EXHIBIT 4.1
THE WORLD GOLF LEAGUE, INC.
2006 STOCK INCENTIVE PLAN
ARTICLE I -- PREAMBLE
1.1 This 2006 Stock Incentive Plan of The World Golf League, Inc. is
intended to secure for the Company and its Affiliates the benefits arising from
ownership of the Company's Common Stock by the Employees, Officers, Directors
and Consultants of the Company and its Affiliates, all of whom are and will be
responsible for the Company's future growth. The Plan is designed to help
attract and retain for the Company and its Affiliates personnel of superior
ability for positions of exceptional responsibility, to reward Employees,
Officers, Directors and Consultants for their services and to motivate such
individuals through added incentives to further contribute to the success of the
Company and its Affiliates. With respect to persons subject to Section 16 of the
Act, transactions under this Plan are intended to satisfy the requirements of
Rule 16b-3 of the Act.
1.2 Awards under the Plan may be made to an Eligible Person in the form of
(i) Incentive Stock Options (to Eligible Employees only); (ii) Nonqualified
Stock Options; (iii) Restricted Stock; (iv) Stock Awards; (v) Performance
Shares; or (vi) any combination of the foregoing.
1.3 The Company's board of directors adopted the Plan on July 11, 2006.
The Plan shall be effective August 16, 2006 (the "Effective Date"), subject to
approval by the shareholders of the Company to the extent necessary to satisfy
the requirements of the Code, the Act, or other applicable federal or state law.
Unless sooner terminated as provided elsewhere in this Plan, this Plan shall
terminate upon the close of business on the day next preceding the tenth (10th)
anniversary of the Effective Date. Award Agreements outstanding on such date
shall continue to have force and effect in accordance with the provisions
thereof.
1.4 The Plan shall be governed by, and construed in accordance with, the
laws of the State of Texas (except its choice-of-law provisions).
1.5 Capitalized terms shall have the meaning provided in Article II unless
otherwise provided in this Plan or any related Award Agreement.
ARTICLE II -- DEFINITIONS
DEFINITIONS. Except where the context otherwise indicates, the following
definitions apply:
2.1 "Act" means the Securities Exchange Act of 1934, as now in effect or
as hereafter amended.
2.2 "Affiliate" means any parent corporation or subsidiary corporation of
the Company, whether now or hereinafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
2.3 "Award" means an award granted to a Participant in accordance with the
provisions of the Plan, including, but not limited to, Stock Options, Restricted
Stock, Stock Awards, Performance Shares, or any combination of the foregoing.
2.4 "Award Agreement" means the separate written agreement evidencing each
Award granted to a Participant under the Plan.
2.5 "Board of Directors" or "Board" means the Board of Directors of the
Company, as constituted from time to time.
2.7 "Change of Control" means (i) the adoption of a plan of merger or
consolidation of the Company with any other corporation or association as a
result of which the holders of the voting capital stock of the Company as a
group would receive less than 50% of the voting capital stock of the surviving
or resulting corporation; (ii) the approval by the Board of Directors of an
agreement providing for the sale or transfer (other than as security for
obligations of the Company) of substantially all the assets of the Company; or
(iii) in the absence of a prior expression of approval by the Board of
Directors, the acquisition of more than 20% of the Company's voting capital
stock by any person within the meaning of Rule 13d-3 under the Act (other than
the Company or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Company).
2.8 "Code" means the Internal Revenue Code of 1986, as amended, and the
regulations and interpretations promulgated thereunder.
2.9 "Committee" means a committee of two or more members of the Board
appointed by the Board in accordance with Section 3.2 of the Plan.
2.10 "Common Stock" means the Company's common stock.
2.11 "Company" means The World Golf League, Inc., a Nevada corporation.
2.12. "Consultant" means any person, including an advisor engaged by the
Company or an Affiliate to render bona fide consulting or advisory services to
the Company or an Affiliate, other than as an Employee, Director or Non-Employee
Director.
2.13 "Director" means a member of the Board of Directors of the Company.
2.14 "Disability" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
2.15 "Effective Date" shall be the date set forth in Section 1.3 of the
Plan.
2.16 "Eligible Employee" means an Eligible Person who is an Employee of
the Company or any Affiliate.
2.17 "Eligible Person" means any Employee, Officer, Director, Non-Employee
Director or Consultant of the Company or any Affiliate, except for instances
where services are in connection with the offer or sale of securities in a
capital-raising transaction, or they directly or indirectly promote or maintain
a market for the Company's securities, subject to any other limitations as may
be provided by the Code, the Act, or the Board. In making such determinations,
the Board may take into account the nature of the services rendered by such
person, his or her present and potential contribution to the Company's success,
and such other factors as the Board in its discretion shall deem relevant.
2.19 "Employee" means an individual who is a common-law employee of the
Company or an Affiliate including employment as an Officer. Mere service as a
Director or payment of a director's fee by the Company or an Affiliate shall not
be sufficient to constitute "employment" by the Company or an Affiliate.
2.20 "ERISA" means the Employee Retirement Income Security Act of 1974, as
now in effect or as hereafter amended.
2.21 "Fair Market Value" means:
(a) for purposes of an Incentive Stock Option, if there is a market
for the Company's stock, on a stock exchange or in an over-the-counter
market, or otherwise, the Fair Market Value shall be the mean between the
highest and lowest quoted selling prices on the valuation date of the
Incentive Stock Option, or if there were no sales of the Company's Common
Stock on the valuation date, the Fair Market Value shall be the weighted
average of the means between the highest and lowest sales on the nearest
date before and the nearest date after the valuation date. If a valuation
pursuant to this paragraph is not available, the appropriate method
described in Section 20.2031-2 of the Treasury Regulations adopted under
the Code shall be used for the Fair Market Value, and
(b) for all other purposes, the mean between the highest and lowest
quoted selling prices of the Common Stock (if actual sales price
information on such trading day is not available, the mean between the bona
fide bid and asked prices on such trading day shall be used) on the trading
day immediately prior to the date on which a determination is being made
pursuant to this Section 2.21 (the "Mean Selling Price"), as reported by
the National Association of Securities Dealers Automated Quotation System
("NASDAQ"), or if the Common Stock is not traded on NASDAQ, the Mean
Selling Price in the over-the-counter market; provided, however, that if
the Common Stock is listed on a stock exchange, the Fair Market Value shall
be the Mean Selling Price on such exchange; and, provided further, that if
the Common Stock is not quoted or listed by any organization, the fair
value of the Common Stock, as determined by the Board, whose determination
shall be conclusive, shall be used. In no event shall the Fair Market Value
of any share of Common Stock be less than its par value.
2.22 "Grant Date" means, as to any Award, the latest of:
(a) the date on which the Board authorizes the grant of the Award; or
(b) the date the Participant receiving the Award becomes an Employee
or a Director of the Company or its Affiliate, to the extent employment
status is a condition of the grant or a requirement of the Code or the Act;
or
(c) such other date (later than the dates described in (a) and (b)
above) as the Board may designate and as set forth in the Participant's
Award Agreement.
2.23 "Immediate Family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include
adoptive relationships.
2.24 "Incentive Stock Option" means a Stock Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and is
granted under Article IV of the Plan and designated as an Incentive Stock Option
in a Participant's Award Agreement.
2.25 "Non-Employee Director" shall have the meaning set forth in Rule
16b-3 under the Act.
2.26 "Nonqualified Stock Option" means a Stock Option not intended to
qualify as an Incentive Stock Option and is not so designated in the
Participant's Award Agreement.
2.27 "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Act.
2.28 "Option Period" means the period during which a Stock Option may be
exercised from time to time, as established by the Board and set forth in the
Award Agreement for each Participant who is granted a Stock Option.
2.29 "Option Price" means the purchase price for a share of Common Stock
subject to purchase pursuant to a Stock Option, as established by the Board and
set forth in the Award Agreement for each Participant who is granted a Stock
Option.
2.30 "Outside Director" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
2.31 "Participant" means an Eligible Person to whom an Award has been
granted and who has entered into an Award Agreement evidencing the Award or, if
applicable, such other person who holds an outstanding Award.
2.32 "Performance Objectives" shall have the meaning set forth in Article
IX of the Plan.
2.33 "Performance Period" shall have the meaning set forth in Article IX
of the Plan.
2.34 "Performance Share" means an Award under Article IX of the Plan of a
unit valued by reference to the Common Stock, the payout of which is subject to
achievement of such Performance Objectives, measured during one or more
Performance Periods, as the Board, in its sole discretion, shall establish at
the time of such Award and set forth in a Participant's Award Agreement.
2.35 "Plan" means this The World Golf League, Inc. 2006 Stock Incentive
Plan, as it may be amended from time to time.
2.36 "Reporting Person" means a person required to file reports under
Section 16(a) of the Act.
2.37 "Restricted Stock" means an Award under Article VII of the Plan of
shares of Common Stock that are at the time of the Award subject to restrictions
or limitations as to the Participant's ability to sell, transfer, pledge or
assign such shares, which restrictions or limitations may lapse separately or in
combination at such time or times, in installments or otherwise, as the Board,
in its sole discretion, shall determine at the time of such Award and set forth
in a Participant's Award Agreement.
2.38 "Restriction Period" means the period commencing on the Grant Date
with respect to such shares of Restricted Stock and ending on such date as the
Board, in its sole discretion, shall establish and set forth in a Participant's
Award Agreement.
2.39 "Retirement" means retirement as determined under procedures
established by the Board or in any Award, as set forth in a Participant's Award
Agreement.
2.40 "Rule 16b-3" means Rule 16b-3 promulgated under the Act or any
successor to Rule 16b-3, as in effect from time to time. Those provisions of
the Plan which make express reference to Rule 16b-3, or which are required in
order for certain option transactions to qualify for exemption under Rule 16b-3,
shall apply only to a Reporting Person.
2.41 "Stock Award" means an Award of shares of Common Stock under Article
VIII of the Plan.
2.42 "Stock Option" means an Award under Article IV or Article V of the
Plan of an option to purchase Common Stock. A Stock Option may be either an
Incentive Stock Option or a Nonqualified Stock Option.
2.43 "Ten Percent Stockholder" means an individual who owns (or is deemed
to own pursuant to Section 424(d) of the Code), at the time of grant, 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 Affiliates.
2.44 "Termination of Service" means (i) in the case of an Eligible
Employee, the discontinuance of employment of such Participant with the Company
or its Subsidiaries for any reason other than a transfer to another member of
the group consisting of the Company and its Affiliates and (ii) in the case of a
Director who is not an Employee of the Company or any Affiliate, the date such
Participant ceases to serve as a Director. The determination of whether a
Participant has discontinued service shall be made by the Board in its sole
discretion. In determining whether a Termination of Service has occurred, the
Board may provide that service as a Consultant or service with a business
enterprise in which the Company has a significant ownership interest shall be
treated as employment with the Company.
ARTICLE III - ADMINISTRATION
3.1 The Plan shall be administered by the Board of Directors of the
Company. The Board shall have the exclusive right to interpret and construe the
Plan, to select the Eligible Persons who shall receive an Award, and to act in
all matters pertaining to the grant of an Award and the determination and
interpretation of the provisions of the related Award Agreement, including,
without limitation, the determination of the number of shares subject to Stock
Options and the Option Period(s) and Option Price(s) thereof, the number of
shares of Restricted Stock or shares subject to Stock Awards or Performance
Shares subject to an Award, the vesting periods (if any) and the form, terms,
conditions and duration of each Award, and any amendment thereof consistent with
the provisions of the Plan. The Board may adopt, establish, amend and rescind
such rules, regulations and procedures as it may deem appropriate for the proper
administration of the Plan, make all other determinations which are, in the
Board's judgment, necessary or desirable for the proper administration of the
Plan, amend the Plan or a Stock Award as provided in Article XI, and terminate
or suspend the Plan as provided in Article XI. All acts, determinations and
decisions of the Board made or taken pursuant to the Plan or with respect to any
questions arising in connection with the administration and interpretation of
the Plan or any Award Agreement, including the severability of any and all of
the provisions thereof, shall be conclusive, final and binding upon all persons.
3.2 The Board may, to the full extent permitted by and consistent with
applicable law and the Company's Bylaws, and subject to Subparagraph 3.2(b)
hereinbelow, delegate any or all of its powers with respect to the
administration of the Plan to a Committee consisting of not fewer than two
members of the Board each of whom shall qualify (at the time of appointment to
the Committee and during all periods of service on the Committee) in all
respects as a Non-Employee Director and as an Outside Director.
(a) If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized
to exercise (and references in the Plan to the Board shall thereafter be to
the Committee or subcommittee), subject, however, to such resolutions, not
consistent with the provisions of the Plan, as may be adopted from time to
time by the Board.
(b) The Board may abolish the Committee at any time and reassume all
powers and authority previously delegated to the Committee.
(c) In addition to, and not in limitation of, the right of any
Committee so designated by the Board to administer this Plan to grant
Awards to Eligible Persons under this Plan, the full Board of Directors may
from time to time grant Awards to Eligible Persons pursuant to the terms
and conditions of this Plan, subject to the requirements of the Code, Rule
16b-3 under the Act or any other applicable law, rule or regulation. In
connection with any such grants, the Board of Directors shall have all of
the power and authority of the Committee to determine the Eligible Persons
to whom such Awards shall be granted and the other terms and conditions of
such Awards.
3.3 Without limiting the provisions of this Article III, and subject to
the provisions of Article X, the Board is authorized to take such action as it
determines to be necessary or advisable, and fair and equitable to Participants
and to the Company, with respect to an outstanding Award in the event of a
Change of Control as described in Article X or other similar event. Such action
may include, but shall not be limited to, establishing, amending or waiving the
form, terms, conditions and duration of an Award and the related Award
Agreement, so as to provide for earlier, later, extended or additional times for
exercise or payments, differing methods for calculating payments, alternate
forms and amounts of payment, an accelerated release of restrictions or other
modifications. The Board may take such actions pursuant to this Section 3.3 by
adopting rules and regulations of general applicability to all Participants or
to certain categories of Participants, by including, amending or waiving terms
and conditions in an Award and the related Award Agreement, or by taking action
with respect to individual Participants from time to time.
3.4 Subject to the provisions of Section 3.9, the maximum aggregate number
of shares of Common Stock which may be issued pursuant to Awards under the Plan
shall be Five Hundred Million (500,000,000) shares. Such shares of Common Stock
shall be made available from authorized and unissued shares of the Company.
(a) For all purposes under the Plan, each Performance Share awarded
shall be counted as one share of Common Stock subject to an Award.
(b) If, for any reason, any shares of Common Stock (including shares
of Common Stock subject to Performance Shares) that have been awarded or
are subject to issuance or purchase pursuant to Awards outstanding under
the Plan are not delivered or purchased, or are reacquired by the Company,
for any reason, including but not limited to a forfeiture of Restricted
Stock or failure to earn Performance Shares or the termination, expiration
or cancellation of a Stock Option, or any other termination of an Award
without payment being made in the form of shares of Common Stock (whether
or not Restricted Stock), such shares of Common Stock shall not be charged
against the aggregate number of shares of Common Stock available for Award
under the Plan and shall again be available for Awards under the Plan. In
no event, however, may Common Stock that is surrendered or withheld to pay
the exercise price of a Stock Option or to satisfy tax withholding
requirements be available for future grants under the Plan.
(c) The foregoing subsections (a) and (b) of this Section 3.4 shall be
subject to any limitations provided by the Code or by Rule 16b-3 under the
Act or by any other applicable law, rule or regulation.
3.5 Each Award granted under the Plan shall be evidenced by a written
Award Agreement, which shall be subject to and shall incorporate (by reference
or otherwise) the applicable terms and conditions of the Plan and shall include
any other terms and conditions (not inconsistent with the Plan) required by the
Board.
3.6 The Company shall not be required to issue or deliver any certificates
for shares of Common Stock under the Plan prior to:
(a) any required approval of the Plan by the shareholders of the
Company; and
(b) the completion of any registration or qualification of such shares
of Common Stock under any federal or state law, or any ruling or regulation of
any governmental body that the Company shall, in its sole discretion, determine
to be necessary or advisable.
3.7 The Board may require any Participant acquiring shares of Common Stock
pursuant to any Award under the Plan to represent to and agree with the Company
in writing that such person is acquiring the shares of Common Stock for
investment purposes and without a view to resale or distribution thereof.
Shares of Common Stock issued and delivered under the Plan shall also be subject
to such stop-transfer orders and other restrictions as the Board may deem
advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Common Stock is then
listed and any applicable federal or state laws, and the Board may cause a
legend or legends to be placed on the certificate or certificates representing
any such shares to make appropriate reference to any such restrictions. In
making such determination, the Board may rely upon an opinion of counsel for the
Company.
3.8 Except as otherwise expressly provided in the Plan or in an Award
Agreement with respect to an Award, no Participant shall have any right as a
shareholder of the Company with respect to any shares of Common Stock subject to
such Participant's Award except to the extent that, and until, one or more
certificates representing such shares of Common Stock shall have been delivered
to the Participant. No shares shall be required to be issued, and no
certificates shall be required to be delivered, under the Plan unless and until
all of the terms and conditions applicable to such Award shall have, in the sole
discretion of the Board, been satisfied in full and any restrictions shall have
lapsed in full, and unless and until all of the requirements of law and of all
regulatory bodies having jurisdiction over the offer and sale, or issuance and
delivery, of the shares shall have been fully complied with.
3.9 The total amount of shares with respect to which Awards may be granted
under the Plan and rights of outstanding Awards (both as to the number of shares
subject to the outstanding Awards and the Option Price(s) or other purchase
price(s) of such shares, as applicable) shall be appropriately adjusted for any
increase or decrease in the number of outstanding shares of Common Stock of the
Company resulting from payment of a stock dividend on the Common Stock, a stock
split or subdivision or combination of shares of the Common Stock, or a
reorganization or reclassification of the Common Stock, or any other change in
the structure of shares of the Common Stock. The foregoing adjustments and the
manner of application of the foregoing provisions shall be determined by the
Board in its sole discretion. Any such adjustment may provide for the
elimination of any fractional shares which might otherwise become subject to an
Award. All adjustments made as the result of the foregoing in respect of each
Incentive Stock Option shall be made so that such Incentive Stock Option shall
continue to be an Incentive Stock Option, as defined in Section 422 of the Code.
3.10 No director or person acting pursuant to authority delegated by the
Board shall be liable for any action or determination under the Plan made in
good faith. The members of the Board shall be entitled to indemnification by
the Company in the manner and to the extent set forth in the Company's Articles
of Incorporation, as amended, Bylaws or as otherwise provided from time to time
regarding indemnification of Directors.
3.11 The Board shall be authorized to make adjustments in any performance
based criteria or in the other terms and conditions of outstanding Awards in
recognition of unusual or nonrecurring events affecting the Company (or any
Affiliate, if applicable) or its financial statements or changes in applicable
laws, regulations or accounting principles. The Board may correct any defect,
supply any omission or reconcile any inconsistency in the Plan or any Award
Agreement in the manner and to the extent it shall deem necessary or desirable
to reflect any such adjustment. In the event the Company (or any Affiliate, if
applicable) shall assume outstanding employee benefit awards or the right or
obligation to make future such awards in connection with the acquisition of
another corporation or business entity, the Board may, in its sole discretion,
make such adjustments in the terms of outstanding Awards under the Plan as it
shall deem appropriate.
3.12 Subject to the express provisions of the Plan, the Board shall have
full power and authority to determine whether, to what extent and under what
circumstances any outstanding Award shall be terminated, canceled, forfeited or
suspended. Notwithstanding the foregoing or any other provision of the Plan or
an Award Agreement, all Awards to any Participant that are subject to any
restriction or have not been earned or exercised in full by the Participant
shall be terminated and canceled if the Participant is terminated for cause, as
determined by the Board in its sole discretion.
ARTICLE IV -- INCENTIVE STOCK OPTIONS
4.1 The Board, in its sole discretion, may from time to time on or after
the Effective Date grant Incentive Stock Options to Eligible Employees, subject
to the provisions of this Article IV and Articles III and VI and subject to the
following conditions:
(a) Incentive Stock Options shall be granted only to Eligible
Employees, each of whom may be granted one or more of such Incentive Stock
Options at such time or times determined by the Board.
(b) The Option Price per share of Common Stock for an Incentive Stock
Option shall be set in the Award Agreement, but shall not be less than (i)
one hundred percent (100%) of the Fair Market Value of the Common Stock at
the Grant Date, or (ii) in the case of an Incentive Stock Option granted to
a Ten Percent Stockholder, one hundred ten percent (110%) of the Fair
Market Value of the Common Stock at the Grant Date.
(c) An Incentive Stock Option may be exercised in full or in part from
time to time within ten (10) years from the Grant Date, or such shorter
period as may be specified by the Board as the Option Period and set forth
in the Award Agreement; provided, however, that, in the case of an
Incentive Stock Option granted to a Ten Percent Stockholder, such period
shall not exceed five (5) years from the Grant Date; and further, provided
that, in any event, the Incentive Stock Option shall lapse and cease to be
exercisable upon a Termination of Service or within such period following a
Termination of Service as shall have been determined by the Board and set
forth in the related Award Agreement; and provided, further, that such
period shall not exceed the period of time ending on the date three (3)
months following a Termination of Service, unless employment shall have
terminated:
(i) as a result of Disability, in which event such period shall
not exceed the period of time ending on the date twelve (12) months
following a Termination of Service; or
(ii) as a result of death, or if death shall have occurred
following a Termination of Service (other than as a result of
Disability) and during the period that the Incentive Stock Option was
still exercisable, in which event such period may not exceed the
period of time ending on the earlier of the date twelve (12) months
after the date of death;
and provided, further, that such period following a Termination
of Service or death shall in no event extend beyond the original
Option Period of the Incentive Stock Option.
(d) The aggregate Fair Market Value of the shares of Common Stock with
respect to which any Incentive Stock Options (whether under this Plan or
any other plan established by the Company) are first exercisable during any
calendar year by any Eligible Employee shall not exceed one hundred
thousand dollars ($100,000), determined based on the Fair Market Value(s)
of such shares as of their respective Grant Dates; provided, however, that
to the extent permitted under Section 422 of the Code, if the aggregate
Fair Market Values of the shares of Common Stock with respect to which
Stock Options intended to be Incentive Stock Options are first exercisable
by any Eligible Employee during any calendar year (whether such Stock
Options are granted under this Plan or any other plan established by the
Company) exceed one hundred thousand dollars ($100,000), the Stock Options
or portions thereof which exceed such limit (according to the order in
which they were granted) shall be treated as Nonqualified Stock Options.
(e) No Incentive Stock Options may be granted more than ten (10) years
from the Effective Date.
(f) The Award Agreement for each Incentive Stock Option shall provide
that the Participant shall notify the Company if such Participant sells or
otherwise transfers any shares of Common Stock acquired upon exercise of
the Incentive Stock Option within two (2) years of the Grant Date of such
Incentive Stock Option or within one (1) year of the date such shares were
acquired upon the exercise of such Incentive Stock Option.
4.2 Subject to the limitations of Section 3.4, the maximum aggregate
number of shares of Common Stock subject to Incentive Stock Option Awards shall
be the maximum aggregate number of shares available for Awards under the Plan.
4.3 The Board may provide for any other terms and conditions which it
determines should be imposed for an Incentive Stock Option to qualify under
Section 422 of the Code, as well as any other terms and conditions not
inconsistent with this Article IV or Articles III or VI, as determined in its
sole discretion and set forth in the Award Agreement for such Incentive Stock
Option.
4.4 Each provision of this Article IV and of each Incentive Stock Option
granted hereunder shall be construed in accordance with the provisions of
Section 422 of the Code, and any provision hereof that cannot be so construed
shall be disregarded.
ARTICLE V -- NONQUALIFIED STOCK OPTIONS
5.1 The Board, in its sole discretion, may from time to time on or after
the Effective Date grant Nonqualified Stock Options to Eligible Persons, subject
to the provisions of this Article V and Articles III and VI and subject to the
following conditions:
(a) Nonqualified Stock Options may be granted to any Eligible Person,
each of whom may be granted one or more of such Nonqualified Stock Options,
at such time or times determined by the Board.
(b) The Option Price per share of Common Stock for a Nonqualified
Stock Option shall be set in the Award Agreement and may be less than one
hundred percent (100%) of the Fair Market Value of the Common Stock at the
Grant Date; provided, however, that the exercise price of each Nonqualified
Stock Option granted under the Plan shall in no event be less than the par
value per share of the Company's Common Stock.
(c) A Nonqualified Stock Option may be exercised in full or in part
from time to time within the Option Period specified by the Board and set
forth in the Award Agreement; provided, however, that, in any event, the
Nonqualified Stock Option shall lapse and cease to be exercisable upon a
Termination of Service or within such period following a Termination of
Service as shall have been determined by the Board and set forth in the
related Award Agreement.
5.2 The Board may provide for any other terms and conditions for a
Nonqualified Stock Option not inconsistent with this Article V or Articles III
or VI, as determined in its sole discretion and set forth in the Award Agreement
for such Nonqualified Stock Option.
ARTICLE VI -- INCIDENTS OF STOCK OPTIONS
6.1 Each Stock Option shall be granted subject to such terms and
conditions, if any, not inconsistent with this Plan, as shall be determined by
the Board and set forth in the related Award Agreement, including any provisions
as to continued employment as consideration for the grant or exercise of such
Stock Option and any provisions which may be advisable to comply with applicable
laws, regulations or rulings of any governmental authority.
6.2 Except as hereinafter described, a Stock Option shall not be
transferable by the Participant other than by will or by the laws of descent and
distribution, and shall be exercisable during the lifetime of the Participant
only by the Participant or the Participant's guardian or legal representative.
In the event of the death of a Participant, any unexercised Stock Options may be
exercised to the extent otherwise provided herein or in such Participant's Award
Agreement by the executor or personal representative of such Participant's
estate or by any person who acquired the right to exercise such Stock Options by
bequest under the Participant's will or by inheritance. The Board, in its sole
discretion, may at any time permit a Participant to transfer a Nonqualified
Stock Option for no consideration to or for the benefit of one or more members
of the Participant's Immediate Family (including, without limitation, to a trust
for the benefit of the Participant and/or one or more members of such
Participant's Immediate Family or a corporation, partnership or limited
liability company established and controlled by the Participant and/or one or
more members of such Participant's Immediate Family), subject to such limits as
the Board may establish. The transferee of such Nonqualified Stock Option shall
remain subject to all terms and conditions applicable to such Nonqualified Stock
Option prior to such transfer. The foregoing right to transfer the Nonqualified
Stock Option, if granted by the Board shall apply to the right to consent to
amendments to the Award Agreement.
6.3 Shares of Common Stock purchased upon exercise of a Stock Option shall
be paid for in such amounts, at such times and upon such terms as shall be
determined by the Board, subject to limitations set forth in the Stock Option
Award Agreement. The Board may, in its sole discretion, permit the exercise of a
Stock Option by payment in cash or by tendering shares of Common Stock (either
by actual delivery of such shares or by attestation), or any combination
thereof, as determined by the Board. In the sole discretion of the Board,
payment in shares of Common Stock also may be made with shares received upon the
exercise or partial exercise of the Stock Option, whether or not involving a
series of exercises or partial exercises and whether or not share certificates
for such shares surrendered have been delivered to the Participant. The Board
also may, in its sole discretion, permit the payment of the exercise price of a
Stock Option by the voluntary surrender of all or a portion of the Stock Option.
Shares of Common Stock previously held by the Participant and surrendered in
payment of the Option Price of a Stock Option shall be valued for such purpose
at the Fair Market Value thereof on the date the Stock Option is exercised.
6.4 The holder of a Stock Option shall have no rights as a shareholder
with respect to any shares covered by the Stock Option (including, without
limitation, any voting rights, the right to inspect or receive the Company's
balance sheets or financial statements or any rights to receive dividends or
non-cash distributions with respect to such shares) until such time as the
holder has exercised the Stock Option and then only with respect to the number
of shares which are the subject of the exercise. No adjustment shall be made
for dividends or other rights for which the record date is prior to the date
such stock certificate is issued.
6.5 The Board may permit the voluntary surrender of all or a portion of
any Stock Option granted under the Plan to be conditioned upon the granting to
the Participant of a new Stock Option for the same or a different number of
shares of Common Stock as the Stock Option surrendered, or may require such
voluntary surrender as a condition precedent to a grant of a new Stock Option to
such Participant. Subject to the provisions of the Plan, such new Stock Option
shall be exercisable at such Option Price, during such Option Period and on such
other terms and conditions as are specified by the Board at the time the new
Stock Option is granted. Upon surrender, the Stock Options surrendered shall be
canceled and the shares of Common Stock previously subject to them shall be
available for the grant of other Stock Options.
6.6 The Board may at any time offer to purchase a Participant's
outstanding Stock Option for a payment equal to the value of such Stock Option
payable in cash, shares of Common Stock or Restricted Stock or other property
upon surrender of the Participant's Stock Option, based on such terms and
conditions as the Board shall establish and communicate to the Participant at
the time that such offer is made.
6.7 The Board shall have the discretion, exercisable either at the time
the Award is granted or at the time the Participant discontinues employment, to
establish as a provision applicable to the exercise of one or more Stock Options
that, during a limited period of exercisability following a Termination of
Service, the Stock Option may be exercised not only with respect to the number
of shares of Common Stock for which it is exercisable at the time of the
Termination of Service but also with respect to one or more subsequent
installments for which the Stock Option would have become exercisable had the
Termination of Service not occurred.
ARTICLE VII -- RESTRICTED STOCK
7.1 The Board, in its sole discretion, may from time to time on or after
the Effective Date award shares of Restricted Stock to Eligible Persons as a
reward for past service and an incentive for the performance of future services
that will contribute materially to the successful operation of the Company an
its Affiliates, subject to the terms and conditions set forth in this Article
VII.
7.2 The Board shall determine the terms and conditions of any Award of
Restricted Stock, which shall be set forth in the related Award Agreement,
including without limitation:
(a) the purchase price, if any, to be paid for such Restricted Stock,
which may be zero, subject to such minimum consideration as may be required
by applicable law;
(b) the duration of the Restriction Period or Restriction Periods with
respect to such Restricted Stock and whether any events may accelerate or
delay the end of such Restriction Period(s);
(c) the circumstances upon which the restrictions or limitations shall
lapse, and whether such restrictions or limitations shall lapse as to all
shares of Restricted Stock at the end of the Restriction Period or as to a
portion of the shares of Restricted Stock in installments during the
Restriction Period by means of one or more vesting schedules;
(d) whether such Restricted Stock is subject to repurchase by the
Company or to a right of first refusal at a predetermined price or if the
Restricted Stock may be forfeited entirely under certain conditions;
(e) whether any performance goals may apply to a Restriction Period to
shorten or lengthen such period; and
(f) whether dividends and other distributions with respect to such
Restricted Stock are to be paid currently to the Participant or withheld by
the Company for the account of the Participant.
7.3 Awards of Restricted Stock must be accepted within a period of thirty
(30) days after the Grant Date (or such shorter or longer period as the Board
may specify at such time) by executing an Award Agreement with respect to such
Restricted Stock and tendering the purchase price, if any. A prospective
recipient of an Award of Restricted Stock shall not have any rights with respect
to such Award, unless such recipient has executed an Award Agreement with
respect to such Restricted Stock, has delivered a fully executed copy thereof to
the Board and has otherwise complied with the applicable terms and conditions of
such Award.
7.4 In the sole discretion of the Board and as set forth in the Award
Agreement for an Award of Restricted Stock, all shares of Restricted Stock held
by a Participant and still subject to restrictions shall be forfeited by the
Participant upon the Participant's Termination of Service and shall be
reacquired, canceled and retired by the Company. Notwithstanding the foregoing,
unless otherwise provided in an Award Agreement with respect to an Award of
Restricted Stock, in the event of the death, Disability or Retirement of a
Participant during the Restriction Period, or in other cases of special
circumstances (including hardship or other special circumstances of a
Participant whose employment is involuntarily terminated), the Board may elect
to waive in whole or in part any remaining restrictions with respect to all or
any part of such Participant's Restricted Stock, if it finds that a waiver would
be appropriate.
7.5 Except as otherwise provided in this Article VII, no shares of
Restricted Stock received by a Participant shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period.
7.6 Upon an Award of Restricted Stock to a Participant, a certificate or
certificates representing the shares of such Restricted Stock will be issued to
and registered in the name of the Participant. Unless otherwise determined by
the Board, such certificate or certificates will be held in custody by the
Company until (i) the Restriction Period expires and the restrictions or
limitations lapse, in which case one or more certificates representing such
shares of Restricted Stock that do not bear a restrictive legend (other than any
legend as required under applicable federal or state securities laws) shall be
delivered to the Participant, or (ii) a prior forfeiture by the Participant of
the shares of Restricted Stock subject to such Restriction Period, in which case
the Company shall cause such certificate or certificates to be canceled and the
shares represented thereby to be retired, all as set forth in the Participant's
Award Agreement. It shall be a condition of an Award of Restricted Stock that
the Participant deliver to the Company a stock power endorsed in blank relating
to the shares of Restricted Stock to be held in custody by the Company.
7.7 Except as provided in this Article VII or in the related Award
Agreement, a Participant receiving an Award of shares of Restricted Stock Award
shall have, with respect to such shares, all rights of a shareholder of the
Company, including the right to vote the shares and the right to receive any
distributions, unless and until such shares are otherwise forfeited by such
Participant; provided, however, the Board may require that any cash dividends
with respect to such shares of Restricted Stock be automatically reinvested in
additional shares of Restricted Stock subject to the same restrictions as the
underlying Award, or may require that cash dividends and other distributions on
Restricted Stock be withheld by the Company or its Affiliates for the account of
the Participant. The Board shall determine whether interest shall be paid on
amounts withheld, the rate of any such interest, and the other terms applicable
to such withheld amounts.
ARTICLE VIII -- STOCK AWARDS
8.1 The Board, in its sole discretion, may from time to time on or after
the Effective Date grant Stock Awards to Eligible Persons in payment of
compensation that has been earned or as compensation to be earned, including
without limitation compensation awarded or earned concurrently with or prior to
the grant of the Stock Award, subject to the terms and conditions set forth in
this Article VIII.
8.2 For the purposes of this Plan, in determining the value of a Stock
Award, all shares of Common Stock subject to such Stock Award shall be set in
the Award Agreement and may be less than one hundred percent (100%) of the Fair
Market Value of the Common Stock at the Grant Date.
8.3 Unless otherwise determined by the Board and set forth in the related
Award Agreement, shares of Common Stock subject to a Stock Award will be issued,
and one or more certificates representing such shares will be delivered, to the
Participant as soon as practicable following the Grant Date of such Stock Award.
Upon the issuance of such shares and the delivery of one or more certificates
representing such shares to the Participant, such Participant shall be and
become a shareholder of the Company fully entitled to receive dividends, to vote
and to exercise all other rights of a shareholder of the Company.
Notwithstanding any other provision of this Plan, unless the Board expressly
provides otherwise with respect to a Stock Award, as set forth in the related
Award Agreement, no Stock Award shall be deemed to be an outstanding Award for
purposes of the Plan.
ARTICLE IX -- PERFORMANCE SHARES
9.1 The Board, in its sole discretion, may from time to time on or after
the Effective Date award Performance Shares to Eligible Persons as an incentive
for the performance of future services that will contribute materially to the
successful operation of the Company and its Affiliates, subject to the terms and
conditions set forth in this Article IX.
9.2 The Board shall determine the terms and conditions of any Award of
Performance Shares, which shall be set forth in the related Award Agreement,
including without limitation:
(a) the purchase price, if any, to be paid for such Performance
Shares, which may be zero, subject to such minimum consideration as may be
required by applicable law;
(b) the performance period (the "Performance Period") and/or
performance objectives (the "Performance Objectives") applicable to such
Awards;
(c) the number of Performance Shares that shall be paid to the
Participant if the applicable Performance Objectives are exceeded or met in
whole or in part; and
(d) the form of settlement of a Performance Share.
9.3 At any date, each Performance Share shall have a value equal to the
Fair Market Value of a share of Common Stock.
9.4 Performance Periods may overlap, and Participants may participate
simultaneously with respect to Performance Shares for which different
Performance Periods are prescribed.
9.5 Performance Objectives may vary from Participant to Participant and
between Awards and shall be based upon such performance criteria or combination
of factors as the Board may deem appropriate, including, but not limited to,
minimum earnings per share or return on equity. If during the course of a
Performance Period there shall occur significant events which the Board expects
to have a substantial effect on the applicable Performance Objectives during
such period, the Board may revise such Performance Objectives.
9.6 In the sole discretion of the Board and as set forth in the Award
Agreement for an Award of Performance Shares, all Performance Shares held by a
Participant and not earned shall be forfeited by the Participant upon the
Participant's Termination of Service. Notwithstanding the foregoing, unless
otherwise provided in an Award Agreement with respect to an Award of Performance
Shares, in the event of the death, Disability or Retirement of a Participant
during the applicable Performance Period, or in other cases of special
circumstances (including hardship or other special circumstances of a
Participant whose employment is involuntarily terminated), the Board may
determine to make a payment in settlement of such Performance Shares at the end
of the Performance Period, based upon the extent to which the Performance
Objectives were satisfied at the end of such period and pro rated for the
portion of the Performance Period during which the Participant was employed by
the Company or an Affiliate; provided, however, that the Board may provide for
an earlier payment in settlement of such Performance Shares in such amount and
under such terms and conditions as the Board deems appropriate or desirable.
9.7 The settlement of a Performance Share shall be made in cash, whole
shares of Common Stock or a combination thereof and shall be made as soon as
practicable after the end of the applicable Performance Period. Notwithstanding
the foregoing, the Board in its sole discretion may allow a Participant to defer
payment in settlement of Performance Shares on terms and conditions approved by
the Board and set forth in the related Award Agreement entered into in advance
of the time of receipt or constructive receipt of payment by the Participant.
9.8 Performance Shares shall not be transferable by the Participant. The
Board shall have the authority to place additional restrictions on the
Performance Shares including, but not limited to, restrictions on transfer of
any shares of Common Stock that are delivered to a Participant in settlement of
any Performance Shares.
ARTICLE X -- CHANGES OF CONTROL OR OTHER FUNDAMENTAL CHANGES
10.1 Upon the occurrence of a Change of Control and unless otherwise
provided in the Award Agreement with respect to a particular Award:
(a) all outstanding Stock Options shall become immediately exercisable
in full, subject to any appropriate adjustments in the number of shares
subject to the Stock Option and the Option Price, and shall remain
exercisable for the remaining Option Period, regardless of any provision in
the related Award Agreement limiting the exercisability of such Stock
Option or any portion thereof for any length of time;
(b) all outstanding Performance Shares with respect to which the
applicable Performance Period has not been completed shall be paid out as
soon as practicable as follows:
(i) all Performance Objectives applicable to the Award of
Performance Shares shall be deemed to have been satisfied to the
extent necessary to earn one hundred percent (100%) of the Performance
Shares covered by the Award;
(ii) the applicable Performance Period shall be deemed to have
been completed upon occurrence of the Change of Control;
(iii) the payment to the Participant in settlement of the
Performance Shares shall be the amount determined by the Board, in its
sole discretion, or in the manner stated in the Award Agreement, as
multiplied by a fraction, the numerator of which is the number of full
calendar months of the applicable Performance Period that have elapsed
prior to occurrence of the Change of Control, and the denominator of
which is the total number of months in the original Performance
Period; and
(iv) upon the making of any such payment, the Award Agreement as
to which it relates shall be deemed terminated and of no further force
and effect.
(c) all outstanding shares of Restricted Stock with respect to which
the restrictions have not lapsed shall be deemed vested, and all such
restrictions shall be deemed lapsed and the Restriction Period ended.
10.2 Anything contained herein to the contrary notwithstanding, upon the
dissolution or liquidation of the Company, each Award granted under the Plan and
then outstanding shall terminate; provided, however, that following the adoption
of a plan of dissolution or liquidation, and in any event prior to the effective
date of such dissolution or liquidation, each such outstanding Award granted
hereunder shall be exercisable in full and all restrictions shall lapse, to the
extent set forth in Section 10.1(a), (b) and (c) above.
10.3 After the merger of one or more corporations into the Company or any
Affiliate, any merger of the Company into another corporation, any consolidation
of the Company or any Affiliate of the Company and one or more corporations, or
any other corporate reorganization of any form involving the Company as a party
thereto and involving any exchange, conversion, adjustment or other modification
of the outstanding shares of the Common Stock, each Participant shall, at no
additional cost, be entitled, upon any exercise of such Participant's Stock
Option, to receive, in lieu of the number of shares as to which such Stock
Option shall then be so exercised, the number and class of shares of stock or
other securities or such other property to which such Participant would have
been entitled to pursuant to the terms of the agreement of merger or
consolidation or reorganization, if at the time of such merger or consolidation
or reorganization, such Participant had been a holder of record of a number of
shares of Common Stock equal to the number of shares as to which such Stock
Option shall then be so exercised. Comparable rights shall accrue to each
Participant in the event of successive mergers, consolidations or
reorganizations of the character described above. The Board may, in its sole
discretion, provide for similar adjustments upon the occurrence of such events
with regard to other outstanding Awards under this Plan. The foregoing
adjustments and the manner of application of the foregoing provisions shall be
determined by the Board in its sole discretion. Any such adjustment may provide
for the elimination of any fractional shares which might otherwise become
subject to an Award. All adjustments made as the result of the foregoing in
respect of each Incentive Stock Option shall be made so that such Incentive
Stock Option shall continue to be an Incentive Stock Option, as defined in
Section 422 of the Code.
ARTICLE XI -- AMENDMENT AND TERMINATION
11.1 Subject to the provisions of Section 11.2, the Board of Directors at
any time and from time to time may amend or terminate the Plan as may be
necessary or desirable to implement or discontinue the Plan or any provision
hereof. To the extent required by the Act or the Code, however, no amendment,
without approval by the Company's shareholders, shall:
(a) materially alter the group of persons eligible to participate in
the Plan;
(b) except as provided in Section 3.4, change the maximum aggregate
number of shares of Common Stock that are available for Awards under the
Plan;
(c) alter the class of individuals eligible to receive an Incentive
Stock Option or increase the limit on Incentive Stock Options set forth in
Section 4.1(d) or the value of shares of Common Stock for which an Eligible
Employee may be granted an Incentive Stock Option.
11.2 No amendment to or discontinuance of the Plan or any provision hereof
by the Board of Directors or the shareholders of the Company shall, without the
written consent of the Participant, adversely affect (in the sole discretion of
the Board) any Award theretofore granted to such Participant under this Plan;
provided, however, that the Board retains the right and power to:
(a) annul any Award if the Participant is terminated for cause as
determined by the Board; and
(b) convert any outstanding Incentive Stock Option to a Nonqualified
Stock Option.
11.3 If a Change of Control has occurred, no amendment or termination
shall impair the rights of any person with respect to an outstanding Award as
provided in Article X.
ARTICLE XII -- MISCELLANEOUS PROVISIONS
12.1 Nothing in the Plan or any Award granted hereunder shall confer upon
any Participant any right to continue in the employ of the Company or its
Affiliates or to serve as a Director or shall interfere in any way with the
right of the Company or its Affiliates or the shareholders of the Company, as
applicable, to terminate the employment of a Participant or to release or remove
a Director at any time. Unless specifically provided otherwise, no Award
granted under the Plan shall be deemed salary or compensation for the purpose of
computing benefits under any employee benefit plan or other arrangement of the
Company or its Affiliates for the benefit of their respective employees unless
the Company shall determine otherwise. No Participant shall have any claim to
an Award until it is actually granted under the Plan and an Award Agreement has
been executed and delivered to the Company. To the extent that any person
acquires a right to receive payments from the Company under the Plan, such right
shall, except as otherwise provided by the Board, be no greater than the right
of an unsecured general creditor of the Company. All payments to be made
hereunder shall be paid from the general funds of the Company, and no special or
separate fund shall be established and no segregation of assets shall be made to
assure payment of such amounts, except as provided in Article VII with respect
to Restricted Stock and except as otherwise provided by the Board.
12.2 The Plan and the grant of Awards shall be subject to all applicable
federal and state laws, rules, and regulations and to such approvals by any
government or regulatory agency as may be required. Any provision herein
relating to compliance with Rule 16b-3 under the Act shall not be applicable
with respect to participation in the Plan by Participants who are not subject to
Section 16 of the Act.
12.3 The terms of the Plan shall be binding upon the Company, its
successors and assigns.
12.4 Neither a Stock Option nor any other type of equity-based
compensation provided for hereunder shall be transferable except as provided for
in Section 6.2. In addition to the transfer restrictions otherwise contained
herein, additional transfer restrictions shall apply to the extent required by
federal or state securities laws. If any Participant makes such a transfer in
violation hereof, any obligation hereunder of the Company to such Participant
shall terminate immediately.
12.5 This Plan and all actions taken hereunder shall be governed by the
laws of the State of Texas.
12.6 Each Participant exercising an Award hereunder agrees to give the
Board prompt written notice of any election made by such Participant under
Section 83(b) of the Code, or any similar provision thereof.
12.7 If any provision of this Plan or an Award Agreement is or becomes or
is deemed invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or any Award Agreement under any law deemed applicable by
the Board, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Board, materially altering the intent of the Plan or the
Award Agreement, it shall be stricken, and the remainder of the Plan or the
Award Agreement shall remain in full force and effect.
12.8 The grant of an Award pursuant to this Plan shall not affect in any
way the right or power of the Company or any of its Affiliates to make
adjustments, reclassification, reorganizations, or changes of its capital or
business structure, or to merge or consolidate, or to dissolve, liquidate or
sell, or to transfer all or part of its business or assets.
12.9 The Plan is not subject to the provisions of ERISA or qualified under
Section 401(a) of the Code.
12.10 If a Participant is required to pay to the Company an amount with
respect to income and employment tax withholding obligations in connection with
(i) the exercise of a Nonqualified Stock Option, (ii) certain dispositions of
Common Stock acquired upon the exercise of an Incentive Stock Option, or (iii)
the receipt of Common Stock pursuant to any other Award, then the issuance of
Common Stock to such Participant shall not be made (or the transfer of shares by
such Participant shall not be required to be effected, as applicable) unless
such withholding tax or other withholding liabilities shall have been satisfied
in a manner acceptable to the Company. To the extent provided by the terms of
an Award Agreement, the Participant may satisfy any federal, state or local tax
withholding obligation relating to the exercise or acquisition of Common Stock
under an Award by any of the following means (in addition to the Company's right
to withhold from any compensation paid to the Participant by the Company) or by
a combination of such means: (i) tendering a cash payment; (ii) authorizing the
Company to withhold shares of Common Stock from the shares of Common Stock
otherwise issuable to the Participant as a result of the exercise or acquisition
of Common Stock under the Award, provided, however, that no shares of Common
Stock are withheld with a value exceeding the minimum amount of tax required to
be withheld by law; or (iii) delivering to the Company owned and unencumbered
shares of Common Stock.