Employees', Officers & Directors' Stock Option Plan - YP.Net Inc.
YPNET, INC.
EMPLOYEES', OFFICERS & DIRECTORS' STOCK OPTION PLAN
TABLE OF CONTENTS
Table of Contents 1,2
Purpose
2 Definitions 3
2.1 Accrued Installment 3
2.2 Affiliate 3
2.3 Board 3
2.4 Code 3
2.5 Company 3
2.6 Common Stock 3
2.7 Compensation Committee 3
2.8 Disabled or Disability 3
2.9 Eligible Recipient 4
2.10 Fair Market Value 4
2.11 Family Member 4
2.12 Incentive Stock Option 4
2.13 Nonqualified Stock Option 4
2.14 Optionee 4
2.15 Option Price 4
2.16 Participant 4
2.17 Plan 5
2.18 Plan Administrators 5
2.19 Restricted Stock 5
2.20 Stock Option 5
3. Stock Options Under the Plan 5
4. Effective Date of Plan 5
5. Term of Plan 5
6. Administration 5
7. Eligibility 7
8. Shares Subject to the Plan 7
8.1 Available Shares 7
8.2 Capital Structure Adjustments 8
9. Terms and Conditions of Stock Options 8
9.1 Number of Shares Subject to Stock Option 8
9.2 Stock Option Price 8
9.3 Notice and Payment 9
9.4 Non-Transferability of Options 10
9.5 Exercise of Stock Option 10
9.6 Term of Stock Option 11
9.7 Limit on Incentive Stock Options 12
9.8 No Fractional Shares 12
9.9 Exercisable in the Event of Death 12
9.10 Modification, Extension, and Renewal of Stock Options 13
9.11 Loans 13
9.12 Cash Payments 13
10. Restricted Stock 14
10.1 General 14
10.2 Awards and Certificates 14
10.3 Restrictions and Conditions 15
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11. Termination or Amendment of the Plan 15
11.1 Amendment to Plan 15
11.2 Effect of Termination of Plan on Outstanding Stock Options or
Restricted Stock 16
11.3 Stockholder Approval for Amendment to Plan 16
12. Indemnification 16
13. Withholding 16
13.1 Irrevocable Election 17
13.2 Approval by Plan Administrators 17
13.3 Timing of Election 17
13.4 Timing of Delivery 17
13.5 Terms in Agreement 17
14. General Provisions 18
14.1 Transfer of Common Stock 18
14.2 Reservation of Shares of Common Stock 18
14.3 Restrictions on Issuance of Shares 18
14.4 Notices 18
14.5 Representations and Warranties 19
14.6 No Enlargement of Employee Rights 19
14.7 Restrictions on Issuance of Shares, Options & Awards 19
14.8 Legends on Stock Certificates 20
14.9 Remedies 20
14.10 Invalid Provisions 20
14.11 Applicable Law 21
14.12 Successors and Assigns 21
14.13 Rights as a Stockholder or Employee 21
Attestation 21
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YP.NET, INC.
EMPLOYEES', OFFICERS' & DIRECTORS' STOCK OPTION PLAN
APRIL 10, 2002
1. Purpose. The purpose of this YP.Net, Inc. (the "Company") Employees',
Officers' and Directors' Stock Option Agreement (the "Plan") is to
strengthen YP.Net and to further the growth and development of the Company
by providing additional means of attracting and retaining competent
managerial personnel, exclusively as an incentive, to directors, officers,
and employees of the Company who are in a position to contribute materially
to the prosperity of the Company, to participate in the long-term growth of
the Company by receiving the opportunity to acquire shares of the Common
Stock of the Company, and to provide for additional compensation based on
appreciation in the Company's shares. The Plan provides a means to increase
such persons' interests in the Company's welfare, to encourage them to
continue their services to the Company or its subsidiaries, and to attract
individuals of outstanding ability to enter the employment of the Company
or its subsidiaries.
2. Definitions. The following definitions are applicable to the Plan:
2.1 Accrued Installment. Any exercisable portion of a Stock Option granted
under the Plan.
2.2 Affiliate. Any subsidiary corporation of the Company, as such term is
defined in Sections 424(e) and (f), respectively, of the Code.
2.3 Board. The Board of Directors of the Company.
2.4 Code. The Internal Revenue Code of 1986, as amended from time to time.
2.5 Company. YP.Net, a Nevada corporation.
2.6 Common Stock. The shares of the $.001 par value common stock of YP.Net.
2.7 Compensation Committee. A Committee selected by the Board that shall
administer the Plan pursuant to the terms hereof.
2.8 Disabled or Disability. A Participant shall be deemed to be Disabled if he
or she is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be
expected to result in death or that has lasted or can be expected to last
for a continuous period of not less than thirty (30) consecutive days. The
determination of whether an individual is Disabled or has a Disability
shall be determined under procedures established by the Plan
Administrators.
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2.9 Eligible Recipient. Shall have the meaning assigned to it in Section 7
hereof.
2.10 Fair Market Value. For purposes of the Plan, the Fair Market Value of any
share of Common Stock of the Company at any date shall be determined based
on the following: (a) if the Common Stock is listed on an established stock
exchange or exchanges or reported by NASDAQ, the last reported sale price
per share on the last trading day immediately preceding such date on the
principal exchange on which it is traded, or if no sale was made on such
day on such principal exchange, at the closing reported bid price on such
day on such exchange, or (b) if the Common Stock is not then listed on an
exchange, the last reported sale price per share on the last trading day
immediately preceding such date reported by NASDAQ, or if sales are not
reported by NASDAQ or no sale was made on such date, the average of the
closing bid and asked price per share for the Common Stock in the
over-the-counter market as quoted by NASDAQ on the day prior to such date,
or (c) if the Common Stock is not publicly traded at the time and a Stock
Option or Restricted Stock Option is granted under the Plan, Fair Market
Value shall be deemed to be the fair value of the Common Stock as
determined by the Plan Administrators after taking into consideration all
factors that it deems appropriate, including, without limitation, recent
sale and offer prices of the Common Stock in private transactions
negotiated at arm's-length.
2.11 Family Member. For purposes of the Plan, Family Member means a
Participant's spouse, stepchildren, in-laws, ancestors and lineal
ascendants and descendants. In addition, a Family Member shall be deemed to
include a corporation, partnership, limited liability company, or trust
whose only stockholders, partners, members or beneficiaries are the
specified person and/or the specified person's spouse, stepchildren,
in-laws, ancestors and lineal ascendants and/or descendants.
2.12 Incentive Stock Option. 'Any Stock Option intended to be and designated as
an "incentive stock option" within the meaning of Section 422 of the Code.
2.13 Nonqualified Stock Option. Any Stock Option that is not an Incentive Stock
Option.
2.14 Optionee. The recipient of a Stock Option.
2.15 Option Price. The exercise or purchase price for any Stock Option awarded
under the Plan.
2.16 Participant. Any Eligible Recipient selected by the Plan Administrators,
pursuant to the Plan Administrator's authority in Section 7 herein, or by
the Board, to receive grants of Stock Options, Restricted Stock awards or
any combination of the foregoing.
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2.17 Plan. The YP.Net, Inc. Employees' Stock Option Plan, as amended from time
to time.
2.18 Plan Administrators. The Company's Compensation Committee, as designated
pursuant to Section 6 hereof, who is authorized to administer, construe and
interpret the terms of the Plan.
2.19 Restricted Stock. Any option granted pursuant to Section 10 hereof of
shares of Common Stock subject to certain restrictions.
2.20 Stock Option. Any option to purchase shares of Common Stock pursuant to
Section
3. Stock Options Under the Plan. Two types of Stock Options (referred to
herein as Stock Options', without distinction between such two types) may
be granted under the Plan: Provided, Stock Options intended to qualify
shall be either Incentive Stock Options or Nonqualified Stock Options.
4. Effective Date of Plan. The Plan shall be adopted and become effective on
the date of execution specified below (the "Effective Date").
5. Term of Plan. Unless sooner terminated by the Board in its sole discretion,
the Plan will expire and no Stock Options or Restricted Stock awards may be
granted hereunder on and after ten (10) years from the Effective Date (the
Plan Termination Date").
6. Administration. 1. The Plan shall be administered by a majority of the
Compensation Committee, who shall be known as the "Plan Administrators."
The Actions of the Plan Administrators shall be subject to and under review
by the Company's Board of Directors. The Compensation Committee shall
consist of not fewer than two (2) members of the Board, all of whom shall
be persons who, in the opinion of counsel to the Company, are outside
directors and 'non-employee directors" within the meaning of Rule
16b-3(b)(3)(i) promulgated pursuant to the Securities Exchange Act of 1934,
as amended. from time to time. The Board may increase or decrease (to not
less than two members) the size of the Compensation Committee, and add
additional members to, or remove members from, the Compensation Committee.
The Compensation Committee shall act pursuant to a majority vote or the
unanimous written consent of its members and minutes shall be kept of all
of its meetings and copies thereof shall be provided to the Board upon
request of the Board. Subject to the provisions of the Plan as of the date,
hereof as adopted by the Board, the Compensation Committee may establish
and follow such rules and regulations for the conduct of its business as it
may deem advisable.
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No member of the Compensation Committee shall be liable for any action or
determination undertaken or made in good faith with respect to the Plan or
any agreement executed pursuant to the Plan. Subject to the provisions of
the Plan, the Plan Administrators shall have the sole authority and
discretion:
(a) to select those Eligible Recipients who shall be Participants, who may
be nominated by the President, Chairman, or Chief Financial Officer.
(b) to determine under what terms and whether and to what extent Stock
Options, whether of Restricted or Registered Stock, or a combination of the
foregoing, are to be granted hereunder to Participants;
(c) to determine the number of shares of Common Stock to be covered by each
such option granted hereunder;
(d) in determining the number of shares of Common Stock to be optioned
pursuant to the granting of Stock Options, in addition to the formulaic
grants described hereinafter in Section 6.1(c), the Plan Administrators
shall take into account as to any Eligible Recipient whose performance
merits it, those factors including, without limitation, the Eligible
Recipient's tenure with the Company, responsibility level, performance,
potential and cash compensation level.
(e) to determine the terms and conditions, not inconsistent with the terms
of the Plan, of any option granted hereunder (including, but not limited to
the restrictions applicable to Restricted Stock awards and the conditions
under which restrictions applicable to such Restricted Stock shall lapse);
(f) to determine the terms and conditions, not inconsistent with the terms
of the Plan, that shall govern all written instruments evidencing the Stock
Options, Restricted Stock or any combination of the foregoing granted
hereunder to Participants; and
(g) to reduce the exercise price of any Stock Option to the then current
Fair Market Value, but to not less than $1.00, if the Fair Market Value of
the Common Stock covered by such Stock Option has declined since the date
such Stock Option was granted.
2. The Plan Administrators shall have the authority, in their sole discretion,
to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as they shall from time to time deem
advisable; to interpret the terms and provisions of the Plan and any option
issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan.
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3. All decisions made by the Plan Administrators pursuant to the provisions of
the Plan shall be final, conclusive and binding on all persons, including
the Company and the Participants.
7. Eligibility. Any of the following individuals shall be eligible to receive
Stock Options of Restricted or Registered Stock under the Plan (each, an
"Eligible Recipient"): (i) any employee, officer or member of the Board of
Directors of the Company or an Affiliate and (ii) any consultant or
professional employed by the Company or an Affiliate; provided, however,
that no person who owns stock possessing more than 10% of the total
combined voting power of alt classes of stock of the Company or any of its
parent or subsidiary corporations shall be eligible to receive an Incentive
Stock Option under the Plan unless at the lime such Stock Option is granted
the Option Price (determined in the manner provided in Section 9.2 hereof)
is at least 110% of the Fair Market Value of the shares subject to the
Stock Option and such Stock Option by its terms is not exercisable after
the expiration of live (5) years from the date such Stock Option is
granted. Any Participant may receive more than one Stock Option or
Restricted Stock Option under the Plan.
8. Shares Subject to the Plan.
8.1 Available Shares. The shares received and available for issuance tinder the
Plan shall be shares of the Company's authorized but unissued. or
reacquired. Common Stock. Subject to adjustment as provided in Section 8.2
hereof, the aggregate number of shares that may be issued under the Plan
shall not exceed a total of Three Million (3,000,000) shares of the
Company's Common Stock. In the event that (i) the grant of any Stock Option
under the Plan for any reason expires, is terminated or surrendered without
being exercised in full or is exercised or surrendered without the
distribution of shares or (ii) any shares of Common Stock subject to any
Restricted Stock Option granted hereunder are forfeited, such shares of
Common Stock allocable to the unexerciscd portion of the Stock Option or
the Restricted Stock award shall again be available for issuance in
connection with future awards tinder the Plan. if any shares of Common
Stock have been pledged as collateral for indebtedness incurred by a
Participant in connection with the exercise of a Stock Option and such
shares are returned to the Company in satisfaction of such indebtedness,
such shares shall again be available for issuance in connection with future
options under the Plan. In the event any portion of a Stock' Option is
exercised pursuant to a "stock-for-stock exercise" as provided in
Subsection 9.3(h), the shares of Common Stock surrendered thereby shall
again be available for grant and distribution under the Plan as if no Stock
Option had been granted with respect to such shares. The maximum number of
shares of Common Stock that shall be issuable upon the exercise dl' any and
all Options granted to any one individual pursuant to this Plan shall not
exceed 30% of the total number of shares eligible to be issued.
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8.2 Capital Structure Adjustments. Except as otherwise provided herein, in the
event of a stock dividend (but only on Common Stock), stock split, reverse
stock split, recapitalization, reorganization, merger, consolidation,
separation, or like change in the corporate or capital structure of the
Company affecting the stock or securities of the Company, appropriate and
proportionate capital structure adjustments shall be made in (i) the
aggregate number of shares of Common Stock reserved for issuance under the
Plan, (ii) the kind, number and Option Price of shares subject to
outstanding Stock Options granted under the Plan, and (iii) the kind,
number and purchase price of shares issuable pursuant to awards of
Restricted Stock. The foregoing adjustments shall be made by the Plan
Administrators, in their sole discretion, the determination of which in
that respect shall be final, binding, and conclusive; provided that each
Incentive Stock Option granted pursuant to the Plan shall not be adjusted
in a manner that causes it to fail to continue to qualify as an Incentive
Stock Option. In the event of a liquidation, a merger, reorganization, or
consolidation of the Company with any other corporation in which the
Company is not the surviving corporation or the Company becomes a
wholly-owned subsidiary of another corporation, any unexercised Stock
Option rights theretofore granted under the Plan shall be (i) assumed by
any surviving corporation or similar stock options shall be substituted
therefore, or (ii) such Stock Options shall continue in full force and
effect.
9. Terms and Conditions of Stock Options. Stock Options granted under the Plan
shall be evidenced by agreements (which need not be identical and which may
include the agreement of the Optionee to be responsible for the Optionee's
assumption and payment of any tax assessment and/or liability) in such form
and containing such provisions that are consistent with the Plan as the
Plan Administrators shall from time to time approve. Such agreements may
incorporate all or any of the terms hereof by reference and shall comply
with and be subject to the following terms and conditions:
9.1 Number of Shares Subject to Stock Option. Each Stock Option agreement shall
specify the number of shares subject to the Stock Option.
9.2 Stock Option Price. The Option Price for the shares subject to any Stock
Option shall be such amount as is determined by the Plan Administrators.
Anything to the contrary contained herein notwithstanding, the Option Price
for the shares subject to any Nonqualified Stock Option or any Incentive
Stock Option shall not be less than $1.00 or 100% of the Fair Market Value
of the shares of Common Stock of the Company on the date the Stock Option
is granted, whichever is greater. In the case of an Incentive Stock Option
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granted to an employee who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any of its
parent or subsidiary corporations, the Option Price shall not be less than
$1 .10 or 110% of the Fair Market Value of the shares of Common Stock of
the Company on the date the Stock Option is granted, which ever is greater.
9.3 Notice and Payment. Any exercisable portion of a Stock Option may be
exercised only by:
(a) delivery of a written notice to the Company, prior to the time when
such Stock Option becomes unexercisable under Section 9.6 hereof, stating
the number of shares being purchased and complying with all applicable
rules established by the Plan Administrators;
(b) payment in full of the Option Price of such Option by, as applicable;
(i) cash or check for an amount equal to the aggregate Option Price for the
number of shares being purchased; (ii) in the discretion of the Plan
Administrators, upon such terms as the Plan Administrators shall approve, a
copy of instructions to a broker directing such broker to sell the Common
Stock for which such Stock Option is exercised, and to remit to the Company
the aggregate Option Price of such Stock Option (a "cashless exercise");
(iii) in the discretion of the Plan Administrators, upon such terms as the
Plan Administrators shall approve, the Optionee may pay all or a portion of
the Option Price for the number of shares being purchased by tendering
shares of the Company's Common Stock owned by the Optionee, duly endorsed
for transfer to the Company, with a Fair Market Value on the date of
delivery equal to the aggregate Option Price of the shares with respect to
which such Stock Option or portion is thereby exercised (a "stock-for-stock
exercise"); or (iv) in any other form of legal consideration that may be
acceptable to the Plan Administrators ("other legal consideration");
(c) payment of the amount of tax required to be withheld (if any) by the
Company or any parent or subsidiary corporation as a result of the exercise
of a Stock Option. At the discretion of the Plan Administrators, upon such
terms as the Plan Administrators shall approve, the Optionee may pay all or
a portion of the tax withholding by; (i) cash or check payable to the
Company; (ii) cashless exercise; (iii) stock-for-stock exercise; (iv) other
legal consideration; or (v) a combination of (i), (ii), (iii) and (iv); and
(d) delivery of a written notice to the Company requesting that the Company
direct the transfer agent to issue to the Optionee (or to his designee) a
certificate for the number of shares of Common Stock for which the Stock
Option was exercised or, in the case of a cashless exercise, for any shares
that were not sold in the cashless exercise.
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Notwithstanding the foregoing, the Company, subject to the provisions of
Section 9.11 hereof, may extend and maintain, or arrange for the extension
and maintenance of, credit to any Optionee to finance the Optionee's
payment of the Option Price upon the exercise of any Stock Option, on such
terms as may be approved by the Plan Administrators, subject to applicable
regulations of the Federal Reserve Board and any other laws or regulations
in effect at the time such credit is extended. The Plan Administrators may,
at any time and in their discretion, authorize a cash payment, determined
in accordance with Section 9.12, which shall not exceed the amount required
to pay in full the federal, state and local tax consequences of an exercise
of any Stock Option granted under the Plan.
9.4 Non-Transferability of Options.
(a) Generally. No Stock Option granted under this Plan shall be assignable
or transferable, directly or indirectly, by an Optionee other than by will
or the laws of descent and distribution, and such Stock Option may be
exercised during the Optionee's lifetime only by the Optionee, or in the
event of death or Disability, by the Optionee's legal representative or
personal representative.
(b) Exceptions. Notwithstanding Section 9.4(a), a Nonqualified Stock Option
may be transferred to a Family Member of the Optionee. In the case of a
transfer pursuant to this Section, the remaining provisions of this Plan
and the terms of any Stock Option agreement under this Plan shall continue
to apply as if the Optionee retained ownership of the Stock Option.
9.5 Exercise of Stock Option. The Plan Administrators shall have the power to
set the time or times within which each Stock Option shall be exercisable
and to accelerate the time or times of exercise. To the extent that an
Optionee has the right to exercise a Stock Option and purchase shares
pursuant thereto, the Stock Option may be exercised from time to time as
provided in this Section 9.5. Subject to the actions, conditions and/or
limitations set forth in this Plan and/or any applicable Stock Option
agreement entered into hereunder, Stock Options granted under this Plan
shall be exercisable in accordance with the following rules:
(a) Subject in all cases to the provisions of Sections 8 and 9.6 hereof,
Stock Options shall vest and become exercisable as determined by the Plan
Administrators; provided, however that by a resolution adopted after a
Stock Option is granted the Plan Administrators, may, on such terms and
conditions as the Plan Administrators may determine to be appropriate,
accelerate the time at which such Stock Option or installment thereof may
be exercised.
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(b) Subject to the provisions of Sections 8 and 9.6 hereof, a Stock Option
may be exercised when and to the extent such Stock Option becomes an
Accrued Installment as provided in the terms under which such Stock Option
was granted and at any time thereafter during the term of such Stock
Option; provided, however, that in no event shall any Stock Option be
granted after the Plan Termination Date.
9.6 Term of Stock Option. Any unexercised Accrued Installment of any Stock
Option granted hereunder shall expire and become unexercisable and no Stock
Option shall be exercisable after the earliest of:
(a) ten (10) years from the date of grant; or
(b) the expiration date of the Stock Option established by the Plan
Administrators at the time of grant of any Stock Option; or
(c) thirty (30) days following the effective date of the termination of
employment or directorship (if such individual is not then an officer or
employee of the Company) with the Company or any Affiliate, as the case may
be, of an Optionee for any reason other than death or Disability (the
"Termination Date"). The Plan Administrators, in their sole discretion, may
extend such thirty (30) day period for a period following the Termination
Date, but in no event beyond ten years from the date of grant. Any
installments under Stock Options that have not accrued (become vested) as
of said Termination Date shall expire and become unexercisable as of said
Termination Date. The Plan Administrators, in their sole discretion, may
vest any installments under Stock Options. Unless otherwise determined by
the Plan Administrators in their sole discretion, any portion of a Stock
Option that expires hereunder shall remain unexercisable and be of no
effect whatsoever after such expiration notwithstanding that such Optionee
may be reemployed by, or again become a director of, the Company or a
subsidiary thereof, as the case may be; or
(d) notwithstanding the foregoing provisions of this Section 9.6, in the
event of the death of an Optionee while an employee, consultant, officer or
director of the Company or any Affiliate, as the case may be, or in the
event of the termination of employment, directorship or a contract to
render services to the Company by reason of the Optionee's Disability, any
unexercised Accrued Installment of the Stock Option granted hereunder to
such Optionee shall expire and become unexercisable as of the earlier of:
(i) the expiration date of the Stock Option established by the Plan
Administrators at the time of grant of any Stock Option; (ii) ten (10)
years from the date of grant;
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or (iii) eighteen (18) months after the date of death of such Optionee (if
applicable) and one (1) year after the date of the termination of
employment or directorship by reason of Disability (if applicable). Any
installments under a deceased Optionee's Option that have not become
exercisable as of the date of his or her death shall expire and become
unexercisable as of said date of termination of employment as a result of
death or Disability. For purposes of this Subsection 9.6(d), an Optionee
shall be deemed employed by the Company or any of its subsidiaries, as the
case may be, during any period of leave of absence from active employment
as authorized by the Company or any of its subsidiaries, as the case may
be; or
(e) in the case of an Incentive Stock Option granted to an employee who
owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or any of its parent or subsidiary
corporations, the term set forth in Subsection 9.6(a), above, shall not be
more than five years after the date the Stock Option is granted.
9.7 Limit on Incentive Stock Options. The aggregate Fair Market Value
(determined at the time the Incentive Stock Option is granted) of the
Common Stock with respect to which Incentive Stock Options granted under
this Plan are exercisable for the first time by an Optionee during any
calendar year shall not exceed $300,000. To the extent that the aggregate
Fair Market Value (determined at the time the Stock Option is granted) of
the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by an Optionee during any calendar year
(under all Incentive Stock Option plans of the Company and any parent or
subsidiary corporations) exceeds $300,000, such Stock Options shall be
treated as Nonqualified Stock Options. The determination of which Stock
Options shall be treated as Nonqualified Stock Options shall be made by
taking Stock Options into account in the order in which they were granted.
9.8 No Fractional Shares. In no event shall the Company be required to issue
fractional shares upon the exercise of a Stock Option.
9.9 Exercisable in the Event of Death. In the event of the death of the
Optionee, any such Accrued Installment of a deceased Optionee may be
exercised prior to its expiration pursuant to Section 9.6 by (and only by)
the Optionee's personal representatives, heirs, or legatees or other person
or persons to whom the Optionee's rights shall pass by will or by the laws
of the descent and distribution, if applicable, subject, however, to all of
the terms and conditions of this Plan and the applicable Stock Option
agreement governing the exercise of Stock Options granted hereunder.
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9.10 Modification, Extension, and Renewal of Stock Options. Subject to the terms
and conditions and within the limitations of the Plan, the Plan
Administrators may modify, extend, or renew outstanding Stock Options
granted under the Plan, accept the surrender of outstanding Stock Options
(to the extent not theretofore exercised) and authorize the granting of new
Stock Options in substitution therefore (to the extent not theretofore
exercised). The Plan Administrators may modify any outstanding Stock
Options so as to specify a lower Option Price. The Plan Administrators
shall not, however, without the consent of the Optionee, modify any
outstanding Incentive Stock Option in any manner that would cause the Stock
Option not to qualify as an Incentive Stock Option. Notwithstanding the
foregoing, no modification of a Stock Option shall, without the consent of
the Optionee, alter or impair any rights of the Optionee under the Stock
Option.
9.11 Loans. The Company may extend and maintain, or arrange for the extension
and maintenance of, credit to any Optionee to finance the Optionee's
purchase of shares pursuant to the exercise of any Stock Option, on such
terms as may be approved by the Plan Administrators, subject to applicable
regulations of the Federal Reserve Board and any other laws or regulations
in effect at the time such credit is extended, either on or after the date
of grant of such Stock Option. Such loans may be either in connection with
the grant or exercise of any Stock Option, or in connection with the
payment of any federal, state and local income taxes in respect of income
recognized upon exercise of a Stock Option. The Plan Administrators shall
have full authority to decide whether to make a loan hereunder and to
determine the amount, term, and provisions of any such loan, including the
interest rate (which must be not less that the Company would pay) charged
in respect of any such loan, whether the loan is to be secured or
unsecured, the terms on which the loan is to be repaid and the conditions,
if any, under which it may be forgiven. However, no loan hereunder shall
have a term (including extensions) exceeding three years in duration or be
an amount exceeding the total Option Price paid by the borrower under a
Stock Option or for related Common Stock under the Plan plus an amount
equal to the cash payment permitted in Section 9.12 below.
9.12 Cash Payments. The Plan Administrators may, at any time and in their
discretion, authorize a cash payment in respect of the grant or exercise of
a Stock Option under the Plan or the lapse or waiver of restrictions under
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a Stock Option, which shall not exceed the amount that would be required
in- order to pay in full the federal, state and local income taxes due as a
result of income recognized by the recipient as a consequence of: (i) the
receipt of a Stock Option or the exercise of rights there under, and (ii)
the receipt of such cash payment. The Plan Administrators shall have
complete authority to decide whether to make such cash payments in any
case, to make provisions for such payments either simultaneously with or
after the grant of the associated Stock Option, and to determine the amount
of any such payment.
10. Restricted Stock.
10.1 General. Restricted Stock may be issued either alone or in addition to
Stock Options granted under the Plan. The Plan Administrators shall
determine the Eligible Recipients to whom, and the time or times at which,
grants of Restricted Stock shall be made; the number of shares to be
awarded; the price, if any, to be paid by the recipient of Restricted
Stock; the Restricted Period, as defined in Section 10.3 hereof, applicable
to Restricted Stock; the date or dates on which restrictions applicable to
Restricted Stock awards shall lapse during the Restricted Period; and all
other conditions of the Restricted Stock awards. Subject to the
requirements of Section 162(m) of the Code, as applicable, the Plan
Administrators may also condition the grant of Restricted Stock upon the
exercise of Stock Options, or upon such other criteria as the Plan
Administrators may determine, in their sole discretion. The provisions of
Restricted Stock awards need not be the same with respect to each
recipient. In the sole discretion of the Plan Administrators, loans may be
made to Participants in connection with the purchase of Restricted Stock
under substantially the same terms and conditions as provided in Section
9.11 hereof with respect to the exercise of Stock Options.
10.2 Awards and Certificates. The prospective recipient of an Option to receive
Restricted Stock shall not have any rights with respect to such Option,
unless and until such recipient has executed an agreement evidencing the
Option (a "Restricted Stock Option Agreement") and delivered a fully
executed copy thereof to the Company, within a period of sixty days (or
such other period as the Plan Administrators may specify) after the
granting date. Except as otherwise provided below in this Section 10.2, (i)
each Participant who exercises his Option for Restricted Stock shall be
issued a stock certificate in respect of such shares of Restricted Stock;
and (ii) such certificate shall be registered in the name of the
Participant, and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Stock.
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The Plan Administrators may require that the stock certificate(s)
evidencing the issuance of Restricted Stock hereunder be held in the
custody of the Company until the restrictions thereon shall have lapsed,
and that, as a condition of any Restricted Stock so issued, the Participant
shall have delivered a stock power, endorsed in blank, relating to the
Common Stock covered by such Option.
10.3 Restrictions and Conditions. The Restricted Stock Options granted pursuant
to this Section 10 shall be subject to the following restrictions and
conditions:
(a) Subject to the provisions of the Plan and the Restricted Stock Option
Agreement, as a appropriate, governing such Option, during such period as
may be set by the Plan Administrators commencing on the grant date (the
"Restricted Period"), the Participant shall not be permitted to sell,
transfer, pledge or assign shares of Restricted Stock issued under the
Plan; provided, however, that the Plan Administrators may, in their sole
discretion, provide for the lapse of such restrictions in installments and
may accelerate or waive such restrictions in whole or in part based on such
factors and such circumstances as the Plan Administrators may determine, in
their sole discretion, including, but not limited to, the attainment of
certain performance related goals, the Participant's termination of
employment or service, death or Disability.
(b) Except as provided in Section 10.3(a), the Participant shall generally
have, with respect to shares of Restricted Stock, all of the rights of a
stockholder with respect to such stock during the Restricted Period.
Certificates for shares of unrestricted Common Stock shall be delivered to
the Participant promptly after, and only after, the Restricted Period shall
expire without forfeiture in respect of such shares of Restricted Stock,
except as the Plan Administrators, in their sole discretion, shall
otherwise determine.
(c) The rights of holders of Restricted Stock Options upon termination of
employment or service for any reason during the Restricted Period shall be
set forth in the Restricted Stock Option Agreement governing such awards.
11. Termination or Amendment of the Plan. The Board may at any time terminate
or amend the Plan in accordance with the following provisions:
11.1 Amendment to Plan. Except as provided in Section 11.3 hereof, the Board may
amend this Plan from time to time in such respect as the Board
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may deem advisable, provided, however, that no such amendment shall operate
to affect adversely a Participant's rights under this Plan with respect to
any Stock Option or Restricted Stock Option granted hereunder prior to the
adoption of such amendment, except as may be necessary, in the judgment of
counsel to the Company, to comply with any applicable law.
11.2.1.1 Effect of Termination of Plan on Outstanding Stock Options or
Restricted Stock. Except as set forth in Section 8.2 hereof, no termination
of the Plan prior to the Plan Termination Date shall, without the written
consent of the Participant, alter the terms of Stock Options or Restricted
Stock already granted and such Stock Options or Restricted Stock shall
remain in full force and effect as if this Plan had not been terminated.
11.3 Stockholder Approval for Amendment to Plan. Any amendment to the Plan that
would result in any of the following changes (except by operation of
Section 8.2) must be approved by the stockholders of the Company: (I) an
increase in the total number of shares of Common Stock covered by the Plan;
(ii) a change in the class of persons deemed to be Eligible Recipients
under the Plan; and (iii) an extension of the term of the Plan beyond ten
(10) years from the Effective Date.
12. Indemnification. In addition to such other rights of indemnification as
they may have as members of the Board, the Compensation Committee, and each
member individually, and the Plan Administrators shall be indemnified by
the Company against reasonable expense, including reasonable attorney's
fees, actually and necessarily incurred in connection with the defense of
any action, suit, or proceeding, or in connection with any appeal therein,
to which they or any of them may be a party by reason of any action taken
or failure to act under or in connection with the Plan or any grant there
under, and against all amounts paid by them in settlement thereof (provided
such settlement is approved by independent legal counsel selected by the
Company) or paid by them in satisfaction of a judgment in any action, suit,
or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit, or proceeding that any of them is liable for
gross negligence or misconduct in the performance of their duties, provided
that within sixty (60) days after institution of any such action, suit, or
proceeding, they shall offer in writing to the Company the opportunity, at
their own expense, to handle and defend the same.
13. Withholding. Whenever the Company proposes or is required to issue or
transfer shares under the Plan, the Company shall have the right to require
the recipient to remit to the Company an amount sufficient to satisfy any
federal, state and local withholding tax requirements prior to the delivery
of any certificate or certificates for such shares of Common Stock. If an
Optionee surrenders shares acquired pursuant to the exercise of an
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Incentive Stock Option in Incentive Stock Option in payment of the Option
Price and such surrender constitutes a disqualifying disposition for
purposes of obtaining Incentive Stock Option treatment under the Code, the
Company shall have the right to require the Optionee to remit to the
Company an amount sufficient to satisfy any federal, state and local
withholding tax requirements prior to the delivery of any certificate or
certificates for such shares. Whenever under the Plan payments are to be
made in cash, such payments shall be net of an amount sufficient to satisfy
any federal, state and local withholding tax requirements. An Optionee may
elect with respect to any Stock Option that is paid in whole or in part in
shares of Common Stock, to surrender previously acquired shares of Common
Stock or authorize the Company to withhold shares (valued at Fair Market
Value on the date of surrender Or withholding of the shares) in
satisfaction of all such withholding requirements (the "Share Surrender
Withholding Election") in accordance with the following:
13.1 Irrevocable Election. Any Share Surrender Withholding Election shall be
made by written notice to the Company and thereafter shall be irrevocable
by the Optionee.
13.2 Approval by Plan Administrators. Any Share Surrender Withholding Election
shall be subject to the consent or disapproval of the Plan Administrators
in accordance with rules established from time to time by the Plan
Administrators.
13.3 Timing of Election. Any Share Surrender Withholding Election must be made
prior to the date on which the Optionee recognizes taxable income with
respect to the receipt of such shares (the "Tax Date").
13.4 Timing of Delivery. When the Tax Date falls after the exercise of a Stock
Option and the Optionee makes a Share Surrender Withholding Election, the
full number of shares subject to the Stock Option being exercised will be
issued, but the Optionee will be unconditionally obligated to deliver to
the Company on the Tax Date the number of shares having a value on the Tax
Date equal to the Optionee's federal, state and local withholding tax
requirements.
13.5 Terms in Agreement. For purposes of this Section 13.5, the Plan
Administrators shall have the discretion to provide (by general rule or a
provision in the specific Stock Option agreement) at the election of the
Optionee, "federal, state and local withholding tax requirements" that
shall be deemed to be any amount designated by the Optionee that does not
exceed his estimated federal, state and local tax obligations associated
with the transaction, including FICA taxes to the extent applicable.
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14. General Provisions.
14.1 Transfer of Common Stock. Common Stock issued pursuant to the exercise of a
Stock Option or the grant of a Restricted Stock Option granted under this
Plan or any interest in such Common Stock, may be sold, assigned, gifted,
pledged, hypothecated, encumbered or otherwise transferred or alienated in
any manner by the holder(s) thereof, subject, however, to any restrictions
contained in the Company's Restated Articles of Incorporation, to the
provisions of this Plan, including any representations or warranties
requested under Section 14.5 hereof, and also subject to compliance with
any applicable federal, state, local or other law, regulation or rule
governing the sale or transfer of stock or securities.
14.2 Reservation of Shares of Common Stock. The Company, during the term of this
Plan, will at all times reserve and keep available such number of shares of
its Common Stock as shall be sufficient to satisfy the requirements of the
Plan.
14.3 Restrictions on Issuance of Shares. The Company, during the term of this
Plan, will use commercially reasonable efforts to seek to obtain from the
appropriate regulatory agencies any requisite authorization in order to
issue and sell such number of shares of its Common Stock as shall be
sufficient to satisfy the requirements of the Plan. The inability of the
Company to obtain from any such regulatory agency having jurisdiction
thereof the authorization deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any shares of its Common Stock hereunder
or the inability of the Company to confirm to its satisfaction that any
issuance and sale of any shares of such Common Stock will meet applicable
legal requirements shall relieve the Company of any liability in respect of
the non-issuance or sale of such Common Stock as to which such
authorization or confirmation shall have not been obtained.
14.4 Notices. Any notice to be given to the Company pursuant to the provisions
of this Plan shall be in writing and addressed to the Company in care of
its Plan Administrators at its principal office, and any notice to be given
to a director, officer, employee or consultant of the Company or any of its
Affiliates to whom a Stock Option or Restricted Stock Option is granted
hereunder shall be in writing and addressed to him or her at the address
given beneath his or her signature on his or her Stock Option agreement or
Restricted Stock Option agreement, as the case may be, or at such other
address as such employee, officer, director or consultant or his or her
transferee (upon the transfer of Common Stock) may hereafter designate in
writing to the Company. Any such notice shall be deemed duly given when
delivered in person or mailed by first-class mail (return
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receipt requested), telecopy or overnight courier to the other's address.
It shall be the obligation of each Participant and each transferee holding
Common Stock granted pursuant to the Plan to provide the Plan
Administrators, by letter mailed as provided hereinabove, with written
notice of his or her correct mailing address.
14.5 Representations and Warranties. As a condition to the exercise of any
portion of a Stock Option or the grant of any Restricted Stock award, the
Company may require the person exercising such Stock Option or receiving
such Restricted Stock to make any representation and/or warranty to the
Company as may, in the judgment of counsel to the Company, be required
under any applicable law or regulation, including, but not limited to, a
representation and warranty that the shares are being acquired only for
investment and without any present intention to sell or distribute such
shares if, in the opinion of counsel for the Company, such a representation
is required under the Securities Act of 1933, as amended (the "Securities
Act"), or any other applicable law, regulation or rule of any governmental
agency.
14.6 No Enlargement of Employee Rights. This Plan is purely voluntary on the
part of the Company, and while the Company hopes to continue it
indefinitely, the continuance of the Plan shall not be deemed to constitute
a contract between the Company or any of its Affiliates and any director,
officer, consultant or employee, or to be consideration for, or a condition
of, the employment of any employee. Nothing contained in the Plan shall be
deemed to give any employee the right to be retained in the employ of the
Company or any of its Affiliates or to interfere with the right of the
Company or any of its Affiliates to terminate the employment or service of
any of its officers, directors, employees or consultants at any time. No
officer, director, employee or consultant shall have any right to or
interest in Stock Options or Restricted Stock awards authorized hereunder
prior to the grant of such a Stock Option or Restricted Stock Option to
such officer, director, employee or consultant, and upon such grant he
shall have only such rights and interests as are expressly provided herein,
subject, however, to all applicable provisions of the Company's Restated
Articles of Incorporation, as the same may be amended from time to time.
14.7 Restrictions on Issuance of Shares. The issuance of Stock Options,
Restricted Stock Options and shares of Common Stock related thereto shall
be subject to compliance with all of the applicable requirements of law
with respect to the issuance and sale of securities as the Plan
Administrators may deem advisable under the Securities Act, including,
without limitation, any required qualification under the rules, regulations
or other requirements of the Securities and Exchange Commission, any Stock
exchange upon which the Common Stock is then listed and any applicable
federal and state
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securities laws including, without limitation, any required qualification
under the Nevada Corporate Securities Law or the Securities Act.
14.8 Legends on Stock Certificates. Unless there is a currently effective
appropriate registration statement on file with the Securities and Exchange
Commission pursuant to the Securities Act with respect to the shares of
Common Stock issuable under this Plan, each Certificate representing such
Common Stock shall be endorsed on its face with the following legend or its
equivalent:
"Neither the shares represented by this Certificate, nor the Options
pursuant to which such shares were issued, have been registered under the
Securities Act of 1933, as amended. These shares have been acquired for
investment (and not with a view to distribution or resale) and may not be
sold, mortgaged, pledged, hypothecated or otherwise transferred without an
effective registration statement for such shares under the Securities Act
of 1933, as amended, or until the issuer has been furnished with an opinion
of counsel for the registered owner of these shares, reasonably
satisfactory to counsel for the issuer, that such sale, transfer or
disposition is exempt from the registration or qualification provisions of
the Securities Act of 1933, as amended."
A copy of this Plan shall be delivered to the Secretary of the Company and
shall be shown by him to any eligible person making reasonable inquiry
concerning it. In addition, the Company reserves the right to place any
legends or other restrictions on each certificate representing Common Stock
that may be required by any applicable state securities or other laws.
14.9 Remedies. Should any dispute arise concerning the sale or other disposition
of a Stock Option, Restricted Stock or shares of Common Stock issued or
issuable upon the exercise of a Stock Option, or any breach by the Company
of the terms of the Plan, any Stock Option agreement or any Restricted
Stock Option agreement, a Participant's sole and exclusive remedy shall be
damages.
14.10 Invalid Provisions. In the event that any provision of this Plan is found
to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any
other provisions contained herein invalid or unenforceable, and all such
other provisions shall be given full force and effect to the same extent as
though the invalid or unenforceable provision was not contained herein.
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14.11 Applicable Law. This Plan shall be governed by and construed in accordance
with the laws of the State of Nevada applicable to agreements made and to
be performed entirely within such state and without regard to the conflict
of law principles thereof.
14.12 Successors and Assigns. This Plan shall be binding on and inure to the
benefit of the Company and the officers, directors, employees and
consultants of the Company and any Affiliate to whom a Stock Option or
Restricted Stock is granted hereunder, and their heirs, executors,
Administrator's, legatees personal representatives, assignees and
transferees.
14.13 Rights as a Stockholder or Employee. A Participant or transferee of a
Stock Option or Restricted Stock shall have no right as a stockholder of
the Company with respect to any shares covered by any grant under this Plan
until the date of the issuance of a share certificate for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether
cash, securities, or other property) or distributions or other rights for
which the record date is prior to the date such share certificate is
issued, except as provided in Section 8.2 hereof.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its
duly authorized officer and to be effective on this 10th day of April, 2002.
YP.Net, Inc.
By: /s/Angelo Tullo
Angelo Tullo
President and Chief Executive Officer
Attest:
By:
Secretary
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