plan, (2) materially increase the
number of securities which may be issued under this Plan (except for
adjustments pursuant to Paragraph 4.1 hereof), or (3) materially modify
the requirements as to eligibility for participation in this Plan.
4.5 SUCCESSORS IN INTEREST. The provisions of this Plan and the actions of the
Committee shall be binding upon all heirs, successors and assigns of the
Company and of the Employees.
4.6 OTHER DOCUMENTS. All documents prepared, executed or delivered in
connection with this Plan (including, without limitation, Option
Agreements and Incentive Agreements) shall be, in substance and form, as
established and modified by the Committee; provided, however, that all
such documents shall be subject in every respect to the provisions of this
Plan, and in the event of any conflict between the terms of any such
document and this Plan, the provisions of this Plan shall prevail.
4.7 NO OBLIGATION TO CONTINUE EMPLOYMENT. This Plan and the grants which might
be made hereunder shall not impose any obligation on the Company to
continue to employ any Employee. Moreover, no provision of this Plan or
any document executed or delivered pursuant to this Plan shall be deemed
modified in any way by any employment contract between an Employee (or
other employee) and the Company.
4.8 MISCONDUCT OF AN EMPLOYEE. Notwithstanding any other provision of this
Plan, if an Employee commits fraud or dishonesty toward the Company or
wrongfully uses or discloses any trade secret, confidential data or other
information proprietary to the Company, or intentionally takes any other
action materially inimical to the best interests of the Company, as
determined by the Committee, in its sole and absolute discretion, the
Employee shall forfeit all rights and benefits under this Plan.
4.9 TERM OF PLAN. This Plan was adopted by the Board effective January 23,
2004. No Stock Options or Awards may be granted under this Plan after
January 23, 2014.
4.10 GOVERNING LAW. This Plan shall be construed in accordance with, and
governed by, the internal laws of the State of Nevada without regard to
conflicts of laws.
4.11 APPROVAL. No Stock Option shall be exercisable, or Award granted, unless
and until the Directors of the Company have approved this Plan and all
other legal requirements have been met.
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4.12 ASSUMPTION AGREEMENTS. The Company will require each successor, (direct or
indirect, whether by purchase, merger, consolidation or otherwise), to all
or substantially all of the business or assets of the Company, prior to
the consummation of each such transaction, to assume and agree to perform
the terms and provisions remaining to be performed by the Company under
each Incentive Agreement and Stock Option and to preserve the benefits to
the Employees thereunder. Such assumption and agreement shall be set forth
in a written agreement in form and substance satisfactory to the Committee
(an "Assumption Agreement"), and shall include such adjustments, if any,
in the application of the provisions of the Incentive Agreements and Stock
Options and such additional provisions, if any, as the Committee shall
require and approve, in order to preserve such benefits to the Employees.
Without limiting the generality of the foregoing, the Committee may
require an Assumption Agreement to include satisfactory undertakings by a
successor:
(a) To provide liquidity to the Employees at the end of the Restriction
Period applicable to the Common Stock awarded to them under this
Plan, or on the exercise of Stock Options;
(b) If the succession occurs before the expiration of any period
specified in the Incentive Agreements for satisfaction of
performance criteria applicable to the Common Stock awarded
thereunder, to refrain from interfering with the Company's ability
to satisfy such performance criteria or to agree to modify such
performance criteria and/or waive any criteria that cannot be
satisfied as a result of the succession;
(c) To require any future successor to enter into an Assumption
Agreement; and
(d) To take or refrain from taking such other actions as the Committee
may require and approve, in its discretion.
The Committee referred to in this Paragraph 4.12 is the Committee
appointed by a Board of Directors in office prior to the succession then
under consideration or the Board of Directors in office prior to the
succession then under consideration in the event the Board of Directors
did not apoint a Committee.
4.13 COMPLIANCE WITH RULE 16B-3. Transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3. To the extent that
any provision of this Plan or action by the Committee fails to so comply,
it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee.
4.14 INFORMATION TO SHAREHOLDERS. The Company shall furnish to each of its
stockholders financial statements of the Company at least annually.
IN WITNESS WHEREOF, this Plan has been executed effective as of July 20,
2004.
PTS, INC.
By: /s/ Peter Chin
--------------------------
Peter Chin, President
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