UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X]
FILED BY PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
THE BLACKHAWK FUND
(Name of Registrant as specified in its charter)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to exchange act rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by exchange act rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
THE BLACKHAWK FUND
1802 N. CARSON STREET, SUITE 212-3018
CARSON CITY, NEVADA 89701
TELEPHONE (775) 887-0670
October 17, 2005
To Our Stockholders:
The purpose of this information statement is to inform the holders of
record of shares of our common stock as of the close of business on the record
date, September 30, 2005, that our board of directors has recommended, and that
the holder of the majority of the voting power of our outstanding capital stock
intends to vote on November 7, 2005 to approve the following:
1. A grant of discretionary authority to our board of directors to
implement a reverse split of our issued and outstanding common shares on the
basis of one post-consolidation share for up to each 800 pre-consolidation
shares to occur at some time within 60 days of the date of this information
statement, with the exact time of the reverse split to be determined by the
board of directors; and
2. The following Stock Plans of The Blackhawk Fund (the "Stock Plans"):
(a) Amended and Restated 2004 Stock Plan of Zannwell, Inc. (our
predecessor), adopted by the directors on June 15, 2004, as amended and restated
on July 22, 2004 and December 6, 2004 with 207,500,000 shares in the aggregate
authorized under the Plan; and
(b) 2005 Stock Plan, adopted by the directors on February 28, 2005,
with 975,000,000 shares in the aggregate authorized under the Plan.
As of the record date, 967,209,709 shares of our common stock were issued
and outstanding. As of the record date 9,000,000 shares of our series A
preferred stock were issued and outstanding, 10,000,000 shares of our series B
preferred stock were issued and outstanding and 10,000,000 shares of our series
C preferred stock were issued and outstanding.
Each share of the common stock outstanding entitles the holder to one vote
on all matters brought before the common stockholders. The shares of our series
A preferred stock do not have voting rights. Each share of our series A
preferred stock is convertible into 100 shares of our common stock. Each share
of our series B preferred stock entitles the holder to one vote of our common
stock on all matters brought before our stockholders. Each share of the series
B preferred stock is convertible into 200 shares of our common stock. Each
share of our series C preferred stock entitles the holder to 100 votes of our
common stock on all matters brought before our stockholders. The shares of our
series C preferred stock are not convertible into shares of our common stock.
We have a consenting stockholder, Palomar Enterprises, Inc., a Nevada
corporation ("Palomar"), which holds 100,000,000 shares of our common stock,
9,000,000 shares of our series A preferred stock, 10,000,000 shares of our
series B preferred stock, and 10,000,000 shares of our series C preferred stock.
Therefore, Palomar will have the power to vote 1,110,000,000 shares of the
common stock, which number exceeds the majority of the issued and outstanding
shares of our common stock on the record date.
Palomar will vote in favor of the grant of the discretionary authority to
our board of directors to effect a reverse stock split of our common stock and
for the approval of the Stock Plans. Palomar will have the power to pass the
proposed corporate actions without the concurrence of any of our other
stockholders.
WE ARE NOT ASKING FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
We appreciate your continued interest in The Blackhawk Fund.
Very truly yours,
/s/ Steve Bonenberger
Steve Bonenberger, President, Chief Executive
Officer and Director
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THE BLACKHAWK FUND
1802 N. CARSON STREET, SUITE 212-3018
CARSON CITY, NEVADA 89701
TELEPHONE (775) 887-0670
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND A
PROXY.
The purpose of this information statement is to inform the holders of
record of shares of our common stock as of the close of business on the record
date, September 30, 2005, that our board of directors has recommended, and that
the holder of the majority of the voting power of our outstanding capital stock
intends to vote on November 7, 2005 to approve the following:
1. A grant of discretionary authority to our board of directors to
implement a reverse split of our issued and outstanding common shares on the
basis of one post-consolidation share for up to each 800 pre-consolidation
shares to occur at some time within 60 days of the date of this information
statement, with the exact time of the reverse split to be determined by the
board of directors; and
2. The following Stock Plans of The Blackhawk Fund (the "Stock Plans"):
(a) Amended and Restated 2004 Stock Plan of Zannwell, Inc. (our
predecessor), adopted by the directors on June 15, 2004, as amended and restated
on July 22, 2004 and December 6, 2004 with 207,500,000 shares in the aggregate
authorized under the Plan; and
(b) 2005 Stock Plan, adopted by the directors on February 28, 2005,
with 975,000,000 shares in the aggregate authorized under the Plan.
As of the record date, 967,209,709 shares of our common stock were issued
and outstanding. As of the record date 9,000,000 shares of our series A
preferred stock were issued and outstanding, 10,000,000 shares of our series B
preferred stock were issued and outstanding and 10,000,000 shares of our series
C preferred stock were issued and outstanding.
Each share of the common stock outstanding entitles the holder to one vote
on all matters brought before the common stockholders. The shares of our series
A preferred stock do not have voting rights. Each share of our series A
preferred stock is convertible into 100 shares of our common stock. Each share
of our series B preferred stock entitles the holder to one vote of our common
stock on all matters brought before our stockholders. Each share of the series
B preferred stock is convertible into 200 shares of our common stock. Each
share of our series C preferred stock entitles the holder to 100 votes of our
common stock on all matters brought before our stockholders. The shares of our
series C preferred stock are not convertible into shares of our common stock.
We have a consenting stockholder, Palomar Enterprises, Inc., a Nevada
corporation ("Palomar"), which holds 100,000,000 shares of our common stock,
9,000,000 shares of our series A preferred stock, 10,000,000 shares of our
series B preferred stock, and 10,000,000 shares of our series C preferred stock.
Therefore, Palomar will have the power to vote 1,110,000,000 shares of the
common stock, which number exceeds the majority of the issued and outstanding
shares of our common stock on the record date.
Palomar will vote in favor of the grant of the discretionary authority to
our board of directors to effect a reverse stock split of our common stock and
for the approval of the Stock Plans. Palomar will have the power to pass the
proposed corporate actions without the concurrence of any of our other
stockholders.
This information statement will be sent on or about October 17, 2005 to our
stockholders of record who do not sign the majority written consent described
herein.
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VOTING SECURITIES
In accordance with our bylaws, our board of directors has fixed the close
of business on September 30, 2005 as the record date for determining the
stockholders entitled to notice of the above noted actions. The grant of
discretionary authority to the directors with respect to the reverse split and
the Stock Plans will be approved if the number of votes cast in favor of the
proposed corporate actions exceeds the number of votes cast in opposition to the
proposed corporate actions. A majority of the voting power, which includes the
voting power that is present in person or by proxy, constitutes a quorum for the
transaction of business.
As of the record date, 967,209,709 shares of our common stock were issued
and outstanding. As of the record date 9,000,000 shares of our series A
preferred stock were issued and outstanding, 10,000,000 shares of our series B
preferred stock were issued and outstanding and 10,000,000 shares of our series
C preferred stock were issued and outstanding.
Each share of the common stock outstanding entitles the holder to one vote
on all matters brought before the common stockholders. The shares of our series
A preferred stock do not have voting rights. Each share of our series A
preferred stock is convertible into 100 shares of our common stock. Each share
of our series B preferred stock entitles the holder to one vote of our common
stock on all matters brought before our stockholders. Each share of the series
B preferred stock is convertible into 200 shares of our common stock. Each
share of our series C preferred stock entitles the holder to 100 votes of our
common stock on all matters brought before our stockholders. The shares of our
series C preferred stock are not convertible into shares of our common stock.
We have a consenting stockholder, Palomar Enterprises, Inc., a Nevada
corporation ("Palomar"), which holds 100,000,000 shares of our common stock,
9,000,000 shares of our series A preferred stock, 10,000,000 shares of our
series B preferred stock, and 10,000,000 shares of our series C preferred stock.
Therefore, Palomar will have the power to vote 1,110,000,000 shares of the
common stock, which number exceeds the majority of the issued and outstanding
shares of our common stock on the record date.
Palomar will vote in favor of the grant of the discretionary authority to
our board of directors to effect a reverse stock split of our common stock and
for the approval of the Stock Plans. Palomar will have the power to pass the
proposed corporate actions without the concurrence of any of our other
stockholders.
DISTRIBUTION AND COSTS
We will pay all costs associated with the distribution of this information
statement, including the costs of printing and mailing. In addition, we will
only deliver one information statement to multiple security holders sharing an
address, unless we have received contrary instructions from one or more of the
security holders. Also, we will promptly deliver a separate copy of this
information statement and future stockholder communication documents to any
security holder at a shared address to which a single copy of this information
statement was delivered, or deliver a single copy of this information statement
and future stockholder communication documents to any security holder or holders
sharing an address to which multiple copies are now delivered, upon written
request to us at our address noted above.
Security holders may also address future requests regarding delivery of
information statements and/or annual reports by contacting us at the address
noted above.
DISSENTERS' RIGHT OF APPRAISAL
Nevada law provides for a right of a stockholder to dissent to the proposed
reverse stock split and obtain appraisal of or payment for such stockholder's
shares. See "Proposal 1 - Dissent Rights of Our Stockholders."
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GRANT OF DISCRETIONARY AUTHORITY TO THE BOARD OF DIRECTORS
TO IMPLEMENT A ONE FOR UP TO 800 REVERSE STOCK SPLIT
(PROPOSAL 1)
Our board of directors has adopted a resolution to seek stockholder
approval of discretionary authority to our board of directors to implement a
reverse split of our issued and outstanding common shares for the purpose of
increasing the market price of our common stock. The reverse split exchange
ratio that the board of directors approved and deemed advisable and for which it
is seeking stockholder approval is up to 800 pre-consolidation shares for each
one post-consolidation share, with the reverse split to occur within 60 days of
the date of this information statement, the exact time of the reverse split to
be determined by the directors in their discretion. Approval of this proposal
would give the board authority to implement the reverse split on the basis of up
to 800 pre-consolidation shares for each one post-consolidation share at any
time it determined within 60 days of the date of this information statement. In
addition, approval of this proposal would also give the board authority to
decline to implement a reverse split.
Our board of directors believes that stockholder approval of a range for
the exchange ratio of the reverse split (as contrasted with approval of a
specified ratio of the split) provides the board of directors with maximum
flexibility to achieve the purposes of a stock split, and, therefore, is in the
best interests of our stockholders. The actual ratio for implementation of the
reverse split would be determined by our board of directors based upon its
evaluation as to what ratio of pre-consolidation shares to post-consolidation
shares would be most advantageous to us and our stockholders.
Our board of directors also believes that stockholder approval of a 60-days
range for the effectuation of the reverse split (as contrasted with approval of
a specified time of the split) provides the board of directors with maximum
flexibility to achieve the purposes of a stock split, and, therefore, is in the
best interests of our stockholders. The actual timing for implementation of the
reverse split would be determined by our board of directors based upon its
evaluation as to when and whether such action would be most advantageous to us
and our stockholders.
If you approve the grant of discretionary authority to our board of
directors to implement a reverse split and the board of directors decides to
implement the reverse split, we will effect a reverse split of our then issued
and outstanding common stock on the basis of up to 800 pre-consolidation shares
for each one post-consolidation share.
The board of directors believes that the higher share price that might
initially result from the reverse stock split could help generate interest in
The Blackhawk Fund among investors and thereby assist us in raising future
capital to fund our operations or make acquisitions.
Stockholders should note that the effect of the reverse split upon the
market price for our common stock cannot be accurately predicted. In
particular, if we elect to implement a reverse stock split, there is no
assurance that prices for shares of our common stock after a reverse split will
be up to 800 times greater than the price for shares of our common stock
immediately prior to the reverse split, depending on the ratio of the split.
Furthermore, there can be no assurance that the market price of our common stock
immediately after a reverse split will be maintained for any period of time.
Moreover, because some investors may view the reverse split negatively, there
can be no assurance that the reverse split will not adversely impact the market
price of our common stock or, alternatively, that the market price following the
reverse split will either exceed or remain in excess of the current market
price.
EFFECT OF THE REVERSE SPLIT
The reverse split would not affect the registration of our common stock
under the Securities Exchange Act of 1934, as amended, nor will it change our
periodic reporting and other obligations thereunder.
The voting and other rights of the holders of our common stock would not be
affected by the reverse split (other than as described below). For example, a
holder of 0.5 percent of the voting power of the outstanding shares of our
common stock immediately prior to the effective time of the reverse split would
continue to hold 0.5 percent
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of the voting power of the outstanding shares of our common stock after the
reverse split. The number of stockholders of record would not be affected by
the reverse split (except as described below).
The authorized number of shares of our common stock and the par value of
our common stock under our articles of incorporation would remain the same
following the effective time of the reverse split.
The number of shares of our common stock issued and outstanding would be
reduced following the effective time of the reverse split in accordance with the
following formula: if our directors decide to implement a one for 800 reverse
split, every 800 shares of our common stock owned by a stockholder will
automatically be changed into and become one new share of our common stock, with
800 being equal to the exchange ratio of the reverse split, as determined by the
directors in their discretion.
Stockholders should recognize that if a reverse split is effected, they
will own a fewer number of shares than they presently own (a number equal to the
number of shares owned immediately prior to the effective time divided by the
one for 800 exchange ratio, or such lesser exchange ratio as may be determined
by our directors, subject to adjustment for fractional shares, as described
below).
CASH PAYMENT IN LIEU OF FRACTIONAL SHARES
In lieu of any fractional shares to which a holder of our common stock
would otherwise be entitled as a result of the reverse split, we shall pay cash
equal to such fraction multiplied by the average of the high and low trading
prices of the our common stock on the OTCBB during regular trading hours for the
five trading days immediately preceding the effectiveness of the reverse split.
The reverse split may reduce the number of holders of post-reverse split
shares as compared to the number of holders of pre-reverse split shares to the
extent that there are stockholders presently holding fewer than 800 shares (or
such lesser number as may be determined by our directors). However, the
intention of the reverse split is not to reduce the number of our stockholders.
In fact, we do not expect that the reverse split will result in any material
reduction in the number of our stockholders.
We currently have no intention of going private, and this proposed reverse
stock split is not intended to be a first step in a going private transaction
and will not have the effect of a going private transaction covered by Rule
13e-3 of the Exchange Act. Moreover, the proposed reverse stock split does not
increase the risk of us becoming a private company in the future.
Issuance of Additional Shares. The number of authorized but unissued
shares of our common stock effectively will be increased significantly by the
reverse split of our common stock.
If we elect to implement a one for 400 reverse split, based on the
967,209,709 shares of our common stock outstanding on the record date, and the
4,000,000,000 shares of our common stock that are currently authorized under our
articles of incorporation, 3,032,790,291 shares of our common stock remain
available for issuance prior to the reverse split taking effect. A one for 400
reverse split would have the effect of decreasing the number of our outstanding
shares of our common stock from 967,209,709 to 2,418,024 shares.
Based on the 4,000,000,000 shares of our common stock that are currently
authorized under our articles of incorporation, if we elect to implement a one
for 400 reverse stock split, the reverse split, when implemented, would have the
effect of increasing the number of authorized but unissued shares of our common
stock from 3,032,790,291 to 3,997,581,976 shares.
If we elect to implement a one for 800 reverse split, based on the
967,209,709 shares of our common stock outstanding on the record date, and the
4,000,000,000 shares of our common stock that are currently authorized under our
articles of incorporation, 3,032,790,291 shares of our common stock remain
available for issuance prior to the reverse split taking effect. A one for 800
reverse split would have the effect of decreasing the number of our outstanding
shares of our common stock from 967,209,709 to 1,209,012 shares.
-4-
Based on the 4,000,000,000 shares of our common stock that are currently
authorized under our articles of incorporation, if we elect to implement a one
for 800 reverse stock split, the reverse split, when implemented, would have the
effect of increasing the number of authorized but unissued shares of our common
stock from 3,032,790,291 to 3,998,790,988 shares
The issuance in the future of such additional authorized shares may have
the effect of diluting the earnings per share and book value per share, as well
as the stock ownership and voting rights, of the currently outstanding shares of
our common stock.
The effective increase in the number of authorized but unissued shares of
our common stock may be construed as having an anti-takeover effect by
permitting the issuance of shares to purchasers who might oppose a hostile
takeover bid or oppose any efforts to amend or repeal certain provisions of our
articles of incorporation or bylaws. Such a use of these additional authorized
shares could render more difficult, or discourage, an attempt to acquire control
of us through a transaction opposed by our board of directors. At this time,
our board does not have plans to issue any common shares resulting from the
effective increase in our authorized but unissued shares generated by the
reverse split.
FEDERAL INCOME TAX CONSEQUENCES
We will not recognize any gain or loss as a result of the reverse split.
The following description of the material federal income tax consequences
of the reverse split to our stockholders is based on the Internal Revenue Code
of 1986, as amended, applicable Treasury Regulations promulgated thereunder,
judicial authority and current administrative rulings and practices as in effect
on the date of this information statement. Changes to the laws could alter the
tax consequences described below, possibly with retroactive effect. We have not
sought and will not seek an opinion of counsel or a ruling from the Internal
Revenue Service regarding the federal income tax consequences of the reverse
split. This discussion is for general information only and does not discuss the
tax consequences that may apply to special classes of taxpayers (e.g.,
non-residents of the United States, broker/dealers or insurance companies). The
state and local tax consequences of the reverse split may vary significantly as
to each stockholder, depending upon the jurisdiction in which such stockholder
resides. You are urged to consult your own tax advisors to determine the
particular consequences to you.
We believe that the likely federal income tax effects of the reverse split
will be that a stockholder who receives solely a reduced number of shares of our
common stock will not recognize gain or loss. With respect to a reverse split,
such a stockholder's basis in the reduced number of shares of our common stock
will equal the stockholder's basis in his old shares of our common stock.
EFFECTIVE DATE
If the proposed reverse split is approved and the board of directors elects
to proceed with a reverse split, the split would become effective as of 5:00
p.m. Nevada time on the date the split is approved by our board of directors
which in any event shall not be later than 60 days from the date of this
information statement. Except as explained herein with respect to fractional
shares and stockholders who currently hold fewer than 800 shares, or such lesser
amount as we may determine, on such date, all shares of our common stock that
were issued and outstanding immediately prior thereto will be, automatically and
without any action on the part of the stockholders, converted into new shares of
our common stock in accordance with the one for 800 exchange ratio or such other
exchange ratio as we determine.
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RISKS ASSOCIATED WITH THE REVERSE SPLIT
This information statement includes forward-looking statements including
statements regarding our intent to solicit approval of a reverse split, the
timing of the proposed reverse split and the potential benefits of a reverse
split, including, but not limited to, increased investor interest and the
potential for a higher stock price. The words "believe," "expect," "will,"
"may" and similar phrases are intended to identify such forward-looking
statements. Such statements reflect our current views and assumptions, and are
subject to various risks and uncertainties that could cause actual results to
differ materially from expectations. The risks include that we may not have
sufficient resources to continue as a going concern; any significant downturn in
our industry or in general business conditions would likely result in a
reduction of demand for our products or services and would be detrimental to our
business; we will be unable to achieve profitable operations unless we increase
quarterly revenues or make further cost reductions; a loss of or decrease in
purchases by one of our significant customers could materially and adversely
affect our revenues and profitability; the loss of key personnel could have a
material adverse effect on our business; the large number of shares available
for future sale could adversely affect the price of our common stock; and the
volatility of our stock price. For a discussion of these and other risk
factors, see our annual report on Form 10-KSB for the year ended December 31,
2004, and other filings with the Securities and Exchange Commission.
If approved and implemented, the reverse stock split will result in some
stockholders owning "odd-lots" of less than 100 common shares of our stock on a
post-consolidation basis. Odd lots may be more difficult to sell, or require
greater transaction costs per share to sell than shares in "even lots" of even
multiples of 100 shares.
DISSENT RIGHTS OF OUR STOCKHOLDERS
Under Nevada law, our stockholders are entitled, after complying with
certain requirements of Nevada law, to dissent from the approval of the
authority with respect to the reverse stock split, pursuant to Sections 92A.300
to 92A.500, inclusive, of the NRS and to be paid the "fair value" of their
shares of The Blackhawk Fund common stock in cash by complying with the
procedures set forth in Sections 92A. 380 to 92A. 450 of the NRS. Set forth
below is a summary of the procedures relating to the exercise of dissenters'
rights by our stockholders. This summary does not purport to be a complete
statement of the provisions of Sections 92A. 380 to 92A. 450 of the NRS and is
qualified in its entirety by reference to such provisions, which are contained
in Attachment B to this information statement.
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Any stockholder who wants to exercise dissenters' rights must deliver
written notice to us, before the date the authority with respect to the reverse
stock split is voted upon, stating that the stockholder intends to demand
payment for his shares of our common stock if the authority to directors with
respect to the reverse stock split is approved (Section 92A.420.1(a) of the
NRS). In addition, the stockholder must not vote his shares in favor of the
authority with respect to the reverse stock split (Section 92A.420.1(b) of the
NRS).
Notices transmitted before the vote should be addressed to The Blackhawk
Fund, 1802 N. Carson Street, Suite 212-3018, Carson City, Nevada 89701.
Stockholders who vote in favor of the authority with respect to the reverse
stock split will be deemed to have waived their dissenter's rights.
A stockholder whose shares of our common stock are held in "street name" or
in the name of anyone other than the stockholder must obtain written consent
from the person or firm in whose name the shares are registered, allowing the
stockholder to file the notice demanding payment for the shares in question, and
must deliver the consent to us no later than the time that dissenter's rights
are asserted (Section 92A.400.2(a) of the NRS). Also, the dissent must be
asserted as to all shares of our common stock that the stockholder beneficially
owns or has power to vote on the record date (Section 92A.400.2(b) of the NRS).
Any stockholder who does not complete the requirements of Sections 92A.400
and 92A.420.1(a) and (b) of the NRS as described above is not entitled to
payment for his shares of The Blackhawk Fund's common stock (Section 92A.420.2
of the NRS).
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VOTE REQUIRED
Once a quorum is present and voting, the grant of discretionary authority
to our directors to implement a reverse stock split will be approved if the
number of votes cast in favor of the grant of authority exceeds the number of
votes cast in opposition to the grant of authority.
The board of directors recommends a vote FOR approval of the grant of
discretionary authority to our directors to implement a reverse stock split, as
described in Attachment A hereto.
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APPROVAL OF STOCK PLANS
(PROPOSAL 2)
Our majority stockholder intends to approve the following Stock Plans of
The Blackhawk Fund (the "Stock Plans"):
(a) Amended and Restated 2004 Stock Plans of Zannwell, Inc. (our
predecessor), adopted by the directors on June 15, 2004, as amended and restated
on July 22, 2004 and December 6, 2004 with 207,500,000 shares in the aggregate
authorized under the Plan; and
(b) 2005 Stock Plans, adopted by the directors on February 28, 2005, with
975,000,000 shares in the aggregate authorized under the Plan.
As of the record date 207,500,000 shares of our common stock have been
issued under the Stock Plans.
The following is a summary of the principal features of the Stock Plans. A
copy of the Stock Plans is attached to this information statement as Attachment
----------
C. Any stockholder who wishes to obtain copies of the Stock Plans may also do
-
so upon written request to our corporate secretary at our principal executive
offices in Carson City, Nevada.
PURPOSE OF THE STOCK PLANS
The purpose of the Stock Plans is to provide incentives to attract, retain
and motivate eligible persons whose present and potential contributions are
important to the success of The Blackhawk Fund and our subsidiaries, by offering
them an opportunity to participate in our future performance through awards of
options, restricted stock and stock bonuses.
The Stock Plans are administered by the compensation committee of the board
of directors.
Number of Shares Available. Subject to certain provisions of the Stock
Plans, the total aggregate number of shares is 1,182,500,000, plus shares of our
common stock that are subject to:
- Issuance upon exercise of an option but cease to be subject to
such option for any reason other than exercise of such option;
- An award granted but forfeited or repurchased by The Blackhawk
Fund at the original issue price; and
- An award that otherwise terminates without shares of our common
stock being issued. At all times, The Blackhawk Fund shall reserve and keep
available a sufficient number of shares of our common stock as shall be required
to satisfy the requirements of all outstanding options granted under the Stock
Plans and all other outstanding but unvested awards granted under the Stock
Plans.
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ELIGIBILITY
Incentive Stock Options and Awards may be granted only to employees
(including, officers and directors who are also employees) of The Blackhawk Fund
or of a parent or subsidiary of The Blackhawk Fund
DISCRETIONARY OPTION GRANT PROGRAM
The committee may grant options to eligible persons and will determine
whether such options will be Incentive Stock Options ("ISO") or Nonqualified
Stock Options ("NQSOs"), the number of shares of our common stock subject to the
option, the exercise price of the option, the period during which the option may
be exercised, and all other terms and conditions of the option, subject to the
following.
Form of Option Grant. Each option granted under the Stock Plans is
evidenced by an Award Agreement that will expressly identify the option as an
ISO or an NQSO (the "Option Agreement"), and will be in such form and contain
such provisions (which need not be the same for each participant) as the
committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of the Stock Plans.
Date of Grant. The date of grant of an option is the date on which the
committee makes the determination to grant such option, unless otherwise
specified by the committee. The Option Agreement and a copy of the applicable
Stock Plans is delivered to the participant within a reasonable time after the
granting of the option.
Exercise Period. Options may be exercisable within the times or upon the
events determined by the committee as set forth in the Stock Option Agreement
governing such option; provided, however, that no option will be exercisable
after the expiration of 10 years from the date the option is granted. For
further restrictions on the Exercise Periods, please refer to the Stock Plans.
Exercise Price. The exercise price of an option is determined by the
committee when the option is granted and may be not less than 85 percent of the
fair market value of the shares of our common stock on the date of grant;
provided that the exercise price of any ISO granted to a Ten Percent Stockholder
as defined in the Stock Plans is not less than 110 percent of the fair market
value of the shares of our common stock on the date of grant. Payment for the
shares of our common stock purchased may be made in accordance with the Stock
Plans.
Method of Exercise. Options may be exercised only by delivery to The
Blackhawk Fund of a written stock option exercise agreement (the "Notice and
Agreement of Exercise") in a form approved by the committee, together with
payment in full of the exercise price for the number of shares of our common
stock being purchased.
Termination. Notwithstanding the exercise periods set forth in the Stock
Option Agreement, exercise of an option is always subject to the following:
- Upon an Employee's Retirement, Disability (as those terms are defined
in the Stock Plans) or death, (a) all Stock Options to the extent then presently
exercisable shall remain in full force and effect and may be exercised pursuant
to the provisions thereof, and (b) unless otherwise provided by the committee,
all Stock Options to the extent not then presently exercisable by the Employee
shall terminate as of the date of such termination of employment and shall not
be exercisable thereafter. Unless employment is terminated for Cause, as defined
by applicable law, the right to exercise in the event of termination of
employment, to the extent that the optionee is entitled to exercise on the date
the employment terminates as follows:
- At least six months from the date of termination if termination
was caused by death or disability.
- At least 30 days from the date of termination if termination was
caused by other than death or disability.
-8-
- Upon the termination of the employment of an Employee for any reason
other than those specifically set forth in the Stock Plans, (a) all Stock
Options to the extent then presently exercisable by the Employee shall remain
exercisable only for a period of 90 days after the date of such termination of
employment (except that the 90 day period shall be extended to 12 months if the
Employee shall die during such 90 day period), and may be exercised pursuant to
the provisions thereof, including expiration at the end of the fixed term
thereof, and (b) unless otherwise provided by the committee, all Stock Options
to the extent not then presently exercisable by the Employee shall terminate as
of the date of such termination of employment and shall not be exercisable
thereafter.
Limitations on Exercise. The committee may specify a reasonable minimum
number of shares of our common stock that may be purchased on any exercise of an
option, provided that such minimum number will not prevent the participant from
exercising the option for the full number of shares of our common stock for
which it is then exercisable. Subject to the provisions of the Stock Plans, the
Employee has the right to exercise his Stock Options at the rate of at least
33-1/3 percent per year over three years from the date the Stock Option is
granted.
Limitations on ISO. The aggregate fair market value (determined as of the
date of grant) of shares of our common stock with respect to which ISOs are
exercisable for the first time by a participant during any calendar year (under
the Stock Plans or under any other ISO plan of The Blackhawk Fund, or the parent
or any subsidiary of The Blackhawk Fund) will not exceed $100,000.00. In the
event that the Internal Revenue Code or the regulations promulgated thereunder
are amended after the effective date of the Stock Plans to provide for a
different limit on the fair market value of shares of our common stock permitted
to be subject to ISO, such different limit will be automatically incorporated in
the Stock Plans and will apply to any options granted after the effective date
of such amendment.
Modification, Extension or Renewal. The committee may modify or amend any
Award under the Stock Plans or waive any restrictions or conditions applicable
to the Award; provided, however, that the committee may not undertake any such
modifications, amendments or waivers if the effect thereof materially increases
the benefits to any Employee, or adversely affects the rights of any Employee
without his consent.
STOCKHOLDER RIGHTS AND OPTION TRANSFERABILITY
Awards granted under the Stock Plans, including any interest, are not
transferable or assignable by the participant, and may not be made subject to
execution, attachment or similar process, other than by will or by the laws of
descent and distribution.
GENERAL PROVISIONS
Adoption and Stockholder Approval. The Stock Plans became effective on the
date they were adopted by the board of directors of The Blackhawk Fund (the
"effective date"). The Stock Plans must be approved by the stockholders of The
Blackhawk Fund within 12 months before or after the date of adoption and the
committee may grant Awards pursuant to the Stock Plans upon the effective date.
Term of Stock Plans/Governing Law. Unless earlier terminated as provided,
the Stock Plans will terminate 10 years from the date of adoption, or, if
earlier, from the date of stockholder approval. The Stock Plans and all
agreements thereunder shall be governed by and construed in accordance with the
laws of the State of Nevada.
Amendment or Termination of the Stock Plans. Our board of directors may at
any time terminate or amend the Stock Plans including to preserve or come within
any exemption from liability under Section 16(b) of the Exchange Act, as it may
deem proper and in our best interest without further approval of our
stockholders, provided that, to the extent required under Nevada law or to
qualify transactions under the Stock Plans for exemption under Rule 16b-3
promulgated under the Exchange Act, no amendment to the Stock Plans shall be
adopted without further approval of our stockholders and, provided, further,
that if and to the extent required for the Stock Plans to comply with Rule 16b-3
promulgated under the Exchange Act, no amendment to the Stock Plans shall be
made more than once in any six month period that would change the amount, price
or timing of the grants of our common stock hereunder other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974,
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as amended, or the regulations thereunder. The board may terminate the Stock
Plans at any time by a vote of a majority of the members thereof.
AWARD OF STOCK BONUSES
Award of Stock Bonuses. A Stock Bonus is an award of shares of our common
stock (which may consist of Restricted Stock) for extraordinary services
rendered to The Blackhawk Fund or any parent or subsidiary of The Blackhawk Fund
Each Award under the Stock Plans consists of a grant of shares of our common
stock subject to a restriction period (after which the restrictions shall
lapse), which shall be a period commencing on the date the Award is granted and
ending on such date as the committee shall determine (the "Restriction Period").
The committee may provide for the lapse of restrictions in installments, for
acceleration of the lapse of restrictions upon the satisfaction of such
performance or other criteria or upon the occurrence of such events as the
committee shall determine, and for the early expiration of the Restriction
Period upon an Employee's death, Disability or Retirement as defined in the
Stock Plans or, following a Change of Control, upon termination of an Employee's
employment by us without "Cause" or by the Employee for "Good Reason," as those
terms are defined in the Stock Plans.
Terms of Stock Bonuses. Upon receipt of an Award of shares of our common
stock under the Stock Plans, even during the Restriction Period, an Employee is
the holder of record of the shares and has all the rights of a stockholder with
respect to such shares, subject to the terms and conditions of the Stock Plans
and the Award.
FEDERAL TAX CONSEQUENCES
Option Grants. Options granted under the Stock Plans may be either ISO
which satisfy the requirements of Section 422 of the Code or NQSOs which are not
intended to meet such requirements. The federal income tax treatment for the
two types of options differs as discussed below.
Incentive Stock Options. The optionee recognizes no taxable income at the
time of the option grant, and no taxable income is generally recognized at the
time the option is exercised. However, the exercise of an ISO (if the holding
period rules set forth below are satisfied) will give rise to income includable
by the optionee in his alternative minimum taxable income for purposes of the
alternative minimum tax in an amount equal to the excess of the fair market
value of the shares acquired on the date of the exercise of the option over the
exercise price. The optionee will also recognize taxable income in the year in
which the exercised shares are sold or otherwise made the subject of a taxable
disposition. For federal tax purposes, dispositions are divided into two
categories: (i) qualifying and (ii) disqualifying. A qualifying disposition
occurs if the sale or other disposition is made after the optionee has held the
shares for more than two years after the option grant date and more than one
year after the exercise date. If either of these two holding periods is not
satisfied, then a disqualifying disposition will result. In addition, the
optionee must be an employee of The Blackhawk Fund or a qualified subsidiary at
all times between the date of grant and the date three months (one year in the
case of disability) before exercise of the option (special rules apply in the
case of the death of the optionee).
Upon a qualifying disposition, the optionee will recognize long-term
capital gain or loss in an amount equal to the difference between (i) the amount
realized upon the sale or other disposition of the purchased shares over (ii)
the exercise price paid for the shares. If there is a disqualifying disposition
of the shares, then the excess of (i) the lesser of the fair market value of
those shares on the exercise date or the sale date and (ii) the exercise price
paid for the shares will be taxable as ordinary income to the optionee. Any
additional gain or loss recognized upon the disposition will be recognized as a
capital gain or loss by the optionee.
If the optionee makes a disqualifying disposition of the purchased shares,
then we will be entitled to an income tax deduction, for the taxable year in
which such disposition occurs, equal to the excess of (i) the fair market value
of such shares on the option exercise date or the sale date, if less, over (ii)
the exercise price paid for the shares. In no other instance will we be allowed
a deduction with respect to the optionee's disposition of the purchased shares.
Nonqualified Stock Options. No taxable income is recognized by an optionee
upon the grant of a NQSO. The optionee will in general recognize ordinary income
in the year in which the option is exercised, equal to the
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excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
If the shares acquired upon exercise of the NQSO are unvested and subject
to repurchase, at the exercise price paid per share, by us in the event of the
optionee's termination of service prior to vesting in those shares, then the
optionee will not recognize any taxable income at the time of exercise but will
have to report as ordinary income, as and when our repurchase right lapses, an
amount equal to the excess of (i) the fair market value of the shares on the
date the repurchase right lapses over (ii) the exercise price paid for the
shares. The optionee may, however, elect under Section 83(b) of the Code to
include as ordinary income in the year of exercise of the option an amount equal
to the excess of (i) the fair market value of the purchased shares on the
exercise date over (ii) the exercise price paid for such shares. If the Section
83(b) election is made, the optionee will not recognize any additional income as
and when the repurchase right lapse and all subsequent appreciation in the
shares generally would be eligible for capital gains treatment.
We will be entitled to an income tax deduction equal to the amount of
ordinary income recognized by the optionee with respect to the exercised NQSO.
The deduction will in general be allowed for our taxable year in which such
ordinary income is recognized by the optionee.
Direct Stock Issuance. With respect to the receipt of a stock award not
subject to restriction, the participant would have ordinary income, at the time
of receipt, in an amount equal to the difference between the fair market value
of the stock received at such time and the amount, if any, paid by the holder
for the stock award.
With respect to the receipt of a stock award that is subject to
restrictions, or certain repurchase rights of The Blackhawk Fund, unless the
recipient of such stock award makes an "83(b) election" (as discussed below),
there generally will be no tax consequences as a result of such a stock award
until the shares are no longer subject to a substantial risk of forfeiture or
are transferable (free of such risk). We intend that, generally, when the
restrictions are lifted, the holder will recognize ordinary income, and we will
be entitled to a deduction, equal to the difference between the fair market
value of the shares at such time and the amount, if any, paid by the holder for
the stock. Subsequently realized changes in the value of the stock generally
will be treated as long-term or short-term capital gain or loss, depending on
the length of time the shares are held prior to disposition of such shares. In
general terms, if a holder makes an "83(b) election" (under Section 83(b) of the
Code) upon the award of a stock award subject to restrictions (or certain
repurchase rights of The Blackhawk Fund), the holder will recognize ordinary
income on the date of the award of the stock award, and we will be entitled to a
deduction, equal to (i) the fair market value of such stock as though the stock
were (A) not subject to a substantial risk of forfeiture or (B) transferable,
minus (ii) the amount, if any, paid for the stock award. If an "83(b) election"
is made, there will generally be no tax consequences to the holder upon the
lifting of restrictions, and all subsequent appreciation in the stock award
generally would be eligible for capital gains treatment.
ACCOUNTING TREATMENT
Option grants or stock issuances with exercise or issue prices less than
the fair market value of the shares on the grant or issue date will result in a
compensation expense to our earnings equal to the difference between the
exercise or issue price and the fair market value of the shares on the grant or
issue date. Such expense will be amortized against our earnings over the period
that the option shares or issued shares are to vest.
Option grants or stock issuances with exercise or issue prices equal to the
fair market value of the shares at the time of issuance or grant generally will
not result in any charge to our earnings, but International Development Corp,
Inc., in accordance with Generally Accepted Accounting Principals, must
disclose, in pro-forma statements to our financial statements, the impact those
option grants would have upon our reported earnings (losses) were the value of
those options treated as compensation expense. Whether or not granted at a
discount, the number of outstanding options may be a factor in determining our
earnings per share on a fully diluted basis.
Should one or more optionee be granted stock appreciation rights that have
no conditions upon exercisability other than a service or employment
requirement, then such rights will result in a compensation expense to our
earnings. Accordingly, at the end of each fiscal quarter, the amount (if any) by
which the fair market value of the shares of common stock subject to such
outstanding stock appreciation rights has increased from the
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prior quarter-end would be accrued as compensation expense, to the extent such
fair market value is in excess of the aggregate exercise price in effect for
those rights.
VOTE REQUIRED
Once a quorum is present and voting, a simple majority of the voting shares
is required to approve the Stock Plans.
Our board of directors recommends that stockholders vote FOR the approval
of the Stock Plans.
Information regarding the beneficial ownership of our common and preferred
stock by management and the board of directors is noted below.
Information regarding the beneficial ownership of our common and preferred
stock by management and the board of directors is noted below
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information regarding the beneficial ownership
of all shares of our common stock and preferred stock as of the record date, by:
- Each person who beneficially owns more than five percent of the
outstanding shares of our common stock;
- Each person who beneficially owns outstanding shares of our
preferred stock;
- Each of our directors;
- Each named executive officer; and
- All directors and officers as a group.
COMMON STOCK
BENEFICIALLY PREFERRED STOCK BENEFICIALLY
OWNED (2) OWNED (2)
--------------------- --------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER (1) NUMBER PERCENT NUMBER PERCENT
--------------------------------------------------- ----------- -------- --------------- ---------------
Steve Bonenberger . . . . . . . . . . . . . . . . . -0- -0- -0- -0-
Brent Fouch . . . . . . . . . . . . . . . . . . . . -0- -0- -0- -0-
----------- --------------- ---------------
All directors and officers as a group (two persons) -0- -0- -0- -0-
=========== ======== =============== ===============
Palomar Enterprises (6) . . . . . . . . . . . . . . 100,000,000 10.34 9,000,000 (3) 100 (3)
10,000,000 (4) 100 (4)
10,000,000 (5) 100 (4)
(1) Unless otherwise indicated, the address for each of these stockholders is
c/o The Blackhawk Fund, 1802 N. Carson Street, Suite 212, Carson City,
Nevada, 89701, telephone number (775) 887-0670. Also, unless otherwise
indicated, each person named in the table above has the sole voting and
investment power with respect to the shares of our common and preferred
stock which he beneficially owns.
(2) Beneficial ownership is determined in accordance with the rules of the SEC.
As of September 30 2005, the total number of outstanding shares of the
common stock is 967,209,709, the total number of outstanding shares of the
series A preferred stock is 9,000,000, the total number of outstanding
shares of the series B preferred stock is 10,000,000 and the total number
of outstanding shares of the series C preferred stock is 10,000,000.
(3) series A preferred stock.
(4) series B preferred stock.
(5) series C preferred stock.
(6) Palomar Enterprises, Inc., a Nevada publicly-traded corporation, is
controlled by Messrs. Steve Bonenberger and Brent Fouch, our officers and
directors. Palomar Enterprises, Inc. holds 9,000,000 shares of our series A
preferred stock, 10,000,000 shares of our series B preferred stock and
10,000,000 shares of our series C preferred stock, equivalent to the voting
power of 1,110,000,000 shares of our common stock.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, executive
officers and persons who own more than 10 percent of a registered class of our
equity securities, file with the SEC initial reports of ownership and reports of
changes in ownership of our equity securities. Officers, directors and greater
than 10 percent stockholders are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file. All such persons have filed all
required reports.
DOCUMENTS INCORPORATED BY REFERENCE
Our Annual Report on Form 10-KSB for the year ended December 31, 2004 and
our Quarterly Reports on Forms 10-QSB for the periods ended March 31, 2005 and
June 30, 2005 are incorporated herein by reference.
COPIES OF ANNUAL AND QUARTERLY REPORTS
We will furnish a copy of our Annual Report on Form 10-KSB, as amended, for
the year ended December 31, 2004 and our Quarterly Reports on Forms 10-QSB for
the periods ended March 31, 2005 and June 30, 2005 and any exhibit referred to
therein without charge to each person to whom this information statement is
delivered upon written or oral request by first class mail or other equally
prompt means within one business day of receipt of such request. Any request
should be directed to our corporate secretary at 1802 N. Carson Street, Suite
212-3018, Carson City, Nevada 89701, Telephone (775) 887-0670.
By Order of the board of directors,
/s/ Steve Bonenberger
Steve Bonenberger, President, Chief Executive
Officer and Director
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ATTACHMENT A
RESOLUTIONS TO BE ADOPTED BY THE
STOCKHOLDERS OF
THE BLACKHAWK FUND
(the "Company")
RESOLVED, that the grant of discretionary authority to the board
of directors to implement a reverse split of the Company's issued and
outstanding common stock on the basis of one post-consolidation share
for up to each 800 pre-consolidation shares within 60 days of the
Company's information statement on Schedule 14C dated October 17, 2005
is hereby approved in all respects; and
RESOLVED FURTHER, that the Company's Stock Plans, included as
Attachment C to the Company's information statement on Schedule 14C
-------------
dated October 17, 2005 are hereby approved in all respects; and
RESOLVED FURTHER, that the officers of the Company be, and each
of them hereby is, authorized, empowered and directed, for and on
behalf of the Company, to take any and all actions, to perform all
such acts and things, to execute, file, deliver or record in the name
and on behalf of the Company, all such instruments, agreements, or
other documents, and to make all such payments as they, in their
judgment, or in the judgment of any one or more of them, may deem
necessary, advisable or appropriate in order to carry out the
transactions contemplated by the foregoing resolutions.
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ATTACHMENT B
SECTIONS 92A.300-92A.500 OF THE NEVADA REVISED STATUTES
NRS 92A.300 DEFINITIONS. As used in NRS 92A.300 to 92A.500, inclusive,
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unless the context otherwise requires, the words and terms defined in NRS
---
92A.305 to 92A.335, inclusive, have the meanings ascribed to them in those
------- -------
sections.
(Added to NRS by 1995, 2086)
NRS 92A.305 "BENEFICIAL STOCKHOLDER" DEFINED. "Beneficial stockholder"
means a person who is a beneficial owner of shares held in a voting trust or by
a nominee as the stockholder of record.
(Added to NRS by 1995, 2087)
NRS 92A.310 "CORPORATE ACTION" DEFINED. "Corporate action" means the action
of a domestic corporation.
(Added to NRS by 1995, 2087)
NRS 92A.315 "DISSENTER" DEFINED. "Dissenter" means a stockholder who is
entitled to dissent from a domestic corporation's action under NRS 92A.380 and
-----------
who exercises that right when and in the manner required by NRS 92A.400 to
-----------
92A.480, inclusive.
-------
(Added to NRS by 1995, 2087; A 1999, 1631)
----
NRS 92A.320 "FAIR VALUE" DEFINED. "Fair value," with respect to a
dissenter's shares, means the value of the shares immediately before the
effectuation of the corporate action to which he objects, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable.
(Added to NRS by 1995, 2087)
NRS 92A.325 "STOCKHOLDER" DEFINED. "Stockholder" means a stockholder of
record or a beneficial stockholder of a domestic corporation.
(Added to NRS by 1995, 2087)
NRS 92A.330 "STOCKHOLDER OF RECORD" DEFINED. "Stockholder of record" means
the person in whose name shares are registered in the records of a domestic
corporation or the beneficial owner of shares to the extent of the rights
granted by a nominee's certificate on file with the domestic corporation.
(Added to NRS by 1995, 2087)
NRS 92A.335 "SUBJECT CORPORATION" DEFINED. "Subject corporation" means the
domestic corporation which is the issuer of the shares held by a dissenter
before the corporate action creating the dissenter's rights becomes effective or
the surviving or acquiring entity of that issuer after the corporate action
becomes effective.
(Added to NRS by 1995, 2087)
NRS 92A.340 COMPUTATION OF INTEREST. Interest payable pursuant to NRS
---
92A.300 to 92A.500, inclusive, must be computed from the effective date of the
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action until the date of payment, at the average rate currently paid by the
entity on its principal bank loans or, if it has no bank loans, at a rate that
is fair and equitable under all of the circumstances.
(Added to NRS by 1995, 2087)
NRS 92A.350 RIGHTS OF DISSENTING PARTNER OF DOMESTIC LIMITED PARTNERSHIP.
A partnership agreement of a domestic limited partnership or, unless otherwise
provided in the partnership agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the partnership interest of a
dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with any
merger or exchange in which the domestic limited partnership is a constituent
entity.
(Added to NRS by 1995, 2088)
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NRS 92A.360 RIGHTS OF DISSENTING MEMBER OF DOMESTIC LIMITED-LIABILITY
COMPANY. The articles of organization or operating agreement of a domestic
limited-liability company or, unless otherwise provided in the articles of
organization or operating agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the interest of a dissenting
member are available in connection with any merger or exchange in which the
domestic limited-liability company is a constituent entity.
(Added to NRS by 1995, 2088)
NRS 92A.370 RIGHTS OF DISSENTING MEMBER OF DOMESTIC NONPROFIT CORPORATION.
1. Except as otherwise provided in subsection 2, and unless otherwise
provided in the articles or bylaws, any member of any constituent domestic
nonprofit corporation who voted against the merger may, without prior notice,
but within 30 days after the effective date of the merger, resign from
membership and is thereby excused from all contractual obligations to the
constituent or surviving corporations which did not occur before his resignation
and is thereby entitled to those rights, if any, which would have existed if
there had been no merger and the membership had been terminated or the member
had been expelled.
2. Unless otherwise provided in its articles of incorporation or bylaws,
no member of a domestic nonprofit corporation, including, but not limited to, a
cooperative corporation, which supplies services described in chapter 704 of NRS
------------------
to its members only, and no person who is a member of a domestic nonprofit
corporation as a condition of or by reason of the ownership of an interest in
real property, may resign and dissent pursuant to subsection 1.
(Added to NRS by 1995, 2088)
NRS 92A.380 RIGHT OF STOCKHOLDER TO DISSENT FROM CERTAIN CORPORATE ACTIONS
AND TO OBTAIN PAYMENT FOR SHARES.
1. Except as otherwise provided in NRS 92A.370 and 92A.390, any
------------ -------
stockholder is entitled to dissent from, and obtain payment of the fair value of
his shares in the event of any of the following corporate actions:
(a) Consummation of a conversion or plan of merger to which the domestic
corporation is a constituent entity:
(1) If approval by the stockholders is required for the conversion or
merger by NRS 92A.120 to 92A.160, inclusive, or the articles of incorporation,
----------- -------
regardless of whether the stockholder is entitled to vote on the conversion or
plan of merger; or
(2) If the domestic corporation is a subsidiary and is merged with
its parent pursuant to NRS 92A.180.
------------
(b) Consummation of a plan of exchange to which the domestic corporation
is a constituent entity as the corporation whose subject owner's interests will
be acquired, if his shares are to be acquired in the plan of exchange.
(c) Any corporate action taken pursuant to a vote of the stockholders to
the extent that the articles of incorporation, bylaws or a resolution of the
board of directors provides that voting or nonvoting stockholders are entitled
to dissent and obtain payment for their shares.
2. A stockholder who is entitled to dissent and obtain payment pursuant
to NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action
------------ -------
creating his entitlement unless the action is unlawful or fraudulent with
respect to him or the domestic corporation.
(Added to NRS by 1995, 2087; A 2001, 1414, 3199; 2003, 3189)
---- ---- ----
NRS 92A.390 LIMITATIONS ON RIGHT OF DISSENT: STOCKHOLDERS OF CERTAIN
CLASSES OR SERIES; ACTION OF STOCKHOLDERS NOT REQUIRED FOR PLAN OF MERGER.
1. There is no right of dissent with respect to a plan of merger or
exchange in favor of stockholders of any class or series which, at the record
date fixed to determine the stockholders entitled to receive notice of and to
vote at the meeting at which the plan of merger or exchange is to be acted on,
were either listed on a national securities exchange, included in the national
market system by the National Association of Securities Dealers, Inc., or held
by at least 2,000 stockholders of record, unless:
(a) The articles of incorporation of the corporation issuing the shares
provide otherwise; or
(b) The holders of the class or series are required under the plan of
merger or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests and cash in lieu of
fractional owner's interests of:
(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of the plan of
merger or exchange, were either listed on a national securities exchange,
included in the national market system by the National Association of Securities
Dealers, Inc., or held of record by a least 2,000 holders of owner's interests
of record; or
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(2) A combination of cash and owner's interests of the kind described
in sub-subparagraphs (I) and (II) of subparagraph (1) of paragraph (b).
2. There is no right of dissent for any holders of stock of the surviving
domestic corporation if the plan of merger does not require action of the
stockholders of the surviving domestic corporation under NRS 92A.130.
------------
(Added to NRS by 1995, 2088)
NRS 92A.400 LIMITATIONS ON RIGHT OF DISSENT: ASSERTION AS TO PORTIONS ONLY
TO SHARES REGISTERED TO STOCKHOLDER; ASSERTION BY BENEFICIAL STOCKHOLDER.
1. A stockholder of record may assert dissenter's rights as to fewer than
all of the shares registered in his name only if he dissents with respect to all
shares beneficially owned by any one person and notifies the subject corporation
in writing of the name and address of each person on whose behalf he asserts
dissenter's rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to shares
held on his behalf only if:
(a) He submits to the subject corporation the written consent of the
stockholder of record to the dissent not later than the time the beneficial
stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the beneficial
stockholder or over which he has power to direct the vote.
(Added to NRS by 1995, 2089)
NRS 92A.410 NOTIFICATION OF STOCKHOLDERS REGARDING RIGHT OF DISSENT.
1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, the notice of the meeting must
state that stockholders are or may be entitled to assert dissenters' rights
under NRS 92A.300 to 92A.500, inclusive, and be accompanied by a copy of those
------------ -------
sections.
2. If the corporate action creating dissenters' rights is taken by
written consent of the stockholders or without a vote of the stockholders, the
domestic corporation shall notify in writing all stockholders entitled to assert
dissenters' rights that the action was taken and send them the dissenter's
notice described in NRS 92A.430.
------------
(Added to NRS by 1995, 2089; A 1997, 730)
NRS 92A.420 PREREQUISITES TO DEMAND FOR PAYMENT FOR SHARES.
1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, a stockholder who wishes to
assert dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is taken,
written notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection 1
and NRS 92A.400 is not entitled to payment for his shares under this chapter.
------------
(Added to NRS by 1995, 2089; 1999, 1631)
----
NRS 92A.430 DISSENTER'S NOTICE: DELIVERY TO STOCKHOLDERS ENTITLED TO ASSERT
RIGHTS; CONTENTS.
1. If a proposed corporate action creating dissenters' rights is
authorized at a stockholders' meeting, the subject corporation shall deliver a
written dissenter's notice to all stockholders who satisfied the requirements to
assert those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and when
certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates to what
extent the transfer of the shares will be restricted after the demand for
payment is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to the news media or to the stockholders of the terms of the
proposed action and requires that the person asserting dissenter's rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(d) Set a date by which the subject corporation must receive the demand
for payment, which may not be less than 30 nor more than 60 days after the date
the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.
------------ -------
(Added to NRS by 1995, 2089)
-17-
NRS 92A.440 DEMAND FOR PAYMENT AND DEPOSIT OF CERTIFICATES; RETENTION OF
RIGHTS OF STOCKHOLDER.
1. A stockholder to whom a dissenter's notice is sent must:
(a) Demand payment;
(b) Certify whether he or the beneficial owner on whose behalf he is
dissenting, as the case may be, acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's notice for this
certification; and
(c) Deposit his certificates, if any, in accordance with the terms of the
notice.
2. The stockholder who demands payment and deposits his certificates, if
any, before the proposed corporate action is taken retains all other rights of a
stockholder until those rights are cancelled or modified by the taking of the
proposed corporate action.
3. The stockholder who does not demand payment or deposit his
certificates where required, each by the date set forth in the dissenter's
notice, is not entitled to payment for his shares under this chapter.
(Added to NRS by 1995, 2090; A 1997, 730; 2003, 3189)
----
NRS 92A.450 UNCERTIFICATED SHARES: AUTHORITY TO RESTRICT TRANSFER AFTER
DEMAND FOR PAYMENT; RETENTION OF RIGHTS OF STOCKHOLDER.
1. The subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their payment is
received.
2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are cancelled or modified by the taking of the proposed corporate
action.
(Added to NRS by 1995, 2090)
NRS 92A.460 PAYMENT FOR SHARES: GENERAL REQUIREMENTS.
1. Except as otherwise provided in NRS 92A.470, within 30 days after
-----------
receipt of a demand for payment, the subject corporation shall pay each
dissenter who complied with NRS 92A.440 the amount the subject corporation
------------
estimates to be the fair value of his shares, plus accrued interest. The
obligation of the subject corporation under this subsection may be enforced by
the district court:
(a) Of the county where the corporation's registered office is located; or
(b) At the election of any dissenter residing or having its registered
office in this state, of the county where the dissenter resides or has its
registered office. The court shall dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of payment, a statement of income
for that year, a statement of changes in the stockholders' equity for that year
and the latest available interim financial statements, if any;
(b) A statement of the subject corporation's estimate of the fair value of
the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's rights to demand payment under NRS
---
92A.480; and
-------
(e) A copy of NRS 92A.300 to 92A.500, inclusive.
------------ -------
(Added to NRS by 1995, 2090)
NRS 92A.470 PAYMENT FOR SHARES: SHARES ACQUIRED ON OR AFTER DATE OF
DISSENTER'S NOTICE.
1. A subject corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in
the dissenter's notice as the date of the first announcement to the news media
or to the stockholders of the terms of the proposed action.
2. To the extent the subject corporation elects to withhold payment,
after taking the proposed action, it shall estimate the fair value of the
shares, plus accrued interest, and shall offer to pay this amount to each
dissenter who agrees to accept it in full satisfaction of his demand. The
subject corporation shall send with its offer a statement of its estimate of the
fair value of the shares, an explanation of how the interest was calculated, and
a statement of the dissenters' right to demand payment pursuant to NRS 92A.480.
-----------
(Added to NRS by 1995, 2091)
NRS 92A.480 DISSENTER'S ESTIMATE OF FAIR VALUE: NOTIFICATION OF SUBJECT
CORPORATION; DEMAND FOR PAYMENT OF ESTIMATE.
1. A dissenter may notify the subject corporation in writing of his own
estimate of the fair value of his shares and the amount of interest due, and
demand payment of his estimate, less any payment pursuant to NRS 92A.460, or
-----------
-18-
reject the offer pursuant to NRS 92A.470 and demand payment of the fair value of
-----------
his shares and interest due, if he believes that the amount paid pursuant to NRS
---
92A.460 or offered pursuant to NRS 92A.470 is less than the fair value of his
------- -----------
shares or that the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this
section unless he notifies the subject corporation of his demand in writing
within 30 days after the subject corporation made or offered payment for his
shares.
(Added to NRS by 1995, 2091)
NRS 92A.490 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: DUTIES OF SUBJECT
CORPORATION; POWERS OF COURT; RIGHTS OF DISSENTER.
1. If a demand for payment remains unsettled, the subject corporation
shall commence a proceeding within 60 days after receiving the demand and
petition the court to determine the fair value of the shares and accrued
interest. If the subject corporation does not commence the proceeding within the
60-day period, it shall pay each dissenter whose demand remains unsettled the
amount demanded.
2. A subject corporation shall commence the proceeding in the district
court of the county where its registered office is located. If the subject
corporation is a foreign entity without a resident agent in the state, it shall
commence the proceeding in the county where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
entity was located.
3. The subject corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding
as in an action against their shares. All parties must be served with a copy of
the petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced
under subsection 2 is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or any amendment thereto. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is entitled to a
judgment:
(a) For the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the subject corporation; or
(b) For the fair value, plus accrued interest, of his after-acquired
shares for which the subject corporation elected to withhold payment pursuant to
NRS 92A.470.
------------
(Added to NRS by 1995, 2091)
NRS 92A.500 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: ASSESSMENT OF COSTS
AND FEES.
1. The court in a proceeding to determine fair value shall determine all
of the costs of the proceeding, including the reasonable compensation and
expenses of any appraisers appointed by the court. The court shall assess the
costs against the subject corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously or not
in good faith in demanding payment.
2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and in favor of all dissenters if the
court finds the subject corporation did not substantially comply with the
requirements of NRS 92A.300 to 92A.500, inclusive; or
------------ -------
(b) Against either the subject corporation or a dissenter in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by NRS 92A.300 to 92A.500, inclusive.
------------ -------
3. If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the subject corporation, the
court may award to those counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited.
4. In a proceeding commenced pursuant to NRS 92A.460, the court may
-----------
assess the costs against the subject corporation, except that the court may
assess costs against all or some of the dissenters who are parties to the
proceeding, in amounts the court finds equitable, to the extent the court finds
that such parties did not act in good faith in instituting the proceeding.
5. This section does not preclude any party in a proceeding commenced
pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68
----------- ------- -----------
or NRS 17.115.
-----------
(Added to NRS by 1995, 2092)
-19-
ATTACHMENT C
STOCK PLANS
USA TELCOM INTERNATIONALE
2004 EMPLOYEE STOCK INCENTIVE PLAN
1. GENERAL PROVISIONS.
1.1 PURPOSE. This Stock Incentive Plan (the "PLAN") is intended to
allow designated officers and employees (including so-called "leased employees")
(all of whom are sometimes collectively referred to herein as the "EMPLOYEES,"
or individually as the "EMPLOYEE") of USA Telcom Internationale, a Nevada
corporation (the "COMPANY") and its Subsidiaries (as that term is defined below)
which they may have from time to time (the Company and such Subsidiaries are
referred to herein as the "COMPANY") to receive certain options (the "STOCK
OPTIONS") to purchase common stock of the Company, par value $0.001 per share
(the "COMMON STOCK"), and to receive grants of the Common Stock subject to
certain restrictions (the "AWARDS"). As used in this Plan, the term "SUBSIDIARY"
shall mean each corporation which is a "subsidiary corporation" of the Company
within the meaning of Section 424(f) of the Internal Revenue Code of 1986, as
amended (the "CODE"). The purpose of this Plan is to provide the Employees with
equity-based compensation incentives who make significant and extraordinary
contributions to the long-term growth and performance of the Company, and to
attract and retain the Employees.
1.2 ADMINISTRATION.
1.2.1 The Plan shall be administered by the Compensation
Committee (the "COMMITTEE") of, or appointed by, the Board of Directors of the
Company (the "BOARD"). The Committee shall select one of its members as Chairman
and shall act by vote of a majority of a quorum, or by unanimous written
consent. A majority of its members shall constitute a quorum. The Committee
shall be governed by the provisions of the Company's Bylaws and of Nevada law
applicable to the Board, except as otherwise provided herein or determined by
the Board.
1.2.2 The Committee shall have full and complete authority, in
its discretion, but subject to the express provisions of this Plan, (a) to
approve the Employees nominated by the management of the Company to be granted
Awards or Stock Options; (b) to determine the number of Awards or Stock Options
to be granted to an Employee; (c) to determine the time or times at which Awards
or Stock Options shall be granted; to establish the terms and conditions upon
which Awards or Stock Options may be exercised; (d) to remove or adjust any
restrictions and conditions upon Awards or Stock Options; (e) to specify, at the
time of grant, provisions relating to exercisability of Stock Options and to
accelerate or otherwise modify the exercisability of any Stock Options; and (f)
to adopt such rules and regulations and to make all other determinations deemed
necessary or desirable for the administration of this Plan. All interpretations
and constructions of this Plan by the Committee, and all of its actions
hereunder, shall be binding and conclusive on all persons for all purposes.
1.2.3 The Company hereby agrees to indemnify and hold harmless
each Committee member and each Employee, and the estate and heirs of such
Committee member or Employee, against all claims, liabilities, expenses,
penalties, damages or other pecuniary losses, including legal fees, which such
Committee member or Employee, his estate or heirs may suffer as a result of his
responsibilities, obligations or duties in connection with this Plan, to the
extent that insurance, if any, does not cover the payment of such items. No
member of the Committee or the Board shall be liable for any action or
determination made in good faith with respect to this Plan or any Award or Stock
Option granted pursuant to this Plan.
1
1.3 ELIGIBILITY AND PARTICIPATION. The Employees eligible under this
Plan shall be approved by the Committee from those Employees who, in the opinion
of the management of the Company, are in positions which enable them to make
significant contributions to the long-term performance and growth of the
Company. In selecting the Employees to whom Award or Stock Options may be
granted, consideration shall be given to factors such as employment position,
duties and responsibilities, ability, productivity, length of service, morale,
interest in the Company and recommendations of supervisors.
1.4 SHARES SUBJECT TO THE PLAN. The maximum number of shares of the
Common Stock that may be issued pursuant to this Plan shall be 6,000,000 subject
to adjustment pursuant to the provisions of Section 4.1. If shares of the Common
Stock awarded or issued under this Plan are reacquired by the Company due to a
forfeiture or for any other reason, such shares shall be cancelled and
thereafter shall again be available for purposes of this Plan. If a Stock Option
expires, terminates or is cancelled for any reason without having been exercised
in full, the shares of the Common Stock not purchased thereunder shall again be
available for purposes of this Plan.
2. PROVISIONS RELATING TO STOCK OPTIONS.
2.1 GRANTS OF STOCK OPTIONS. The Committee may grant Stock Options
in such amounts, at such times, and to the Employees nominated by the management
of the Company as the Committee, in its discretion, may determine. Stock Options
granted under this Plan may constitute "incentive stock options" within the
meaning of Section 422 of the Code, if so designated by the Committee on the
date of grant and if the requirements of Section 422 of the Code have been met.
The Committee may also grant Stock Options which do not constitute incentive
stock options, and any such Stock Options shall be designated non-statutory
stock options by the Committee on the date of grant. The aggregate Fair Market
Value (determined as of the time an incentive stock option is granted) of the
Common Stock with respect to which incentive stock options are exercisable for
the first time by any Employee during any one calendar year (under all plans of
the Company and any parent or subsidiary of the Company) may not exceed the
maximum amount permitted under Section 422 of the Code (currently, $100,000.00).
Non-statutory stock options shall not be subject to the limitations relating to
incentive stock options contained in the preceding sentence. Each Stock Option
shall be evidenced by a written agreement (the "OPTION AGREEMENT") in a form
approved by the Committee, which shall be executed on behalf of the Company and
by the Employee to whom the Stock Option is granted, and which shall be subject
to the terms and conditions of this Plan. In the discretion of the Committee,
Stock Options may include provisions (which need not be uniform), authorized by
the Committee, in its discretion, that accelerate an Employee's rights to
exercise Stock Options following a "Change in Control," upon termination of the
Employee's employment by the Company without "Cause" or by the Employee for
"Good Reason," as such terms are defined in Section 3.1 hereof. The holder of a
Stock Option shall not be entitled to the privileges of stock ownership as to
any shares of the Common Stock not actually issued to such holder.
The exercise price per share for the Stock covered by a Stock Option
shall be determined by the Committee at the time of grant but in the case of
Incentive Stock Options shall not be less than 100% of the Fair Market Value on
the date of grant. If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more than 10% of
the combined voting power of all classes of stock of the Company or any parent
or subsidiary corporation and an Incentive Stock Option is granted to such
employee, the option price of such Incentive Stock Option shall be not less than
110% of the Fair Market Value on the grant date.
2
2.2 PURCHASE PRICE. The purchase price (the "EXERCISE PRICE") of
shares of the Common Stock subject to each Stock Option (the "OPTION SHARES")
shall be determined by the Committee at the time of grant but, in the case of an
incentive stock option, shall not be less than 100% percent of the Fair Market
Value on the date of the grant of the option. For an Employee holding or who is
deemed to be holding (by reason of the attribution rules applicable under
Section 424(d) of the Code) greater than 10% of the total voting power of all
stock of the Company, the Exercise Price of an incentive stock option shall be
at least 110% of the Fair Market Value of the Common Stock on the date of the
grant of the option. As used herein, "Fair Market Value" means the mean between
the highest and lowest reported sales prices of the Common Stock on the New York
Stock Exchange Composite Tape or, if not listed on such exchange, on any other
national securities exchange on which the Common Stock is listed or on The
Nasdaq Stock Market, or, if not so listed on any other national securities
exchange or The Nasdaq Stock Market, then the average of the bid price of the
Common Stock during the last five trading days on the OTC Bulletin Board
immediately preceding the last trading day prior to the date with respect to
which the Fair Market Value is to be determined. If the Common Stock is not then
publicly traded, then the Fair Market Value of the Common Stock shall be the
book value of the Company per share as determined on the last day of March,
June, September, or December in any year closest to the date when the
determination is to be made. For the purpose of determining book value
hereunder, book value shall be determined by adding as of the applicable date
called for herein the capital, surplus, and undivided profits of the Company,
and after having deducted any reserves theretofore established; the sum of these
items shall be divided by the number of shares of the Common Stock outstanding
as of said date, and the quotient thus obtained shall represent the book value
of each share of the Common Stock of the Company.
2.3 OPTION PERIOD. The Stock Option period (the "TERM") shall
commence on the date of grant of the Stock Option and shall be 10 years or such
shorter period as is determined by the Committee. Each Stock Option shall
provide that it is exercisable over its term in such periodic installments as
the Committee in its sole discretion may determine. Such provisions need not be
uniform. Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT") exempts persons normally subject to the reporting requirements
of Section 16(a) of the Exchange Act (the "SECTION 16 REPORTING PERSONS")
pursuant to a qualified employee stock option plan from the normal requirement
of not selling until at least six months and one day from the date the Stock
Option is granted.
2.4 EXERCISE OF OPTIONS.
2.4.1 Each Stock Option may be exercised in whole or in part (but
not as to fractional shares) by delivering it for surrender or endorsement to
the Company, attention of the Corporate Secretary, at the principal office of
the Company, together with payment of the Exercise Price and an executed Notice
and Agreement of Exercise in the form prescribed by Section 2.4.2. Payment may
be made (a) in cash, (b) by cashier's or certified check, (c) by surrender of
previously owned shares of the Common Stock valued pursuant to Section 2.2 (if
the Committee authorizes payment in stock in its discretion), (d) by withholding
from the Option Shares which would otherwise be issuable upon the exercise of
the Stock Option that number of Option Shares equal to the exercise price of the
Stock Option, if such withholding is authorized by the Committee in its
discretion, (e) in the discretion of the Committee, by the delivery to the
Company of the optionee's promissory note secured by the Option Shares, bearing
interest at a rate sufficient to prevent the imputation of interest under
Sections 483 or 1274 of the Code, and having such other terms and conditions as
may be satisfactory to the Committee., or (f) if the Employee and the Company so
agree, deliver to the Optionee's NASD licensed broker-dealer and to the Company
an irrevocable notice of exercise of the option, together with irrevocable
instructions from the Optionee to the Company to deliver the Option Shares to
the broker-dealer. Upon receipt of such notice, the Company shall immediately
deliver to the Employee's broker-dealer the share certificate(s) representing
the Option Shares so purchased, and upon receipt of such certificate(s), the
broker shall sell the Option Shares and remit the purchase price for all Option
Shares then being purchased, and any withholding taxes to the Corporation.
3
2.4.2 Exercise of each Stock Option is conditioned upon the
agreement of the Employee to the terms and conditions of this Plan and of such
Stock Option as evidenced by the Employee's execution and delivery of a Notice
and Agreement of Exercise in a form to be determined by the Committee in its
discretion. Such Notice and Agreement of Exercise shall set forth the agreement
of the Employee that (a) no Option Shares will be sold or otherwise distributed
in violation of the Securities Act of 1933, as amended (the "SECURITIES ACT") or
any other applicable federal or state securities laws, (b) each Option Share
certificate may be imprinted with legends reflecting any applicable federal and
state securities law restrictions and conditions, (c) the Company may comply
with said securities law restrictions and issue "stop transfer" instructions to
its Transfer Agent and Registrar without liability, (d) if the Employee is a
Section 16 Reporting Person, the Employee will furnish to the Company a copy of
each Form 4 or Form 5 filed by said Employee and will timely file all reports
required under federal securities laws, and (e) the Employee will report all
sales of Option Shares to the Company in writing on a form prescribed by the
Company.
2.4.3 No Stock Option shall be exercisable unless and until any
applicable registration or qualification requirements of federal and state
securities laws, and all other legal requirements, have been fully complied
with. The Company will use reasonable efforts to maintain the effectiveness of a
registration statement under the Securities Act (a "REGISTRATION STATEMENT") for
the issuance of Stock Options and shares acquired thereunder, but there may be
times when no such Registration Statement will be currently effective. The
exercise of Stock Options may be temporarily suspended without liability to the
Company during times when no such Registration Statement is currently effective,
or during times when, in the reasonable opinion of the Committee, such
suspension is necessary to preclude violation of any requirements of applicable
law or regulatory bodies having jurisdiction over the Company. If any Stock
Option would expire for any reason except the end of its term during such a
suspension, then if exercise of such Stock Option is duly tendered before its
expiration, such Stock Option shall be exercisable and exercised (unless the
attempted exercise is withdrawn) as of the first day after the end of such
suspension. The Company shall have no obligation to file any Registration
Statement covering resales of Option Shares.
4
2.5 CONTINUOUS EMPLOYMENT. Except as provided in Section 2.7 below,
an Employee may not exercise a Stock Option unless from the date of grant to the
date of exercise the Employee remains continuously in the employ of the Company
(which shall be deemed to included Employees who are "leased" by the Company
from a third party). For purposes of this Section 2.5, the period of continuous
employment of an Employee with the Company shall be deemed to include (without
extending the term of the Stock Option) any period during which the Employee is
on leave of absence with the consent of the Company, provided that such leave of
absence shall not exceed three months and that the Employee returns to the
employ of the Company at the expiration of such leave of absence. If the
Employee fails to return to the employ of the Company at the expiration of such
leave of absence, the Employee's employment with the Company shall be deemed
terminated as of the date such leave of absence commenced. The continuous
employment of an Employee with the Company shall also be deemed to include any
period during which the Employee is a member of the Armed Forces of the United
States, provided that the Employee returns to the employ of the Company within
90 days (or such longer period as may be prescribed by law) from the date the
Employee first becomes entitled to a discharge from military service. If an
Employee does not return to the employ of the Company within 90 days (or such
longer period as may be prescribed by law) from the date the Employee first
becomes entitled to a discharge from military service, the Employee's employment
with the Company shall be deemed to have terminated as of the date the
Employee's military service ended.
2.6 RESTRICTIONS ON TRANSFER. Each Stock Option granted under this
Plan shall be transferable only by will or the laws of descent and distribution.
No interest of any Employee under this Plan shall be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other legal
or equitable process. Each Stock Option granted under this Plan shall be
exercisable during an Employee's lifetime only by the Employee or by the
Employee's legal representative.
2.7 TERMINATION OF EMPLOYMENT.
2.7.1 Upon an Employee's Retirement, Disability (both terms
being defined below) or death, (a) all Stock Options to the extent then
presently exercisable shall remain in full force and effect and may be exercised
pursuant to the provisions thereof, including expiration at the end of the fixed
term thereof, and (b) unless otherwise provided by the Committee, all Stock
Options to the extent not then presently exercisable by the Employee shall
terminate as of the date of such termination of employment and shall not be
exercisable thereafter.
2.7.2 Upon the termination of the employment of an Employee
with the Company for any reason other than the reasons set forth in Section
2.7.1 hereof, (a) all Stock Options to the extent then presently exercisable by
the Employee shall remain exercisable only for a period of 90 days after the
date of such termination of employment (except that the 90 day period shall be
extended to 12 months if the Employee shall die during such 90 day period), and
may be exercised pursuant to the provisions thereof, including expiration at the
end of the fixed term thereof, and (b) unless otherwise provided by the
Committee, all Stock Options to the extent not then presently exercisable by the
Employee shall terminate as of the date of such termination of employment and
shall not be exercisable thereafter.
2.7.3 For purposes of this Plan:
(a) "RETIREMENT" shall mean an Employee's retirement from the
employ of the Company on or after the date on which the Employee attains the age
of 65 years; and
5
(b) "DISABILITY" shall mean total and permanent incapacity of
an Employee, due to physical impairment or legally established mental
incompetence, to perform the usual duties of the Employee's employment with the
Company, which disability shall be determined (i) on medical evidence by a
licensed physician designated by the Committee, or (ii) on evidence that the
Employee has become entitled to receive primary benefits as a disabled employee
under the Social Security Act in effect on the date of such disability.
3. PROVISIONS RELATING TO AWARDS.
3.1 GRANT OF AWARDS. Subject to the provisions of this Plan, the
Committee shall have full and complete authority, in its discretion, but subject
to the express provisions of this Plan, to (1) grant Awards pursuant to this
Plan, (2) determine the number of shares of the Common Stock subject to each
Award (the "AWARD SHARES"), (3) determine the terms and conditions (which need
not be identical) of each Award, including the consideration (if any) to be paid
by the Employee for such the Common Stock, which may, in the Committee's
discretion, consist of the delivery of the Employee's promissory note meeting
the requirements of Section 2.4.1, (4) establish and modify performance criteria
for Awards, and (5) make all of the determinations necessary or advisable with
respect to Awards under this Plan. Each Award under this Plan shall consist of a
grant of shares of the Common Stock subject to a restriction period (after which
the restrictions shall lapse), which shall be a period commencing on the date
the Award is granted and ending on such date as the Committee shall determine
(the "RESTRICTION PERIOD"). The Committee may provide for the lapse of
restrictions in installments, for acceleration of the lapse of restrictions upon
the satisfaction of such performance or other criteria or upon the occurrence of
such events as the Committee shall determine, and for the early expiration of
the Restriction Period upon an Employee's death, Disability or Retirement as
defined in Section 2.7.3, or, following a Change of Control, upon termination of
an Employee's employment by the Company without "Cause" or by the Employee for
"Good Reason," as those terms are defined herein. For purposes of this Plan:
"CHANGE OF CONTROL" shall be deemed to occur (a) on the date the Company
first has actual knowledge that any person (as such term is used in Sections
13(d) and 14(d)(2) of the Exchange Act) has become the beneficial owner (as
defined in Rule 13(d)-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 40 percent or more of the combined voting
power of the Company's then outstanding securities, or (b) on the date the
stockholders of the Company approve (i) a merger of the Company with or into any
other corporation in which the Company is not the surviving corporation or in
which the Company survives as a subsidiary of another corporation, (ii) a
consolidation of the Company with any other corporation, or (iii) the sale or
disposition of all or substantially all of the Company's assets or a plan of
complete liquidation.
"CAUSE," when used with reference to termination of the employment of an
Employee by the Company for "Cause," shall mean:
(a) The Employee's continuing willful and material breach of his
duties to the Company after he receives a demand from the Chief Executive of the
Company specifying the manner in which he has willfully and materially breached
such duties, other than any such failure resulting from Disability of the
Employee or his resignation for "Good Reason," as defined herein; or
6
(b) The conviction of the Employee of a felony; or
(c) The Employee's commission of fraud in the course of his
employment with the Company, such as embezzlement or other material and
intentional violation of law against the Company; or
(d) The Employee's gross misconduct causing material harm to the
Company.
"GOOD REASON" shall mean any one or more of the following, occurring
following or in connection with a Change of Control and within 90 days prior to
the Employee's resignation, unless the Employee shall have consented thereto in
writing:
(a) The assignment to the Employee of duties inconsistent with
his executive status prior to the Change of Control or a substantive change in
the officer or officers to whom he reports from the officer or officers to whom
he reported immediately prior to the Change of Control; or
(b) The elimination or reassignment of a majority of the
duties and responsibilities that were assigned to the Employee immediately prior
to the Change of Control; or
(c) A reduction by the Company in the Employee's annual base
salary as in effect immediately prior to the Change of Control; or
(d) The Company requiring the Employee to be based anywhere
outside a 35-mile radius from his place of employment immediately prior to the
Change of Control, except for required travel on the Company's business to an
extent substantially consistent with the Employee's business travel obligations
immediately prior to the Change of Control; or
(e) The failure of the Company to grant the Employee a
performance bonus reasonably equivalent to the same percentage of salary the
Employee normally received prior to the Change of Control, given comparable
performance by the Company and the Employee; or
(f) The failure of the Company to obtain a satisfactory
Assumption Agreement (as defined in Section 4.12 of this Plan) from a successor,
or the failure of such successor to perform such Assumption Agreement.
3.2 INCENTIVE AGREEMENTS. Each Award granted under this Plan shall
be evidenced by a written agreement (an "INCENTIVE AGREEMENT") in a form
approved by the Committee and executed by the Company and the Employee to whom
the Award is granted. Each Incentive Agreement shall be subject to the terms and
conditions of this Plan and other such terms and conditions as the Committee may
specify.
3.3 WAIVER OF RESTRICTIONS. The Committee may modify or amend any
Award under this Plan or waive any restrictions or conditions applicable to the
Award; provided, however, that the Committee may not undertake any such
modifications, amendments or waivers if the effect thereof materially increases
the benefits to any Employee, or adversely affects the rights of any Employee
without his consent.
3.4 TERMS AND CONDITIONS OF AWARDS. Upon receipt of an Award of
shares of the Common Stock under this Plan, even during the Restriction Period,
an Employee shall be the holder of record of the shares and shall have all the
rights of a stockholder with respect to such shares, subject to the terms and
conditions of this Plan and the Award.
7
3.4.1 Except as otherwise provided in this Section 3.4, no
shares of the Common Stock received pursuant to this Plan shall be sold,
exchanged, transferred, pledged, hypothecated or otherwise disposed of during
the Restriction Period applicable to such shares. Any purported disposition of
such the Common Stock in violation of this Section 3.4.2 shall be null and void.
3.4.2 If an Employee's employment with the Company terminates
prior to the expiration of the Restriction Period for an Award, subject to any
provisions of the Award with respect to the Employee's death, Disability or
Retirement, or Change of Control, all shares of the Common Stock subject to the
Award shall be immediately forfeited by the Employee and reacquired by the
Company, and the Employee shall have no further rights with respect to the
Award. In the discretion of the Committee, an Incentive Agreement may provide
that, upon the forfeiture by an Employee of Award Shares, the Company shall
repay to the Employee the consideration (if any) which the Employee paid for the
Award Shares on the grant of the Award. In the discretion of the Committee, an
Incentive Agreement may also provide that such repayment shall include an
interest factor on such consideration from the date of the grant of the Award to
the date of such repayment.
3.4.3 The Committee may require under such terms and
conditions as it deems appropriate or desirable that (a) the certificates for
the Common Stock delivered under this Plan are to be held in custody by the
Company or a person or institution designated by the Company until the
Restriction Period expires, (b) such certificates shall bear a legend referring
to the restrictions on the Common Stock pursuant to this Plan, and (c) the
Employee shall have delivered to the Company a stock power endorsed in blank
relating to the Common Stock.
4. MISCELLANEOUS PROVISIONS.
4.1 ADJUSTMENTS UPON CHANGE IN CAPITALIZATION.
4.1.1 The number and class of shares subject to each
outstanding Stock Option, the Exercise Price thereof (but not the total price),
the maximum number of Stock Options that may be granted under this Plan, the
minimum number of shares as to which a Stock Option may be exercised at any one
time, and the number and class of shares subject to each outstanding Award,
shall be proportionately adjusted in the event of any increase or decrease in
the number of the issued shares of the Common Stock which results from a
split-up or consolidation of shares, payment of a stock dividend or dividends
exceeding a total of five percent for which the record dates occur in any one
fiscal year, a recapitalization (other than the conversion of convertible
securities according to their terms), a combination of shares or other like
capital adjustment, so that (a) upon exercise of the Stock Option, the Employee
shall receive the number and class of shares the Employee would have received
had the Employee been the holder of the number of shares of the Common Stock for
which the Stock Option is being exercised upon the date of such change or
increase or decrease in the number of issued shares of the Company, and (b) upon
the lapse of restrictions of the Award Shares, the Employee shall receive the
number and class of shares the Employee would have received if the restrictions
on the Award Shares had lapsed on the date of such change or increase or
decrease in the number of issued shares of the Company.
8
4.1.2 Upon a reorganization, merger or consolidation of the
Company with one or more corporations as a result of which the Company is not
the surviving corporation or in which the Company survives as a wholly-owned
subsidiary of another corporation, or upon a sale of all or substantially all of
the property of the Company to another corporation, or any dividend or
distribution to stockholders of more than 10 percent of the Company's assets,
adequate adjustment or other provisions shall be made by the Company or other
party to such transaction so that there shall remain and/or be substituted for
the Option Shares and Award Shares provided for herein, the shares, securities
or assets which would have been issuable or payable in respect of or in exchange
for such Option Shares and Award Shares then remaining, as if the Employee had
been the owner of such shares as of the applicable date. Any securities so
substituted shall be subject to similar successive adjustments.
4.2 WITHHOLDING TAXES. The Company shall have the right at the time of
exercise of any Stock Option, the grant of an Award, or the lapse of
restrictions on Award Shares, to make adequate provision for any federal, state,
local or foreign taxes which it believes are or may be required by law to be
withheld with respect to such exercise (the "TAX LIABILITY"), to ensure the
payment of any such Tax Liability. The Company may provide for the payment of
any Tax Liability by any of the following means or a combination of such means,
as determined by the Committee in its sole and absolute discretion in the
particular case (1) by requiring the Employee to tender a cash payment to the
Company, (2) by withholding from the Employee's salary, (3) by withholding from
the Option Shares which would otherwise be issuable upon exercise of the Stock
Option, or from the Award Shares on their grant or date of lapse of
restrictions, that number of Option Shares or Award Shares having an aggregate
Fair Market Value (determined in the manner prescribed by Section 2.2) as of the
date the withholding tax obligation arises in an amount which is equal to the
Employee's Tax Liability or (4) by any other method deemed appropriate by the
Committee. Satisfaction of the Tax Liability of a Section 16 Reporting Person
may be made by the method of payment specified in clause (3) above only if the
following two conditions are satisfied:
(a) The withholding of Option Shares or Award Shares and the
exercise of the related Stock Option occur at least six months and one day
following the date of grant of such Stock Option or Award; and
(b) The withholding of Option Shares or Award Shares is made
either (i) pursuant to an irrevocable election (the "WITHHOLDING ELECTION") made
by the Employee at least six months in advance of the withholding of Options
Shares or Award Shares, or (ii) on a day within a 10-day "window period"
beginning on the third business day following the date of release of the
Company's quarterly or annual summary statement of sales and earnings.
Anything herein to the contrary notwithstanding, a Withholding
Election may be disapproved by the Committee at any time.
9
4.3 RELATIONSHIP TO OTHER EMPLOYEE BENEFIT PLANS. Stock Options and Awards
granted hereunder shall not be deemed to be salary or other compensation to any
Employee for purposes of any pension, thrift, profit-sharing, stock purchase or
any other employee benefit plan now maintained or hereafter adopted by the
Company.
4.4 AMENDMENT AND TERMINATION. The Board of Directors may at any time
suspend, amend or terminate this Plan. No amendment, except as provided in
Section 2.8, or modification of this Plan may be adopted, except subject to
stockholder approval, which would (1) materially increase the benefits accruing
to the Employees under this Plan, (2) materially increase the number of
securities which may be issued under this Plan (except for adjustments pursuant
to Section 4.1 hereof), or (3) materially modify the requirements as to
eligibility for participation in this Plan.
4.5 SUCCESSORS IN INTEREST. The provisions of this Plan and the actions of
the Committee shall be binding upon all heirs, successors and assigns of the
Company and of the Employees.
4.6 OTHER DOCUMENTS. All documents prepared, executed or delivered in
connection with this Plan (including, without limitation, Option Agreements and
Incentive Agreements) shall be, in substance and form, as established and
modified by the Committee; provided, however, that all such documents shall be
subject in every respect to the provisions of this Plan, and in the event of any
conflict between the terms of any such document and this Plan, the provisions of
this Plan shall prevail.
4.7 NO OBLIGATION TO CONTINUE EMPLOYMENT. This Plan and the grants which
might be made hereunder shall not impose any obligation on the Company to
continue to employ any Employee. Moreover, no provision of this Plan or any
document executed or delivered pursuant to this Plan shall be deemed modified in
any way by any employment contract between an Employee (or other employee) and
the Company.
4.8 MISCONDUCT OF AN EMPLOYEE. Notwithstanding any other provision of this
Plan, if an Employee commits fraud or dishonesty toward the Company or
wrongfully uses or discloses any trade secret, confidential data or other
information proprietary to the Company, or intentionally takes any other action
materially inimical to the best interests of the Company, as determined by the
Committee, in its sole and absolute discretion, the Employee shall forfeit all
rights and benefits under this Plan.
4.9 TERM OF PLAN. This Plan was adopted by the Board effective June __,
2004. No Stock Options or Awards may be granted under this Plan after June __,
2014.
4.10 GOVERNING LAW. This Plan shall be construed in accordance with, and
governed by, the laws of the State of Nevada.
4.11 APPROVAL, No Stock Option shall be exercisable, or Award granted,
unless and until the Directors of the Company have approved this Plan and all
other legal requirements have been met.
10
4.12 ASSUMPTION AGREEMENTS. The Company will require each successor,
(direct or indirect, whether by purchase, merger, consolidation or otherwise),
to all or substantially all of the business or assets of the Company, prior to
the consummation of each such transaction, to assume and agree to perform the
terms and provisions remaining to be performed by the Company under each
Incentive Agreement and Stock Option and to preserve the benefits to the
Employees thereunder. Such assumption and agreement shall be set forth in a
written agreement in form and substance satisfactory to the Committee (an
"ASSUMPTION AGREEMENT"), and shall include such adjustments, if any, in the
application of the provisions of the Incentive Agreements and Stock Options and
such additional provisions, if any, as the Committee shall require and approve,
in order to preserve such benefits to the Employees. Without limiting the
generality of the foregoing, the Committee may require an Assumption Agreement
to include satisfactory undertakings by a successor:
(a) To provide liquidity to the Employees at the end of the
Restriction Period applicable to the Common Stock awarded to them under this
Plan, or on the exercise of Stock Options;
(b) If the succession occurs before the expiration of any period
specified in the Incentive Agreements for satisfaction of performance criteria
applicable to the Common Stock awarded thereunder, to refrain from interfering
with the Company's ability to satisfy such performance criteria or to agree to
modify such performance criteria and/or waive any criteria that cannot be
satisfied as a result of the succession;
(c) To require any future successor to enter into an Assumption
Agreement; and
(d) To take or refrain from taking such other actions as the
Committee may require and approve, in its discretion.
The Committee referred to in this Section 4.12 is the Committee
appointed by a Board of Directors in office prior to the succession then under
consideration.
4.13 COMPLIANCE WITH RULE 16B-3. Transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3. To the extent
that any provision of this Plan or action by the Committee fails to so comply,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
4.14 INFORMATION TO STOCKHOLDERS. The Company shall furnish to each
of its stockholders financial statements of the Company at least annually.
IN WITNESS WHEREOF, this Plan has been executed effective as of June 10,
2004.
USA TELCOM INTERNATIONALE
By: /s/ Robert C. Simpson
-------------------------------------
Robert C. Simpson,
President and Chairman of the Board
11
USA TELCOM INTERNATIONALE
2004 NON-EMPLOYEE DIRECTORS
AND CONSULTANTS RETAINER STOCK PLAN
1. INTRODUCTION. This Plan shall be known as the "USA TELCOM
INTERNATIONALE 2004 NON-EMPLOYEE DIRECTORS AND CONSULTANTS RETAINER STOCK PLAN,"
and is hereinafter referred to as the "PLAN." The purposes of this Plan are to
enable USA Telcom Internationale, a Nevada corporation (the "COMPANY"), to
promote the interests of the Company and its stockholders by attracting and
retaining non-employee Directors and Consultants capable of furthering the
future success of the Company and by aligning their economic interests more
closely with those of the Company's stockholders, by paying their retainer or
fees in the form of shares of the Company's common stock, par value $0.001 per
share (the "COMMON Stock").
2. DEFINITIONS. The following terms shall have the meanings set forth
below:
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "CHANGE OF CONTROL" has the meaning set forth in Section 12.4
hereof.
2.3 "CODE" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations thereunder. References to any provision of the Code or
rule or regulation thereunder shall be deemed to include any amended or
successor provision, rule or regulation.
2.4 "COMMITTEE" means the committee that administers this Plan, as
more fully defined in Section 13 hereof.
2.5 "COMMON STOCK" has the meaning set forth in Section 1 hereof.
2.6 "COMPANY" has the meaning set forth in Section 1 hereof.
2.7 "DEFERRAL" has the meaning set forth in Section 6 hereof.
2.8 "DEFERRED STOCK ACCOUNT" means a bookkeeping account maintained
by the Company for a Participant representing the Participant's interest in the
shares credited to such Deferred Stock Account pursuant to Section 7 hereof.
2.9 "DELIVERY DATE" has the meaning set forth in Section 6 hereof.
2.10 "DIRECTOR" means an individual who is a member of the Board of
Directors of the Company.
2.11 "DIVIDEND EQUIVALENT" for a given dividend or other
distribution means a number of shares of the Common Stock having a Fair Market
Value, as of the record date for such dividend or distribution, equal to the
amount of cash, plus the Fair Market Value on the date of distribution of any
property, that is distributed with respect to one share of the Common Stock
pursuant to such dividend or distribution; such Fair Market Value to be
determined by the Committee in good faith.
1
2.12 "EFFECTIVE DATE" has the meaning set forth in Section 3 hereof.
2.13 "EXCHANGE ACT" has the meaning set forth in Section 13.2
hereof.
2.14 "FAIR MARKET VALUE" means the mean between the highest and
lowest reported sales prices of the Common Stock on the New York Stock Exchange
Composite Tape or, if not listed on such exchange, on any other national
securities exchange on which the Common Stock is listed or on The Nasdaq Stock
Market, or, if not so listed on any other national securities exchange or The
Nasdaq Stock Market, then the average of the bid price of the Common Stock
during the last five trading days on the OTC Bulletin Board immediately
preceding the last trading day prior to the date with respect to which the Fair
Market Value is to be determined. If the Common Stock is not then publicly
traded, then the Fair Market Value of the Common Stock shall be the book value
of the Company per share as determined on the last day of March, June,
September, or December in any year closest to the date when the determination is
to be made. For the purpose of determining book value hereunder, book value
shall be determined by adding as of the applicable date called for herein the
capital, surplus, and undivided profits of the Company, and after having
deducted any reserves theretofore established; the sum of these items shall be
divided by the number of shares of the Common Stock outstanding as of said date,
and the quotient thus obtained shall represent the book value of each share of
the Common Stock of the Company.
2.15 "PARTICIPANT" has the meaning set forth in Section 4 hereof.
2.16 "PAYMENT TIME" means the time when a Stock Retainer is payable
to a Participant pursuant to Section 5 hereof (without regard to the effect of
any Deferral Election).
2.17 "STOCK RETAINER" has the meaning set forth in Section 5 hereof.
2.18 "THIRD ANNIVERSARY" has the meaning set forth in Section 6
hereof.
3. EFFECTIVE DATE OF THE PLAN. This Plan was adopted by the Board
effective June 10, 2004 (the "EFFECTIVE DATE").
4. ELIGIBILITY. Each individual who is a Director or Consultant on the
Effective Date and each individual who becomes a Director or Consultant
thereafter during the term of this Plan, shall be a participant (the
"PARTICIPANT") in this Plan, in each case during such period as such individual
remains a Director or Consultant and is not an employee of the Company or any of
its subsidiaries. Each credit of shares of the Common Stock pursuant to this
Plan shall be evidenced by a written agreement duly executed and delivered by or
on behalf of the Company and a Participant, if such an agreement is required by
the Company to assure compliance with all applicable laws and regulations.
2
5. GRANTS OF SHARES. Commencing on the Effective Date, the amount of
compensation for service to directors or consultants shall be payable in shares
of the Common Stock (the "STOCK RETAINER") pursuant to this Plan at the deemed
issuance price of the Fair Market Value of the Common Stock on the date of the
issuance of such shares. As used herein, "FAIR MARKET VALUE" means the mean
between the highest and lowest reported sales prices of the Common Stock on the
New York Stock Exchange Composite Tape or, if not listed on such exchange, on
any other national securities exchange on which the Common Stock is listed or on
The Nasdaq Stock Market, or, if not so listed on any other national securities
exchange or The Nasdaq Stock Market, then the average of the bid price of the
Common Stock during the last five trading days on the OTC Bulletin Board
immediately preceding the last trading day prior to the date with respect to
which the Fair Market Value is to be determined. If the Common Stock is not then
publicly traded, then the Fair Market Value of the Common Stock shall be the
book value of the Company per share as determined on the last day of March,
June, September, or December in any year closest to the date when the
determination is to be made. For the purpose of determining book value
hereunder, book value shall be determined by adding as of the applicable date
called for herein the capital, surplus, and undivided profits of the Company,
and after having deducted any reserves theretofore established; the sum of these
items shall be divided by the number of shares of the Common Stock outstanding
as of said date, and the quotient thus obtained shall represent the book value
of each share of the Common Stock of the Company.
6. DEFERRAL OPTION. From and after the Effective Date, a Participant may
make an election (a "DEFERRAL ELECTION") on an annual basis to defer delivery of
the Stock Retainer specifying which one of the following ways the Stock Retainer
is to be delivered (a) on the date which is three years after the Effective Date
for which it was originally payable (the "THIRD ANNIVERSARY"), (b) on the date
upon which the Participant ceases to be a Director or Consultant for any reason
(the "DEPARTURE DATE") or (c) in five equal annual installments commencing on
the Departure Date (the "THIRD ANNIVERSARY" and "DEPARTURE DATE" each being
referred to herein as a "DELIVERY DATE"). Such Deferral Election shall remain in
effect for each Subsequent Year unless changed, provided that, any Deferral
Election with respect to a particular Year may not be changed less than six
months prior to the beginning of such Year, and provided, further, that no more
than one Deferral Election or change thereof may be made in any Year. Any
Deferral Election and any change or revocation thereof shall be made by
delivering written notice thereof to the Committee no later than six months
prior to the beginning of the Year in which it is to be effected; provided that,
with respect to the Year beginning on the Effective Date, any Deferral Election
or revocation thereof must be delivered no later than the close of business on
the 30th day after the Effective Date.
7. DEFERRED STOCK ACCOUNTS. The Company shall maintain a Deferred Stock
Account for each Participant who makes a Deferral Election to which shall be
credited, as of the applicable Payment Time, the number of shares of the Common
Stock payable pursuant to the Stock Retainer to which the Deferral Election
relates. So long as any amounts in such Deferred Stock Account have not been
delivered to the Participant under Section 8 hereof, each Deferred Stock Account
shall be credited as of the payment date for any dividend paid or other
distribution made with respect to the Common Stock, with a number of shares of
the Common Stock equal to (a) the number of shares of the Common Stock shown in
such Deferred Stock Account on the record date for such dividend or distribution
multiplied by (b) the Dividend Equivalent for such dividend or distribution.
3
8. DELIVERY OF SHARES.
8.1 DELIVERY. The shares of the Common Stock in a Participant's
Deferred Stock Account with respect to any Stock Retainer for which a Deferral
Election has been made (together with dividends attributable to such shares
credited to such Deferred Stock Account) shall be delivered in accordance with
this Section 8 as soon as practicable after the applicable Delivery Date. Except
with respect to a Deferral Election pursuant to Section 6(c) hereof, or other
agreement between the parties, such shares shall be delivered at one time;
provided that, if the number of shares so delivered includes a fractional share,
such number shall be rounded to the nearest whole number of shares. If the
Participant has in effect a Deferral Election pursuant to Section 6(c) hereof,
then such shares shall be delivered in five equal annual installments (together
with dividends attributable to such shares credited to such Deferred Stock
Account), with the first such installment being delivered on the first
anniversary of the Delivery Date; provided that, if in order to equalize such
installments, fractional shares would have to be delivered, such installments
shall be adjusted by rounding to the nearest whole share. If any such shares are
to be delivered after the Participant has died or become legally incompetent,
they shall be delivered to the Participant's estate or legal guardian, as the
case may be, in accordance with the foregoing; provided that, if the Participant
dies with a Deferral Election pursuant to Section 6(c) hereof in effect, the
Committee shall deliver all remaining undelivered shares to the Participant's
estate immediately. References to a Participant in this Plan shall be deemed to
refer to the Participant's estate or legal guardian, where appropriate.
8.2 TRUST. The Company may, but shall not be required to, create a
grantor trust or utilize an existing grantor trust (in either case, "TRUST") to
assist it in accumulating the shares of the Common Stock needed to fulfill its
obligations under this Section 8. However, Participants shall have no beneficial
or other interest in the Trust and the assets thereof, and their rights under
this Plan shall be as general creditors of the Company, unaffected by the
existence or nonexistence of the Trust, except that deliveries of Stock
Retainers to Participants from the Trust shall, to the extent thereof, be
treated as satisfying the Company's obligations under this Section 8.
9. SHARE CERTIFICATES; VOTING AND OTHER RIGHTS. The certificates for
shares delivered to a Participant pursuant to Section 8 above shall be issued in
the name of the Participant, and from and after the date of such issuance the
Participant shall be entitled to all rights of a stockholder with respect to the
Common Stock for all such shares issued in his name, including the right to vote
the shares, and the Participant shall receive all dividends and other
distributions paid or made with respect thereto.
10. GENERAL RESTRICTIONS.
10.1 RESTRICTIONS. Notwithstanding any other provision of this Plan
or agreements made pursuant thereto, the Company shall not be required to issue
or deliver any certificate or certificates for shares of the Common Stock under
this Plan prior to fulfillment of all of the following conditions:
(i) Listing or approval for listing upon official notice of
issuance of such shares on the New York Stock Exchange, Inc., or such other
securities exchange as may at the time be a market for the Common Stock;
(ii) Any registration or other qualification of such shares
under any state or federal law or regulation, or the maintaining in effect of
any such registration or other qualification which the Committee shall, upon the
advice of counsel, deem necessary or advisable; and
4
(iii) Obtaining any other consent, approval, or permit from
any state or federal governmental agency which the Committee shall, after
receiving the advice of counsel, determine to be necessary or advisable.
10.2 OTHER COMPENSATION. Nothing contained in this Plan shall
prevent the Company from adopting other or additional compensation arrangements
for the Participants.
11. SHARES AVAILABLE. Subject to Section 12 below, the maximum number of
shares of the Common Stock which may in the aggregate be paid as Stock Retainers
pursuant to this Plan is 1,500,000. Shares of the Common Stock issueable under
this Plan may be taken from treasury shares of the Company or purchased on the
open market.
12. ADJUSTMENTS; CHANGE OF CONTROL.
12.1 CHANGE IN CAPITALIZATION; CHANGE OF CONTROL. In the event that
there is, at any time after the Board adopts this Plan, any change in corporate
capitalization, such as a stock split, combination of shares, exchange of
shares, warrants or rights offering to purchase the Common Stock at a price
below its Fair Market Value, reclassification, or recapitalization, or a
corporate transaction, such as any merger, consolidation, separation, including
a spin-off, stock dividend, or other extraordinary distribution of stock or
property of the Company, any reorganization (whether or not such reorganization
comes within the definition of such term in Section 368 of the Code) or any
partial or complete liquidation of the Company (each of the foregoing a
"TRANSACTION"), in each case other than any such Transaction which constitutes a
Change of Control (as defined below), (i) the Deferred Stock Accounts shall be
credited with the amount and kind of shares or other property which would have
been received by a holder of the number of shares of the Common Stock held in
such Deferred Stock Account had such shares of the Common Stock been outstanding
as of the effectiveness of any such Transaction, (ii) the number and kind of
shares or other property subject to this Plan shall likewise be appropriately
adjusted to reflect the effectiveness of any such transaction, and (iii) the
Committee shall appropriately adjust any other relevant provisions of this Plan
and any such modification by the Committee shall be binding and conclusive on
all persons.
12.2 PROPERTY. If the shares of the Common Stock credited to the
Deferred Stock Accounts are converted pursuant to Section 12.1 into another form
of property, references in this Plan to the Common Stock shall be deemed, where
appropriate, to refer to such other form of property, with such other
modifications as may be required for this Plan to operate in accordance with its
purposes. Without limiting the generality of the foregoing, references to
delivery of certificates for shares of the Common Stock shall be deemed to refer
to delivery of cash and the incidents of ownership of any other property held in
the Deferred Stock Accounts.
12.3 CHANGE OF CONTROL ALTERNATIVE. In lieu of the adjustment
contemplated by Section 12.1, in the event of a Change of Control, the following
shall occur on the date of the Change of Control (i) the shares of the Common
Stock held in each Participant's Deferred Stock Account shall be deemed to be
issued and outstanding as of the Change of Control; (ii) the Company shall
forthwith deliver to each Participant who has a Deferred Stock Account all of
the shares of the Common Stock or any other property held in such Participant's
Deferred Stock Account; and (iii) this Plan shall be terminated.
5
12.4 CHANGE OF CONTROL EVENTS. For purposes of this Plan, Change of
Control shall mean any of the following events:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT") (a "PERSON") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20 percent or more
of either (1) the then outstanding shares of the Common Stock of the Company
(the "OUTSTANDING COMPANY COMMON STOCK"), or (2) the combined voting power of
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "OUTSTANDING COMPANY VOTING SECURITIES");
provided, however, that the following acquisitions shall not constitute a Change
of Control (A) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired directly from the Company), (B)
any acquisition by the Company, (C) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (D) any acquisition by any corporation pursuant to
a reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses (A), (B) and (C) of
paragraph (iii) of this Section 12.4 are satisfied; or
(ii) Individuals who, as of the date hereof, constitute the Board of
the Company (as of the date hereof, "INCUMBENT BOARD") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board; or
(iii) Approval by the stockholders of the Company of a
reorganization, merger, binding share exchange or consolidation, unless,
following such reorganization, merger, binding share exchange or consolidation
(1) more than 60 percent of, respectively, then outstanding shares of common
stock of the corporation resulting from such reorganization, merger, binding
share exchange or consolidation and the combined voting power of then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger,
binding share exchange or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger, binding share
exchange or consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (2) no Person
(excluding the Company, any employee benefit plan (or related trust) of the
Company or such corporation resulting from such reorganization, merger, binding
share exchange or consolidation and any Person beneficially owning, immediately
prior to such reorganization, merger, binding share exchange or consolidation,
directly or indirectly, 20 percent or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 20 percent or more of, respectively, then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger, binding share exchange or consolidation or the combined
voting power of then outstanding voting securities of such corporation entitled
to vote generally in the election of directors, and (3) at least a majority of
the members of the board of directors of the corporation resulting from such
reorganization, merger, binding share exchange or consolidation were members of
the Incumbent Board at the time of the execution of the initial agreement
providing for such reorganization, merger, binding share exchange or
consolidation; or
6
(iv) Approval by the stockholders of the Company of (1) a complete
liquidation or dissolution of the Company, or (2) the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation, with respect to which following such sale or other disposition, (A)
more than 60 percent of, respectively, then outstanding shares of common stock
of such corporation and the combined voting power of then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company and any employee benefit plan (or related trust) of the
Company or such corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, 20 percent or
more of the Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 20
percent or more of, respectively, then outstanding shares of common stock of
such corporation and the combined voting power of then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors, and (3) at least a majority of the members of the board of directors
of such corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company.
13. ADMINISTRATION; AMENDMENT AND TERMINATION.
13.1 ADMINISTRATION. This Plan shall be administered by a committee
consisting of two members who shall be the current directors of the Company or
senior executive officers or other directors who are not Participants as may be
designated by the Chief Executive Officer (the "COMMITTEE"), which shall have
full authority to construe and interpret this Plan, to establish, amend and
rescind rules and regulations relating to this Plan, and to take all such
actions and make all such determinations in connection with this Plan as it may
deem necessary or desirable.
13.2 AMENDMENT AND TERMINATION. The Board may from time to time make
such amendments to this Plan, including to preserve or come within any exemption
from liability under Section 16(b) of the Exchange Act, as it may deem proper
and in the best interest of the Company without further approval of the
Company's stockholders, provided that, to the extent required under Nevada law
or to qualify transactions under this Plan for exemption under Rule 16b-3
promulgated under the Exchange Act, no amendment to this Plan shall be adopted
without further approval of the Company's stockholders and, provided, further,
that if and to the extent required for this Plan to comply with Rule 16b-3
promulgated under the Exchange Act, no amendment to this Plan shall be made more
than once in any six month period that would change the amount, price or timing
of the grants of the Common Stock hereunder other than to comport with changes
in the Code, the Employee Retirement Income Security Act of 1974, as amended, or
the regulations thereunder. The Board may terminate this Plan at any time by a
vote of a majority of the members thereof.
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14. MISCELLANEOUS.
14.1 NO OBLIGATION. Nothing in this Plan shall be deemed to create
any obligation on the part of the Board to nominate any Director for reelection
by the Company's stockholders or to limit the rights of the stockholders to
remove any Director.
14.2 WITHHOLDING TAXES. The Company shall have the right to require,
prior to the issuance or delivery of any shares of the Common Stock pursuant to
this Plan, that a Participant make arrangements satisfactory to the Committee
for the withholding of any taxes required by law to be withheld with respect to
the issuance or delivery of such shares, including, without limitation, by the
withholding of shares that would otherwise be so issued or delivered, by
withholding from any other payment due to the Participant, or by a cash payment
to the Company by the Participant.
14.3 GOVERNING LAW. The Plan and all actions taken thereunder shall
be governed by and construed in accordance with the laws of the State of Nevada.
14.4 INFORMATION TO STOCKHOLDERS. The Company shall furnish to each
of its stockholders financial statements of the Company at least annually.
IN WITNESS WHEREOF, this Plan has been executed effective as of June 10,
2004.
USA TELCOM INTERNATIONALE
By: /s/ Robert C. Simpson
-------------------------------------
Robert C. Simpson,
President and Chairman of the Board
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AMENDED AND RESTATED
ZANNWELL INC.
2004 EMPLOYEE STOCK INCENTIVE PLAN
1. GENERAL PROVISIONS.
1.1 PURPOSE. This Amended and Restated Employee Stock Incentive Plan (the
"PLAN") is intended to allow designated officers and employees (including
so-called "leased employees") (all of whom are sometimes collectively referred
to herein as the "EMPLOYEES," or individually as the "EMPLOYEE") of ZannWell
Inc., a Nevada corporation formerly known as USA Telcom Internationale (the
"COMPANY") and its Subsidiaries (as that term is defined below) which they may
have from time to time (the Company and such Subsidiaries are referred to herein
as the "COMPANY") to receive certain options (the "STOCK OPTIONS") to purchase
common stock of the Company, par value $0.001 per share (the "COMMON STOCK"),
and to receive grants of the Common Stock subject to certain restrictions (the
"AWARDS"). As used in this Plan, the term "SUBSIDIARY" shall mean each
corporation which is a "subsidiary corporation" of the Company within the
meaning of Section 424(f) of the Internal Revenue Code of 1986, as amended (the
"CODE"). The purpose of this Plan is to provide the Employees with equity-based
compensation incentives who make significant and extraordinary contributions to
the long-term growth and performance of the Company, and to attract and retain
the Employees.
1.2 ADMINISTRATION.
1.2.1 The Plan shall be administered by the Compensation Committee
(the "COMMITTEE") of, or appointed by, the Board of Directors of the Company
(the "BOARD"). The Committee shall select one of its members as Chairman and
shall act by vote of a majority of a quorum, or by unanimous written consent. A
majority of its members shall constitute a quorum. The Committee shall be
governed by the provisions of the Company's Bylaws and of Nevada law applicable
to the Board, except as otherwise provided herein or determined by the Board.
1.2.2 The Committee shall have full and complete authority, in its
discretion, but subject to the express provisions of this Plan, (a) to approve
the Employees nominated by the management of the Company to be granted Awards or
Stock Options; (b) to determine the number of Awards or Stock Options to be
granted to an Employee; (c) to determine the time or times at which Awards or
Stock Options shall be granted; to establish the terms and conditions upon which
Awards or Stock Options may be exercised; (d) to remove or adjust any
restrictions and conditions upon Awards or Stock Options; (e) to specify, at the
time of grant, provisions relating to exercisability of Stock Options and to
accelerate or otherwise modify the exercisability of any Stock Options; and (f)
to adopt such rules and regulations and to make all other determinations deemed
necessary or desirable for the administration of this Plan. All interpretations
and constructions of this Plan by the Committee, and all of its actions
hereunder, shall be binding and conclusive on all persons for all purposes.
1.2.3 The Company hereby agrees to indemnify and hold harmless each
Committee member and each Employee, and the estate and heirs of such Committee
member or Employee, against all claims, liabilities, expenses, penalties,
damages or other pecuniary losses, including legal fees, which such Committee
member or Employee, his estate or heirs may suffer as a result of his
responsibilities, obligations or duties in connection with this Plan, to the
extent that insurance, if any, does not cover the payment of such items. No
member of the Committee or the Board shall be liable for any action or
determination made in good faith with respect to this Plan or any Award or Stock
Option granted pursuant to this Plan.
1
1.3 ELIGIBILITY AND PARTICIPATION. The Employees eligible under this Plan
shall be approved by the Committee from those Employees who, in the opinion of
the management of the Company, are in positions which enable them to make
significant contributions to the long-term performance and growth of the
Company. In selecting the Employees to whom Award or Stock Options may be
granted, consideration shall be given to factors such as employment position,
duties and responsibilities, ability, productivity, length of service, morale,
interest in the Company and recommendations of supervisors.
1.4 SHARES SUBJECT TO THE PLAN. The maximum number of shares of the Common
Stock that may be issued pursuant to this Plan shall be 186,000,000 subject to
adjustment pursuant to the provisions of Section 4.1. If shares of the Common
Stock awarded or issued under this Plan are reacquired by the Company due to a
forfeiture or for any other reason, such shares shall be cancelled and
thereafter shall again be available for purposes of this Plan. If a Stock Option
expires, terminates or is cancelled for any reason without having been exercised
in full, the shares of the Common Stock not purchased thereunder shall again be
available for purposes of this Plan.
2. PROVISIONS RELATING TO STOCK OPTIONS.
2.1 GRANTS OF STOCK OPTIONS. The Committee may grant Stock Options in such
amounts, at such times, and to the Employees nominated by the management of the
Company as the Committee, in its discretion, may determine. Stock Options
granted under this Plan may constitute "incentive stock options" within the
meaning of Section 422 of the Code, if so designated by the Committee on the
date of grant and if the requirements of Section 422 of the Code have been met.
The Committee may also grant Stock Options which do not constitute incentive
stock options, and any such Stock Options shall be designated non-statutory
stock options by the Committee on the date of grant. The aggregate Fair Market
Value (determined as of the time an incentive stock option is granted) of the
Common Stock with respect to which incentive stock options are exercisable for
the first time by any Employee during any one calendar year (under all plans of
the Company and any parent or subsidiary of the Company) may not exceed the
maximum amount permitted under Section 422 of the Code (currently, $100,000.00).
Non-statutory stock options shall not be subject to the limitations relating to
incentive stock options contained in the preceding sentence. Each Stock Option
shall be evidenced by a written agreement (the "OPTION AGREEMENT") in a form
approved by the Committee, which shall be executed on behalf of the Company and
by the Employee to whom the Stock Option is granted, and which shall be subject
to the terms and conditions of this Plan. In the discretion of the Committee,
Stock Options may include provisions (which need not be uniform), authorized by
the Committee, in its discretion, that accelerate an Employee's rights to
exercise Stock Options following a "Change in Control," upon termination of the
Employee's employment by the Company without "Cause" or by the Employee for
"Good Reason," as such terms are defined in Section 3.1 hereof. The holder of a
Stock Option shall not be entitled to the privileges of stock ownership as to
any shares of the Common Stock not actually issued to such holder.
2
The exercise price per share for the Stock covered by a Stock Option shall
be determined by the Committee at the time of grant but in the case of Incentive
Stock Options shall not be less than 100% of the Fair Market Value on the date
of grant. If an employee owns or is deemed to own (by reason of the attribution
rules applicable under Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company or any parent or subsidiary
corporation and an Incentive Stock Option is granted to such employee, the
option price of such Incentive Stock Option shall be not less than 110% of the
Fair Market Value on the grant date.
2.2 PURCHASE PRICE. The purchase price (the "EXERCISE PRICE") of shares of
the Common Stock subject to each Stock Option (the "OPTION SHARES") shall be
determined by the Committee at the time of grant but, in the case of an
incentive stock option, shall not be less than 100% percent of the Fair Market
Value on the date of the grant of the option. For an Employee holding or who is
deemed to be holding (by reason of the attribution rules applicable under
Section 424(d) of the Code) greater than 10% of the total voting power of all
stock of the Company, the Exercise Price of an incentive stock option shall be
at least 110% of the Fair Market Value of the Common Stock on the date of the
grant of the option. As used herein, "Fair Market Value" means the mean between
the highest and lowest reported sales prices of the Common Stock on the New York
Stock Exchange Composite Tape or, if not listed on such exchange, on any other
national securities exchange on which the Common Stock is listed or on The
Nasdaq Stock Market, or, if not so listed on any other national securities
exchange or The Nasdaq Stock Market, then the average of the bid price of the
Common Stock during the last five trading days on the OTC Bulletin Board
immediately preceding the last trading day prior to the date with respect to
which the Fair Market Value is to be determined. If the Common Stock is not then
publicly traded, then the Fair Market Value of the Common Stock shall be the
book value of the Company per share as determined on the last day of March,
June, September, or December in any year closest to the date when the
determination is to be made. For the purpose of determining book value
hereunder, book value shall be determined by adding as of the applicable date
called for herein the capital, surplus, and undivided profits of the Company,
and after having deducted any reserves theretofore established; the sum of these
items shall be divided by the number of shares of the Common Stock outstanding
as of said date, and the quotient thus obtained shall represent the book value
of each share of the Common Stock of the Company.
2.3 OPTION PERIOD. The Stock Option period (the "TERM") shall commence on
the date of grant of the Stock Option and shall be 10 years or such shorter
period as is determined by the Committee. Each Stock Option shall provide that
it is exercisable over its term in such periodic installments as the Committee
in its sole discretion may determine. Such provisions need not be uniform.
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT") exempts persons normally subject to the reporting requirements of Section
16(a) of the Exchange Act (the "SECTION 16 REPORTING PERSONS") pursuant to a
qualified employee stock option plan from the normal requirement of not selling
until at least six months and one day from the date the Stock Option is granted.
3
2.4 EXERCISE OF OPTIONS.
2.4.1 Each Stock Option may be exercised in whole or in part (but
not as to fractional shares) by delivering it for surrender or endorsement to
the Company, attention of the Corporate Secretary, at the principal office of
the Company, together with payment of the Exercise Price and an executed Notice
and Agreement of Exercise in the form prescribed by Section 2.4.2. Payment may
be made (a) in cash, (b) by cashier's or certified check, (c) by surrender of
previously owned shares of the Common Stock valued pursuant to Section 2.2 (if
the Committee authorizes payment in stock in its discretion), (d) by withholding
from the Option Shares which would otherwise be issuable upon the exercise of
the Stock Option that number of Option Shares equal to the exercise price of the
Stock Option, if such withholding is authorized by the Committee in its
discretion, (e) in the discretion of the Committee, by the delivery to the
Company of the optionee's promissory note secured by the Option Shares, bearing
interest at a rate sufficient to prevent the imputation of interest under
Sections 483 or 1274 of the Code, and having such other terms and conditions as
may be satisfactory to the Committee., or (f) if the Employee and the Company so
agree, deliver to the Optionee's NASD licensed broker-dealer and to the Company
an irrevocable notice of exercise of the option, together with irrevocable
instructions from the Optionee to the Company to deliver the Option Shares to
the broker-dealer. Upon receipt of such notice, the Company shall immediately
deliver to the Employee's broker-dealer the share certificate(s) representing
the Option Shares so purchased, and upon receipt of such certificate(s), the
broker shall sell the Option Shares and remit the purchase price for all Option
Shares then being purchased, and any withholding taxes to the Corporation.
2.4.2 Exercise of each Stock Option is conditioned upon the
agreement of the Employee to the terms and conditions of this Plan and of such
Stock Option as evidenced by the Employee's execution and delivery of a Notice
and Agreement of Exercise in a form to be determined by the Committee in its
discretion. Such Notice and Agreement of Exercise shall set forth the agreement
of the Employee that (a) no Option Shares will be sold or otherwise distributed
in violation of the Securities Act of 1933, as amended (the "SECURITIES ACT") or
any other applicable federal or state securities laws, (b) each Option Share
certificate may be imprinted with legends reflecting any applicable federal and
state securities law restrictions and conditions, (c) the Company may comply
with said securities law restrictions and issue "stop transfer" instructions to
its Transfer Agent and Registrar without liability, (d) if the Employee is a
Section 16 Reporting Person, the Employee will furnish to the Company a copy of
each Form 4 or Form 5 filed by said Employee and will timely file all reports
required under federal securities laws, and (e) the Employee will report all
sales of Option Shares to the Company in writing on a form prescribed by the
Company.
2.4.3 No Stock Option shall be exercisable unless and until any
applicable registration or qualification requirements of federal and state
securities laws, and all other legal requirements, have been fully complied
with. The Company will use reasonable efforts to maintain the effectiveness of a
registration statement under the Securities Act (a "REGISTRATION STATEMENT") for
the issuance of Stock Options and shares acquired thereunder, but there may be
times when no such Registration Statement will be currently effective. The
exercise of Stock Options may be temporarily suspended without liability to the
Company during times when no such Registration Statement is currently effective,
or during times when, in the reasonable opinion of the Committee, such
suspension is necessary to preclude violation of any requirements of applicable
law or regulatory bodies having jurisdiction over the Company. If any Stock
Option would expire for any reason except the end of its term during such a
suspension, then if exercise of such Stock Option is duly tendered before its
expiration, such Stock Option shall be exercisable and exercised (unless the
attempted exercise is withdrawn) as of the first day after the end of such
suspension. The Company shall have no obligation to file any Registration
Statement covering resales of Option Shares.
4
2.5 CONTINUOUS EMPLOYMENT. Except as provided in Section 2.7 below, an
Employee may not exercise a Stock Option unless from the date of grant to the
date of exercise the Employee remains continuously in the employ of the Company
(which shall be deemed to included Employees who are "leased" by the Company
from a third party). For purposes of this Section 2.5, the period of continuous
employment of an Employee with the Company shall be deemed to include (without
extending the term of the Stock Option) any period during which the Employee is
on leave of absence with the consent of the Company, provided that such leave of
absence shall not exceed three months and that the Employee returns to the
employ of the Company at the expiration of such leave of absence. If the
Employee fails to return to the employ of the Company at the expiration of such
leave of absence, the Employee's employment with the Company shall be deemed
terminated as of the date such leave of absence commenced. The continuous
employment of an Employee with the Company shall also be deemed to include any
period during which the Employee is a member of the Armed Forces of the United
States, provided that the Employee returns to the employ of the Company within
90 days (or such longer period as may be prescribed by law) from the date the
Employee first becomes entitled to a discharge from military service. If an
Employee does not return to the employ of the Company within 90 days (or such
longer period as may be prescribed by law) from the date the Employee first
becomes entitled to a discharge from military service, the Employee's employment
with the Company shall be deemed to have terminated as of the date the
Employee's military service ended.
2.6 RESTRICTIONS ON TRANSFER. Each Stock Option granted under this Plan
shall be transferable only by will or the laws of descent and distribution. No
interest of any Employee under this Plan shall be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other legal
or equitable process. Each Stock Option granted under this Plan shall be
exercisable during an Employee's lifetime only by the Employee or by the
Employee's legal representative.
2.7 TERMINATION OF EMPLOYMENT.
2.7.1 Upon an Employee's Retirement, Disability (both terms being
defined below) or death, (a) all Stock Options to the extent then presently
exercisable shall remain in full force and effect and may be exercised pursuant
to the provisions thereof, including expiration at the end of the fixed term
thereof, and (b) unless otherwise provided by the Committee, all Stock Options
to the extent not then presently exercisable by the Employee shall terminate as
of the date of such termination of employment and shall not be exercisable
thereafter.
2.7.2 Upon the termination of the employment of an Employee with the
Company for any reason other than the reasons set forth in Section 2.7.1 hereof,
(a) all Stock Options to the extent then presently exercisable by the Employee
shall remain exercisable only for a period of 90 days after the date of such
termination of employment (except that the 90 day period shall be extended to 12
months if the Employee shall die during such 90 day period), and may be
exercised pursuant to the provisions thereof, including expiration at the end of
the fixed term thereof, and (b) unless otherwise provided by the Committee, all
Stock Options to the extent not then presently exercisable by the Employee shall
terminate as of the date of such termination of employment and shall not be
exercisable thereafter.
5
2.7.3 For purposes of this Plan:
(a) "RETIREMENT" shall mean an Employee's retirement from the
employ of the Company on or after the date on which the Employee attains the age
of 65 years; and
(b) "DISABILITY" shall mean total and permanent incapacity of
an Employee, due to physical impairment or legally established mental
incompetence, to perform the usual duties of the Employee's employment with the
Company, which disability shall be determined (i) on medical evidence by a
licensed physician designated by the Committee, or (ii) on evidence that the
Employee has become entitled to receive primary benefits as a disabled employee
under the Social Security Act in effect on the date of such disability.
3. PROVISIONS RELATING TO AWARDS.
3.1 GRANT OF AWARDS. Subject to the provisions of this Plan, the Committee
shall have full and complete authority, in its discretion, but subject to the
express provisions of this Plan, to (1) grant Awards pursuant to this Plan, (2)
determine the number of shares of the Common Stock subject to each Award (the
"AWARD SHARES"), (3) determine the terms and conditions (which need not be
identical) of each Award, including the consideration (if any) to be paid by the
Employee for such the Common Stock, which may, in the Committee's discretion,
consist of the delivery of the Employee's promissory note meeting the
requirements of Section 2.4.1, (4) establish and modify performance criteria for
Awards, and (5) make all of the determinations necessary or advisable with
respect to Awards under this Plan. Each Award under this Plan shall consist of a
grant of shares of the Common Stock subject to a restriction period (after which
the restrictions shall lapse), which shall be a period commencing on the date
the Award is granted and ending on such date as the Committee shall determine
(the "RESTRICTION PERIOD"). The Committee may provide for the lapse of
restrictions in installments, for acceleration of the lapse of restrictions upon
the satisfaction of such performance or other criteria or upon the occurrence of
such events as the Committee shall determine, and for the early expiration of
the Restriction Period upon an Employee's death, Disability or Retirement as
defined in Section 2.7.3, or, following a Change of Control, upon termination of
an Employee's employment by the Company without "Cause" or by the Employee for
"Good Reason," as those terms are defined herein. For purposes of this Plan:
"CHANGE OF CONTROL" shall be deemed to occur (a) on the date the Company
first has actual knowledge that any person (as such term is used in Sections
13(d) and 14(d)(2) of the Exchange Act) has become the beneficial owner (as
defined in Rule 13(d)-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 40 percent or more of the combined voting
power of the Company's then outstanding securities, or (b) on the date the
stockholders of the Company approve (i) a merger of the Company with or into any
other corporation in which the Company is not the surviving corporation or in
which the Company survives as a subsidiary of another corporation, (ii) a
consolidation of the Company with any other corporation, or (iii) the sale or
disposition of all or substantially all of the Company's assets or a plan of
complete liquidation.
"CAUSE," when used with reference to termination of the employment of an
Employee by the Company for "Cause," shall mean:
(a) The Employee's continuing willful and material breach of his
duties to the Company after he receives a demand from the Chief Executive of the
Company specifying the manner in which he has willfully and materially breached
such duties, other than any such failure resulting from Disability of the
Employee or his resignation for "Good Reason," as defined herein; or
6
(b) The conviction of the Employee of a felony; or
(c) The Employee's commission of fraud in the course of his
employment with the Company, such as embezzlement or other material and
intentional violation of law against the Company; or
(d) The Employee's gross misconduct causing material harm to the
Company.
"GOOD REASON" shall mean any one or more of the following, occurring
following or in connection with a Change of Control and within 90 days prior to
the Employee's resignation, unless the Employee shall have consented thereto in
writing:
(a) The assignment to the Employee of duties inconsistent with his
executive status prior to the Change of Control or a substantive change in the
officer or officers to whom he reports from the officer or officers to whom he
reported immediately prior to the Change of Control; or
(b) The elimination or reassignment of a majority of the duties and
responsibilities that were assigned to the Employee immediately prior to the
Change of Control; or
(c) A reduction by the Company in the Employee's annual base salary
as in effect immediately prior to the Change of Control; or
(d) The Company requiring the Employee to be based anywhere outside
a 35-mile radius from his place of employment immediately prior to the Change of
Control, except for required travel on the Company's business to an extent
substantially consistent with the Employee's business travel obligations
immediately prior to the Change of Control; or
(e) The failure of the Company to grant the Employee a performance
bonus reasonably equivalent to the same percentage of salary the Employee
normally received prior to the Change of Control, given comparable performance
by the Company and the Employee; or
(f) The failure of the Company to obtain a satisfactory Assumption
Agreement (as defined in Section 4.12 of this Plan) from a successor, or the
failure of such successor to perform such Assumption Agreement.
3.2 INCENTIVE AGREEMENTS. Each Award granted under this Plan shall be
evidenced by a written agreement (an "INCENTIVE AGREEMENT") in a form approved
by the Committee and executed by the Company and the Employee to whom the Award
is granted. Each Incentive Agreement shall be subject to the terms and
conditions of this Plan and other such terms and conditions as the Committee may
specify.
7
3.3 WAIVER OF RESTRICTIONS. The Committee may modify or amend any Award
under this Plan or waive any restrictions or conditions applicable to the Award;
provided, however, that the Committee may not undertake any such modifications,
amendments or waivers if the effect thereof materially increases the benefits to
any Employee, or adversely affects the rights of any Employee without his
consent.
3.4 TERMS AND CONDITIONS OF AWARDS. Upon receipt of an Award of shares of
the Common Stock under this Plan, even during the Restriction Period, an
Employee shall be the holder of record of the shares and shall have all the
rights of a stockholder with respect to such shares, subject to the terms and
conditions of this Plan and the Award.
3.4.1 Except as otherwise provided in this Section 3.4, no shares of
the Common Stock received pursuant to this Plan shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period applicable to such shares. Any purported disposition of such
the Common Stock in violation of this Section 3.4.2 shall be null and void.
3.4.2 If an Employee's employment with the Company terminates prior
to the expiration of the Restriction Period for an Award, subject to any
provisions of the Award with respect to the Employee's death, Disability or
Retirement, or Change of Control, all shares of the Common Stock subject to the
Award shall be immediately forfeited by the Employee and reacquired by the
Company, and the Employee shall have no further rights with respect to the
Award. In the discretion of the Committee, an Incentive Agreement may provide
that, upon the forfeiture by an Employee of Award Shares, the Company shall
repay to the Employee the consideration (if any) which the Employee paid for the
Award Shares on the grant of the Award. In the discretion of the Committee, an
Incentive Agreement may also provide that such repayment shall include an
interest factor on such consideration from the date of the grant of the Award to
the date of such repayment.
3.4.3 The Committee may require under such terms and conditions as
it deems appropriate or desirable that (a) the certificates for the Common Stock
delivered under this Plan are to be held in custody by the Company or a person
or institution designated by the Company until the Restriction Period expires,
(b) such certificates shall bear a legend referring to the restrictions on the
Common Stock pursuant to this Plan, and (c) the Employee shall have delivered to
the Company a stock power endorsed in blank relating to the Common Stock.
4. MISCELLANEOUS PROVISIONS.
4.1 ADJUSTMENTS UPON CHANGE IN CAPITALIZATION.
4.1.1 The number and class of shares subject to each outstanding
Stock Option, the Exercise Price thereof (but not the total price), the maximum
number of Stock Options that may be granted under this Plan, the minimum number
of shares as to which a Stock Option may be exercised at any one time, and the
number and class of shares subject to each outstanding Award, shall be
proportionately adjusted in the event of any increase or decrease in the number
of the issued shares of the Common Stock which results from a split-up or
consolidation of shares, payment of a stock dividend or dividends exceeding a
total of five percent for which the record dates occur in any one fiscal year, a
recapitalization (other than the conversion of convertible securities according
to their terms), a combination of shares or other like capital adjustment, so
that (a) upon exercise of the Stock Option, the Employee shall receive the
number and class of shares the Employee would have received had the Employee
been the holder of the number of shares of the Common Stock for which the Stock
Option is being exercised upon the date of such change or increase or decrease
in the number of issued shares of the Company, and (b) upon the lapse of
restrictions of the Award Shares, the Employee shall receive the number and
class of shares the Employee would have received if the restrictions on the
Award Shares had lapsed on the date of such change or increase or decrease in
the number of issued shares of the Company.
8
4.1.2 Upon a reorganization, merger or consolidation of the Company
with one or more corporations as a result of which the Company is not the
surviving corporation or in which the Company survives as a wholly-owned
subsidiary of another corporation, or upon a sale of all or substantially all of
the property of the Company to another corporation, or any dividend or
distribution to stockholders of more than 10 percent of the Company's assets,
adequate adjustment or other provisions shall be made by the Company or other
party to such transaction so that there shall remain and/or be substituted for
the Option Shares and Award Shares provided for herein, the shares, securities
or assets which would have been issuable or payable in respect of or in exchange
for such Option Shares and Award Shares then remaining, as if the Employee had
been the owner of such shares as of the applicable date. Any securities so
substituted shall be subject to similar successive adjustments.
4.2 WITHHOLDING TAXES. The Company shall have the right at the time of
exercise of any Stock Option, the grant of an Award, or the lapse of
restrictions on Award Shares, to make adequate provision for any federal, state,
local or foreign taxes which it believes are or may be required by law to be
withheld with respect to such exercise (the "TAX LIABILITY"), to ensure the
payment of any such Tax Liability. The Company may provide for the payment of
any Tax Liability by any of the following means or a combination of such means,
as determined by the Committee in its sole and absolute discretion in the
particular case (1) by requiring the Employee to tender a cash payment to the
Company, (2) by withholding from the Employee's salary, (3) by withholding from
the Option Shares which would otherwise be issuable upon exercise of the Stock
Option, or from the Award Shares on their grant or date of lapse of
restrictions, that number of Option Shares or Award Shares having an aggregate
Fair Market Value (determined in the manner prescribed by Section 2.2) as of the
date the withholding tax obligation arises in an amount which is equal to the
Employee's Tax Liability or (4) by any other method deemed appropriate by the
Committee. Satisfaction of the Tax Liability of a Section 16 Reporting Person
may be made by the method of payment specified in clause (3) above only if the
following two conditions are satisfied:
(a) The withholding of Option Shares or Award Shares and the
exercise of the related Stock Option occur at least six months and one day
following the date of grant of such Stock Option or Award; and
(b) The withholding of Option Shares or Award Shares is made either
(i) pursuant to an irrevocable election (the "WITHHOLDING ELECTION") made by the
Employee at least six months in advance of the withholding of Options Shares or
Award Shares, or (ii) on a day within a 10-day "window period" beginning on the
third business day following the date of release of the Company's quarterly or
annual summary statement of sales and earnings.
Anything herein to the contrary notwithstanding, a Withholding
Election may be disapproved by the Committee at any time.
9
4.3 RELATIONSHIP TO OTHER EMPLOYEE BENEFIT PLANS. Stock Options and Awards
granted hereunder shall not be deemed to be salary or other compensation to any
Employee for purposes of any pension, thrift, profit-sharing, stock purchase or
any other employee benefit plan now maintained or hereafter adopted by the
Company.
4.4 AMENDMENT AND TERMINATION. The Board of Directors may at any time
suspend, amend or terminate this Plan. No amendment, except as provided in
Section 2.8, or modification of this Plan may be adopted, except subject to
stockholder approval, which would (1) materially increase the benefits accruing
to the Employees under this Plan, (2) materially increase the number of
securities which may be issued under this Plan (except for adjustments pursuant
to Section 4.1 hereof), or (3) materially modify the requirements as to
eligibility for participation in this Plan.
4.5 SUCCESSORS IN INTEREST. The provisions of this Plan and the actions of
the Committee shall be binding upon all heirs, successors and assigns of the
Company and of the Employees.
4.6 OTHER DOCUMENTS. All documents prepared, executed or delivered in
connection with this Plan (including, without limitation, Option Agreements and
Incentive Agreements) shall be, in substance and form, as established and
modified by the Committee; provided, however, that all such documents shall be
subject in every respect to the provisions of this Plan, and in the event of any
conflict between the terms of any such document and this Plan, the provisions of
this Plan shall prevail.
4.7 NO OBLIGATION TO CONTINUE EMPLOYMENT. This Plan and the grants which
might be made hereunder shall not impose any obligation on the Company to
continue to employ any Employee. Moreover, no provision of this Plan or any
document executed or delivered pursuant to this Plan shall be deemed modified in
any way by any employment contract between an Employee (or other employee) and
the Company.
4.8 MISCONDUCT OF AN EMPLOYEE. Notwithstanding any other provision of this
Plan, if an Employee commits fraud or dishonesty toward the Company or
wrongfully uses or discloses any trade secret, confidential data or other
information proprietary to the Company, or intentionally takes any other action
materially inimical to the best interests of the Company, as determined by the
Committee, in its sole and absolute discretion, the Employee shall forfeit all
rights and benefits under this Plan.
4.9 TERM OF PLAN. This Plan was amended and restated by the Board
effective July 22, 2004. No Stock Options or Awards may be granted under this
Plan after June 15, 2014.
4.10 GOVERNING LAW. This Plan shall be construed in accordance with, and
governed by, the laws of the State of Nevada.
4.11 APPROVAL, No Stock Option shall be exercisable, or Award granted,
unless and until the Directors of the Company have approved this Plan and all
other legal requirements have been met.
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4.12 ASSUMPTION AGREEMENTS. The Company will require each successor,
(direct or indirect, whether by purchase, merger, consolidation or otherwise),
to all or substantially all of the business or assets of the Company, prior to
the consummation of each such transaction, to assume and agree to perform the
terms and provisions remaining to be performed by the Company under each
Incentive Agreement and Stock Option and to preserve the benefits to the
Employees thereunder. Such assumption and agreement shall be set forth in a
written agreement in form and substance satisfactory to the Committee (an
"ASSUMPTION AGREEMENT"), and shall include such adjustments, if any, in the
application of the provisions of the Incentive Agreements and Stock Options and
such additional provisions, if any, as the Committee shall require and approve,
in order to preserve such benefits to the Employees. Without limiting the
generality of the foregoing, the Committee may require an Assumption Agreement
to include satisfactory undertakings by a successor:
(a) To provide liquidity to the Employees at the end of the
Restriction Period applicable to the Common Stock awarded to them under this
Plan, or on the exercise of Stock Options;
(b) If the succession occurs before the expiration of any period
specified in the Incentive Agreements for satisfaction of performance criteria
applicable to the Common Stock awarded thereunder, to refrain from interfering
with the Company's ability to satisfy such performance criteria or to agree to
modify such performance criteria and/or waive any criteria that cannot be
satisfied as a result of the succession;
(c) To require any future successor to enter into an Assumption
Agreement; and
(d) To take or refrain from taking such other actions as the
Committee may require and approve, in its discretion.
The Committee referred to in this Section 4.12 is the Committee appointed
by a Board of Directors in office prior to the succession then under
consideration.
4.13 COMPLIANCE WITH RULE 16B-3. Transactions under this Plan are intended
to comply with all applicable conditions of Rule 16b-3. To the extent that any
provision of this Plan or action by the Committee fails to so comply, it shall
be deemed null and void, to the extent permitted by law and deemed advisable by
the Committee.
4.14 INFORMATION TO STOCKHOLDERS. The Company shall furnish to each of its
stockholders financial statements of the Company at least annually.
IN WITNESS WHEREOF, this Plan has been amended and restated effective as
of July 22, 2004.
ZANNWELL INC.
By: /S/ ROBERT C. SIMPSON
-----------------------------------
Robert C. Simpson,
President and Chairman of the Board
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AMENDED AND RESTATED
ZANNWELL INC.
2004 NON-EMPLOYEE DIRECTORS
AND CONSULTANTS RETAINER STOCK PLAN
1. INTRODUCTION. This Plan shall be known as the "AMENDED AND RESTATED
ZANNWELL INC. 2004 NON-EMPLOYEE DIRECTORS AND CONSULTANTS RETAINER STOCK PLAN,"
and is hereinafter referred to as the "PLAN." The purposes of this Plan are to
enable ZannWell Inc., a Nevada corporation formerly known as USA Telcom
Internationale (the "COMPANY"), to promote the interests of the Company and its
stockholders by attracting and retaining non-employee Directors and Consultants
capable of furthering the future success of the Company and by aligning their
economic interests more closely with those of the Company's stockholders, by
paying their retainer or fees in the form of shares of the Company's common
stock, par value $0.001 per share (the "COMMON STOCK").
2. DEFINITIONS. The following terms shall have the meanings set forth
below:
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "CHANGE OF CONTROL" has the meaning set forth in Section 12.4
hereof.
2.3 "CODE" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations thereunder. References to any provision of the Code or
rule or regulation thereunder shall be deemed to include any amended or
successor provision, rule or regulation.
2.4 "COMMITTEE" means the committee that administers this Plan, as
more fully defined in Section 13 hereof.
2.5 "COMMON STOCK" has the meaning set forth in Section 1 hereof.
2.6 "COMPANY" has the meaning set forth in Section 1 hereof.
2.7 "DEFERRAL" has the meaning set forth in Section 6 hereof.
2.8 "DEFERRED STOCK ACCOUNT" means a bookkeeping account maintained
by the Company for a Participant representing the Participant's interest in the
shares credited to such Deferred Stock Account pursuant to Section 7 hereof.
2.9 "DELIVERY DATE" has the meaning set forth in Section 6 hereof.
2.10 "DIRECTOR" means an individual who is a member of the Board of
Directors of the Company.
2.11 "DIVIDEND EQUIVALENT" for a given dividend or other
distribution means a number of shares of the Common Stock having a Fair Market
Value, as of the record date for such dividend or distribution, equal to the
amount of cash, plus the Fair Market Value on the date of distribution of any
property, that is distributed with respect to one share of the Common Stock
pursuant to such dividend or distribution; such Fair Market Value to be
determined by the Committee in good faith.
1
2.12 "EFFECTIVE DATE" has the meaning set forth in Section 3 hereof.
2.13 "EXCHANGE ACT" has the meaning set forth in Section 13.2
hereof.
2.14 "FAIR MARKET VALUE" means the mean between the highest and
lowest reported sales prices of the Common Stock on the New York Stock Exchange
Composite Tape or, if not listed on such exchange, on any other national
securities exchange on which the Common Stock is listed or on The Nasdaq Stock
Market, or, if not so listed on any other national securities exchange or The
Nasdaq Stock Market, then the average of the bid price of the Common Stock
during the last five trading days on the OTC Bulletin Board immediately
preceding the last trading day prior to the date with respect to which the Fair
Market Value is to be determined. If the Common Stock is not then publicly
traded, then the Fair Market Value of the Common Stock shall be the book value
of the Company per share as determined on the last day of March, June,
September, or December in any year closest to the date when the determination is
to be made. For the purpose of determining book value hereunder, book value
shall be determined by adding as of the applicable date called for herein the
capital, surplus, and undivided profits of the Company, and after having
deducted any reserves theretofore established; the sum of these items shall be
divided by the number of shares of the Common Stock outstanding as of said date,
and the quotient thus obtained shall represent the book value of each share of
the Common Stock of the Company.
2.15 "PARTICIPANT" has the meaning set forth in Section 4 hereof.
2.16 "PAYMENT TIME" means the time when a Stock Retainer is payable
to a Participant pursuant to Section 5 hereof (without regard to the effect of
any Deferral Election).
2.17 "STOCK RETAINER" has the meaning set forth in Section 5 hereof.
2.18 "THIRD ANNIVERSARY" has the meaning set forth in Section 6
hereof.
3. EFFECTIVE DATE OF THE PLAN. This Plan was amended and restated by the
Board effective July 22, 2004 (the "EFFECTIVE DATE").
4. ELIGIBILITY. Each individual who is a Director or Consultant on the
Effective Date and each individual who becomes a Director or Consultant
thereafter during the term of this Plan, shall be a participant (the
"PARTICIPANT") in this Plan, in each case during such period as such individual
remains a Director or Consultant and is not an employee of the Company or any of
its subsidiaries. Each credit of shares of the Common Stock pursuant to this
Plan shall be evidenced by a written agreement duly executed and delivered by or
on behalf of the Company and a Participant, if such an agreement is required by
the Company to assure compliance with all applicable laws and regulations.
2
5. GRANTS OF SHARES. Commencing on the Effective Date, the amount of
compensation for service to directors or consultants shall be payable in shares
of the Common Stock (the "STOCK RETAINER") pursuant to this Plan at the deemed
issuance price of the Fair Market Value of the Common Stock on the date of the
issuance of such shares. As used herein, "FAIR MARKET VALUE" means the mean
between the highest and lowest reported sales prices of the Common Stock on the
New York Stock Exchange Composite Tape or, if not listed on such exchange, on
any other national securities exchange on which the Common Stock is listed or on
The Nasdaq Stock Market, or, if not so listed on any other national securities
exchange or The Nasdaq Stock Market, then the average of the bid price of the
Common Stock during the last five trading days on the OTC Bulletin Board
immediately preceding the last trading day prior to the date with respect to
which the Fair Market Value is to be determined. If the Common Stock is not then
publicly traded, then the Fair Market Value of the Common Stock shall be the
book value of the Company per share as determined on the last day of March,
June, September, or December in any year closest to the date when the
determination is to be made. For the purpose of determining book value
hereunder, book value shall be determined by adding as of the applicable date
called for herein the capital, surplus, and undivided profits of the Company,
and after having deducted any reserves theretofore established; the sum of these
items shall be divided by the number of shares of the Common Stock outstanding
as of said date, and the quotient thus obtained shall represent the book value
of each share of the Common Stock of the Company.
6. DEFERRAL OPTION. From and after the Effective Date, a Participant may
make an election (a "DEFERRAL ELECTION") on an annual basis to defer delivery of
the Stock Retainer specifying which one of the following ways the Stock Retainer
is to be delivered (a) on the date which is three years after the Effective Date
for which it was originally payable (the "THIRD ANNIVERSARY"), (b) on the date
upon which the Participant ceases to be a Director or Consultant for any reason
(the "DEPARTURE DATE") or (c) in five equal annual installments commencing on
the Departure Date (the "THIRD ANNIVERSARY" and "DEPARTURE DATE" each being
referred to herein as a "DELIVERY DATE"). Such Deferral Election shall remain in
effect for each Subsequent Year unless changed, provided that, any Deferral
Election with respect to a particular Year may not be changed less than six
months prior to the beginning of such Year, and provided, further, that no more
than one Deferral Election or change thereof may be made in any Year. Any
Deferral Election and any change or revocation thereof shall be made by
delivering written notice thereof to the Committee no later than six months
prior to the beginning of the Year in which it is to be effected; provided that,
with respect to the Year beginning on the Effective Date, any Deferral Election
or revocation thereof must be delivered no later than the close of business on
the 30th day after the Effective Date.
7. DEFERRED STOCK ACCOUNTS. The Company shall maintain a Deferred Stock
Account for each Participant who makes a Deferral Election to which shall be
credited, as of the applicable Payment Time, the number of shares of the Common
Stock payable pursuant to the Stock Retainer to which the Deferral Election
relates. So long as any amounts in such Deferred Stock Account have not been
delivered to the Participant under Section 8 hereof, each Deferred Stock Account
shall be credited as of the payment date for any dividend paid or other
distribution made with respect to the Common Stock, with a number of shares of
the Common Stock equal to (a) the number of shares of the Common Stock shown in
such Deferred Stock Account on the record date for such dividend or distribution
multiplied by (b) the Dividend Equivalent for such dividend or distribution.
3
8. DELIVERY OF SHARES.
8.1 DELIVERY. The shares of the Common Stock in a Participant's
Deferred Stock Account with respect to any Stock Retainer for which a Deferral
Election has been made (together with dividends attributable to such shares
credited to such Deferred Stock Account) shall be delivered in accordance with
this Section 8 as soon as practicable after the applicable Delivery Date. Except
with respect to a Deferral Election pursuant to Section 6(c) hereof, or other
agreement between the parties, such shares shall be delivered at one time;
provided that, if the number of shares so delivered includes a fractional share,
such number shall be rounded to the nearest whole number of shares. If the
Participant has in effect a Deferral Election pursuant to Section 6(c) hereof,
then such shares shall be delivered in five equal annual installments (together
with dividends attributable to such shares credited to such Deferred Stock
Account), with the first such installment being delivered on the first
anniversary of the Delivery Date; provided that, if in order to equalize such
installments, fractional shares would have to be delivered, such installments
shall be adjusted by rounding to the nearest whole share. If any such shares are
to be delivered after the Participant has died or become legally incompetent,
they shall be delivered to the Participant's estate or legal guardian, as the
case may be, in accordance with the foregoing; provided that, if the Participant
dies with a Deferral Election pursuant to Section 6(c) hereof in effect, the
Committee shall deliver all remaining undelivered shares to the Participant's
estate immediately. References to a Participant in this Plan shall be deemed to
refer to the Participant's estate or legal guardian, where appropriate.
8.2 TRUST. The Company may, but shall not be required to, create a
grantor trust or utilize an existing grantor trust (in either case, "TRUST") to
assist it in accumulating the shares of the Common Stock needed to fulfill its
obligations under this Section 8. However, Participants shall have no beneficial
or other interest in the Trust and the assets thereof, and their rights under
this Plan shall be as general creditors of the Company, unaffected by the
existence or nonexistence of the Trust, except that deliveries of Stock
Retainers to Participants from the Trust shall, to the extent thereof, be
treated as satisfying the Company's obligations under this Section 8.
9. SHARE CERTIFICATES; VOTING AND OTHER RIGHTS. The certificates for
shares delivered to a Participant pursuant to Section 8 above shall be issued in
the name of the Participant, and from and after the date of such issuance the
Participant shall be entitled to all rights of a stockholder with respect to the
Common Stock for all such shares issued in his name, including the right to vote
the shares, and the Participant shall receive all dividends and other
distributions paid or made with respect thereto.
10. GENERAL RESTRICTIONS.
10.1 RESTRICTIONS. Notwithstanding any other provision of this Plan
or agreements made pursuant thereto, the Company shall not be required to issue
or deliver any certificate or certificates for shares of the Common Stock under
this Plan prior to fulfillment of all of the following conditions:
(i) Listing or approval for listing upon official notice of
issuance of such shares on the New York Stock Exchange, Inc., or such other
securities exchange as may at the time be a market for the Common Stock;
(ii) Any registration or other qualification of such shares
under any state or federal law or regulation, or the maintaining in effect of
any such registration or other qualification which the Committee shall, upon the
advice of counsel, deem necessary or advisable; and
4
(iii) Obtaining any other consent, approval, or permit from
any state or federal governmental agency which the Committee shall, after
receiving the advice of counsel, determine to be necessary or advisable.
10.2 OTHER COMPENSATION. Nothing contained in this Plan shall
prevent the Company from adopting other or additional compensation arrangements
for the Participants.
11. SHARES AVAILABLE. Subject to Section 12 below, the maximum number of
shares of the Common Stock which may in the aggregate be paid as Stock Retainers
pursuant to this Plan is 21,500,000. Shares of the Common Stock issueable under
this Plan may be taken from treasury shares of the Company or purchased on the
open market.
12. ADJUSTMENTS; CHANGE OF CONTROL.
12.1 CHANGE IN CAPITALIZATION; CHANGE OF CONTROL. In the event that
there is, at any time after the Board adopts this Plan, any change in corporate
capitalization, such as a stock split, combination of shares, exchange of
shares, warrants or rights offering to purchase the Common Stock at a price
below its Fair Market Value, reclassification, or recapitalization, or a
corporate transaction, such as any merger, consolidation, separation, including
a spin-off, stock dividend, or other extraordinary distribution of stock or
property of the Company, any reorganization (whether or not such reorganization
comes within the definition of such term in Section 368 of the Code) or any
partial or complete liquidation of the Company (each of the foregoing a
"TRANSACTION"), in each case other than any such Transaction which constitutes a
Change of Control (as defined below), (i) the Deferred Stock Accounts shall be
credited with the amount and kind of shares or other property which would have
been received by a holder of the number of shares of the Common Stock held in
such Deferred Stock Account had such shares of the Common Stock been outstanding
as of the effectiveness of any such Transaction, (ii) the number and kind of
shares or other property subject to this Plan shall likewise be appropriately
adjusted to reflect the effectiveness of any such transaction, and (iii) the
Committee shall appropriately adjust any other relevant provisions of this Plan
and any such modification by the Committee shall be binding and conclusive on
all persons.
12.2 PROPERTY. If the shares of the Common Stock credited to the
Deferred Stock Accounts are converted pursuant to Section 12.1 into another form
of property, references in this Plan to the Common Stock shall be deemed, where
appropriate, to refer to such other form of property, with such other
modifications as may be required for this Plan to operate in accordance with its
purposes. Without limiting the generality of the foregoing, references to
delivery of certificates for shares of the Common Stock shall be deemed to refer
to delivery of cash and the incidents of ownership of any other property held in
the Deferred Stock Accounts.
12.3 CHANGE OF CONTROL ALTERNATIVE. In lieu of the adjustment
contemplated by Section 12.1, in the event of a Change of Control, the following
shall occur on the date of the Change of Control (i) the shares of the Common
Stock held in each Participant's Deferred Stock Account shall be deemed to be
issued and outstanding as of the Change of Control; (ii) the Company shall
forthwith deliver to each Participant who has a Deferred Stock Account all of
the shares of the Common Stock or any other property held in such Participant's
Deferred Stock Account; and (iii) this Plan shall be terminated.
5
12.4 CHANGE OF CONTROL EVENTS. For purposes of this Plan, Change of
Control shall mean any of the following events:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") (a "PERSON") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20
percent or more of either (1) the then outstanding shares of the Common Stock of
the Company (the "OUTSTANDING COMPANY COMMON STOCK"), or (2) the combined voting
power of then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "OUTSTANDING COMPANY VOTING
SECURITIES"); provided, however, that the following acquisitions shall not
constitute a Change of Control (A) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a conversion privilege
unless the security being so converted was itself acquired directly from the
Company), (B) any acquisition by the Company, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (D) any acquisition by any
corporation pursuant to a reorganization, merger or consolidation, if, following
such reorganization, merger or consolidation, the conditions described in
clauses (A), (B) and (C) of paragraph (iii) of this Section 12.4 are satisfied;
or
(ii) Individuals who, as of the date hereof, constitute the
Board of the Company (as of the date hereof, "INCUMBENT BOARD") cease for any
reason to constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's stockholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board; or
(iii) Approval by the stockholders of the Company of a
reorganization, merger, binding share exchange or consolidation, unless,
following such reorganization, merger, binding share exchange or consolidation
(1) more than 60 percent of, respectively, then outstanding shares of common
stock of the corporation resulting from such reorganization, merger, binding
share exchange or consolidation and the combined voting power of then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger,
binding share exchange or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger, binding share
exchange or consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (2) no Person
(excluding the Company, any employee benefit plan (or related trust) of the
Company or such corporation resulting from such reorganization, merger, binding
share exchange or consolidation and any Person beneficially owning, immediately
prior to such reorganization, merger, binding share exchange or consolidation,
directly or indirectly, 20 percent or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 20 percent or more of, respectively, then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger, binding share exchange or consolidation or the combined
voting power of then outstanding voting securities of such corporation entitled
to vote generally in the election of directors, and (3) at least a majority of
the members of the board of directors of the corporation resulting from such
reorganization, merger, binding share exchange or consolidation were members of
the Incumbent Board at the time of the execution of the initial agreement
providing for such reorganization, merger, binding share exchange or
consolidation; or
6
(iv) Approval by the stockholders of the Company of (1) a
complete liquidation or dissolution of the Company, or (2) the sale or other
disposition of all or substantially all of the assets of the Company, other than
to a corporation, with respect to which following such sale or other
disposition, (A) more than 60 percent of, respectively, then outstanding shares
of common stock of such corporation and the combined voting power of then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company and any employee benefit plan (or related trust) of the
Company or such corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, 20 percent or
more of the Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 20
percent or more of, respectively, then outstanding shares of common stock of
such corporation and the combined voting power of then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors, and (3) at least a majority of the members of the board of directors
of such corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company.
13. ADMINISTRATION; AMENDMENT AND TERMINATION.
13.1 ADMINISTRATION. This Plan shall be administered by a committee
consisting of two members who shall be the current directors of the Company or
senior executive officers or other directors who are not Participants as may be
designated by the Chief Executive Officer (the "COMMITTEE"), which shall have
full authority to construe and interpret this Plan, to establish, amend and
rescind rules and regulations relating to this Plan, and to take all such
actions and make all such determinations in connection with this Plan as it may
deem necessary or desirable.
13.2 AMENDMENT AND TERMINATION. The Board may from time to time make
such amendments to this Plan, including to preserve or come within any exemption
from liability under Section 16(b) of the Exchange Act, as it may deem proper
and in the best interest of the Company without further approval of the
Company's stockholders, provided that, to the extent required under Nevada law
or to qualify transactions under this Plan for exemption under Rule 16b-3
promulgated under the Exchange Act, no amendment to this Plan shall be adopted
without further approval of the Company's stockholders and, provided, further,
that if and to the extent required for this Plan to comply with Rule 16b-3
promulgated under the Exchange Act, no amendment to this Plan shall be made more
than once in any six month period that would change the amount, price or timing
of the grants of the Common Stock hereunder other than to comport with changes
in the Code, the Employee Retirement Income Security Act of 1974, as amended, or
the regulations thereunder. The Board may terminate this Plan at any time by a
vote of a majority of the members thereof.
7
14. MISCELLANEOUS.
14.1 NO OBLIGATION. Nothing in this Plan shall be deemed to create
any obligation on the part of the Board to nominate any Director for reelection
by the Company's stockholders or to limit the rights of the stockholders to
remove any Director.
14.2 WITHHOLDING TAXES. The Company shall have the right to require,
prior to the issuance or delivery of any shares of the Common Stock pursuant to
this Plan, that a Participant make arrangements satisfactory to the Committee
for the withholding of any taxes required by law to be withheld with respect to
the issuance or delivery of such shares, including, without limitation, by the
withholding of shares that would otherwise be so issued or delivered, by
withholding from any other payment due to the Participant, or by a cash payment
to the Company by the Participant.
14.3 GOVERNING LAW. The Plan and all actions taken thereunder shall
be governed by and construed in accordance with the laws of the State of Nevada.
14.4 INFORMATION TO STOCKHOLDERS. The Company shall furnish to each
of its stockholders financial statements of the Company at least annually.
IN WITNESS WHEREOF, this Plan has been amended and restated effective as
of July 22, 2004.
ZANNWELL INC.
By: /S/ ROBERT C. SIMPSON
-----------------------------------
Robert C. Simpson,
President and Chairman of the Board
8
ZANNWELL INC.
AMENDED AND RESTATED ZANNWELL INC. 2004 EMPLOYEE STOCK INCENTIVE PLAN
1. General Provisions.
1.1 Purpose. This Stock Incentive Plan (the "Plan") is intended to allow
designated officers and employees (all of whom are sometimes collectively
referred to herein as the "Employees," or individually as the "Employee") of
Zannwell Inc., a Nevada corporation (the "Company") and its Subsidiaries (as
that term is defined below) which they may have from time to time (the Company
and such Subsidiaries are referred to herein as the "Company") to receive
certain options (the "Stock Options") to purchase common stock of the Company,
par value $0.001 per share (the "Common Stock"), and to receive grants of the
Common Stock subject to certain restrictions (the "Awards"). As used in this
Plan, the term "Subsidiary" shall mean each corporation which is a "subsidiary
corporation" of the Company within the meaning of Section 424(f) of the Internal
Revenue Code of 1986, as amended (the "Code"). The purpose of this Plan is to
provide the Employees, who make significant and extraordinary contributions to
the long-term growth and performance of the Company, with equity-based
compensation incentives, and to attract and retain the Employees.
1.2 Administration.
1.2.1 The Plan shall be administered by the Compensation Committee (the
"Committee") of, or appointed by, the Board of Directors of the Company (the
"Board"). The Committee shall select one of its members as Chairman and shall
act by vote of a majority of a quorum, or by unanimous written consent. A
majority of its members shall constitute a quorum. The Committee shall be
governed by the provisions of the Company's Bylaws and of Nevada law applicable
to the Board, except as otherwise provided herein or determined by the Board.
1.2.2 The Committee shall have full and complete authority, in its
discretion, but subject to the express provisions of this Plan (a) to approve
the Employees nominated by the management of the Company to be granted Awards or
Stock Options; (b) to determine the number of Awards or Stock Options to be
granted to an Employee; (c) to determine the time or times at which Awards or
Stock Options shall be granted; (d) to establish the terms and conditions upon
which Awards or Stock Options may be exercised; (e) to remove or adjust any
restrictions and conditions upon Awards or Stock Options; (f) to specify, at the
time of grant, provisions relating to exercisability of Stock Options and to
accelerate or otherwise modify the exercisability of any Stock Options; and (g)
to adopt such rules and regulations and to make all other determinations deemed
necessary or desirable for the administration of this Plan. All interpretations
and constructions of this Plan by the Committee, and all of its actions
hereunder, shall be binding and conclusive on all persons for all purposes.
1.2.3 The Company hereby agrees to indemnify and hold harmless each
Committee member and each Employee, and the estate and heirs of such Committee
member or Employee, against all claims, liabilities, expenses, penalties,
damages or other pecuniary losses, including legal fees, which such Committee
member or Employee, his estate or heirs may suffer as a result of his
responsibilities, obligations or duties in connection with this Plan, to the
extent that insurance, if any, does not cover the payment of such items. No
member of the Committee or the Board shall be liable for any action or
determination made in good faith with respect to this Plan or any Award or Stock
Option granted pursuant to this Plan.
1.3 Eligibility and Participation. The Employees eligible under this Plan
shall be approved by the Committee from those Employees who, in the opinion of
the management of the Company, are in positions which enable them to make
significant contributions to the long-term performance and growth of the
Company. In selecting the Employees to whom Award or Stock Options may be
granted, consideration shall be given to factors such as employment position,
duties and responsibilities, ability, productivity, length of service, morale,
interest in the Company and recommendations of supervisors.
1
Beckstead and Watts, LLP
Certified Public Accountants
3340 Wynn Road, Suite B
Las Vegas, NV 89102
702.257.1984 tel
702.362.0540 fax
Securities and Exchange Commission
Washington, DC 20549
Ladies and Gentlemen:
We have issued our report dated March 16, 2004 accompanying the financials
statements of Zannwell, Inc. (formerly USA Telcom Internationale) on Form 10-KSB
for the years ended December 31, 2003 and 2002. We hereby consent to the
incorporation by reference of said report in the Registration Statement of
Zannwell, Inc. (formerly USA Telcom Internationale) on Form S-8.
Signed,
/s/ Beckstead and Watts, LLP
December 7, 2004
1.4 Shares Subject to this Plan. The maximum number of shares of the
Common Stock that may be issued pursuant to this Plan shall be 186,000,000
subject to the provisions of Paragraph 4.1. If shares of the Common Stock
awarded or issued under this Plan are reacquired by the Company due to a
forfeiture or for any other reason, such shares shall be cancelled and
thereafter shall again be available for purposes of this Plan. If a Stock Option
expires, terminates or is cancelled for any reason without having been exercised
in full, the shares of the Common Stock not purchased thereunder shall again be
available for purposes of this Plan. In the event that any outstanding Stock
Option or Award under this Plan for any reason expires or is terminated, the
shares of Common Stock allocable to the unexercised portion of the Stock Option
or Award shall be available for issuance under the Amended and Restated Zannwell
Inc. 2004 Non-Employee Directors and Consultants Retainer Stock Plan. The
Compensation Committee may, in its discretion, increase the number of shares
available for issuance under this Plan, while correspondingly decreasing the
number of shares available for issuance under the Amended and Restated Zannwell
Inc. 2004 Non-Employee Directors and Consultants Retainer Stock Plan.
2. Provisions Relating to Stock Options.
2.1 Grants of Stock Options. The Committee may grant Stock Options in such
amounts, at such times, and to the Employees nominated by the management of the
Company as the Committee, in its discretion, may determine. Stock Options
granted under this Plan shall constitute "incentive stock options" within the
meaning of Section 422 of the Code, if so designated by the Committee on the
date of grant. The Committee shall also have the discretion to grant Stock
Options which do not constitute incentive stock options, and any such Stock
Options shall be designated non-statutory stock options by the Committee on the
date of grant. The aggregate Fair Market Value (determined as of the time an
incentive stock option is granted) of the Common Stock with respect to which
incentive stock options are exercisable for the first time by any Employee
during any one calendar year (under all plans of the Company and any parent or
subsidiary of the Company) may not exceed the maximum amount permitted under
Section 422 of the Code (currently, $100,000.00). Non-statutory stock options
shall not be subject to the limitations relating to incentive stock options
contained in the preceding sentence. Each Stock Option shall be evidenced by a
written agreement (the "Option Agreement") in a form approved by the Committee,
which shall be executed on behalf of the Company and by the Employee to whom the
Stock Option is granted, and which shall be subject to the terms and conditions
of this Plan. In the discretion of the Committee, Stock Options may include
provisions (which need not be uniform), authorized by the Committee in its
discretion, that accelerate an Employee's rights to exercise Stock Options
following a "Change in Control," upon termination of the Employee's employment
by the Company without "Cause" or by the Employee for "Good Reason," as such
terms are defined in Paragraph 3.1 hereof. The holder of a Stock Option shall
not be entitled to the privileges of stock ownership as to any shares of the
Common Stock not actually issued to such holder.
The exercise price per share for the Stock covered by a Stock Option shall
be determined by the Committee at the time of grant but in the case of Incentive
Stock Options shall not be less than 100% of the Fair Market Value on the date
of grant. If an employee owns or is deemed to own (by reason of the attribution
rules applicable under Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company or any parent or subsidiary
corporation and an Incentive Stock Option is granted to such employee, the
option price of such Incentive Stock Option shall be not less than 110% of the
Fair Market Value on the grant date.
2.2 Purchase Price. The purchase price (the "Exercise Price") of shares of
the Common Stock subject to each Stock Option (the "Option Shares") shall not be
less than 85 percent of the Fair Market Value of the Common Stock on the date of
the grant of the option. For an Employee holding greater than 10 percent of the
total voting power of all stock of the Company, either Common or Preferred, the
Exercise Price of an incentive stock option shall be at least 110 percent of the
Fair Market Value of the Common Stock on the date of the grant of the option. As
used herein, "Fair Market Value" means the mean between the highest and lowest
reported sales prices of the Common Stock on the New York Stock Exchange
Composite Tape or, if not listed on such exchange, on any other national
securities exchange on which the Common Stock is listed or on The Nasdaq Stock
Market, or, if not so listed on any other national securities exchange or The
Nasdaq Stock Market, then the average of the bid price of the Common Stock
during the last five trading days on the OTC Bulletin Board immediately
preceding the last trading day prior to the date with respect to which the Fair
Market Value is to be determined. If the Common Stock is not then publicly
traded, then the Fair Market Value of the Common Stock shall be the book value
of the Company per share as determined on the last day of March, June,
September, or December in any year closest to the date when the determination is
to be made. For the purpose of determining book value hereunder, book value
shall be determined by adding as of the applicable date called for herein the
capital, surplus, and undivided profits of the Company, and after having
deducted any reserves theretofore established; the sum of these items shall be
divided by the number of shares of the Common Stock outstanding as of said date,
and the quotient thus obtained shall represent the book value of each share of
the Common Stock of the Company.
2
2.3 Option Period. The Stock Option period (the "Term") shall commence on
the date of grant of the Stock Option and shall be 10 years or such shorter
period as is determined by the Committee. Each Stock Option shall provide that
it is exercisable over its term in such periodic installments as the Committee
may determine, subject to the provisions of Paragraph 2.4.1. Section 16(b) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") exempts
persons normally subject to the reporting requirements of Section 16(a) of the
Exchange Act (the "Section 16 Reporting Persons") pursuant to a qualified
employee stock option plan from the normal requirement of not selling until at
least six months and one day from the date the Stock Option is granted.
2.4 Exercise of Options.
2.4.1 Each Stock Option may be exercised in whole or in part (but not as
to fractional shares) by delivering it for surrender or endorsement to the
Company, attention of the Corporate Secretary, at the principal office of the
Company, together with payment of the Exercise Price and an executed Notice and
Agreement of Exercise in the form prescribed by Paragraph 2.4.2. Payment may be
made (a) in cash, (b) by cashier's or certified check, (c) by surrender of
previously owned shares of the Common Stock valued pursuant to Paragraph 2.2 (if
the Committee authorizes payment in stock in its discretion), (d) by withholding
from the Option Shares which would otherwise be issuable upon the exercise of
the Stock Option that number of Option Shares equal to the exercise price of the
Stock Option, if such withholding is authorized by the Committee in its
discretion, (e) in the discretion of the Committee, by the delivery to the
Company of the optionee's promissory note secured by the Option Shares, bearing
interest at a rate sufficient to prevent the imputation of interest under
Sections 483 or 1274 of the Code, and having such other terms and conditions as
may be satisfactory to the Committee., or (f) if the Employee and the Company so
agree, deliver to the Optionee's NASD licensed broker-dealer and to the Company
an irrevocable notice of exercise of the option, together with irrevocable
instructions from the Optionee to the Company to deliver the Option Shares to
the broker-dealer. Upon receipt of such notice, the Company shall immediately
deliver to the Employee's broker-dealer the share certificate(s) representing
the Option Shares so purchased, and upon receipt of such certificate(s), the
broker shall sell the Option Shares and remit the purchase price for all Option
Shares then being purchased, and any withholding taxes to the Corporation.
2.4.2 Exercise of each Stock Option is conditioned upon the agreement of
the Employee to the terms and conditions of this Plan and of such Stock Option
as evidenced by the Employee's execution and delivery of a Notice and Agreement
of Exercise in a form to be determined by the Committee in its discretion. Such
Notice and Agreement of Exercise shall set forth the agreement of the Employee
that (a) no Option Shares will be sold or otherwise distributed in violation of
the Securities Act of 1933, as amended (the "Securities Act") or any other
applicable federal or state securities laws, (b) each Option Share certificate
may be imprinted with legends reflecting any applicable federal and state
securities law restrictions and conditions, (c) the Company may comply with said
securities law restrictions and issue "stop transfer" instructions to its
Transfer Agent and Registrar without liability, (d) if the Employee is a Section
16 Reporting Person, the Employee will furnish to the Company a copy of each
Form 4 or Form 5 filed by said Employee and will timely file all reports
required under federal securities laws, and (e) the Employee will report all
sales of Option Shares to the Company in writing on a form prescribed by the
Company.
2.4.3 No Stock Option shall be exercisable unless and until any applicable
registration or qualification requirements of federal and state securities laws,
and all other legal requirements, have been fully complied with. The Company
will use reasonable efforts to maintain the effectiveness of a registration
statement under the Securities Act (a "Registration Statement") for the issuance
of Stock Options and shares acquired thereunder, but there may be times when no
such Registration Statement will be currently effective. The exercise of Stock
Options may be temporarily suspended without liability to the Company during
times when no such Registration Statement is currently effective, or during
times when, in the reasonable opinion of the Committee, such suspension is
necessary to preclude violation of any requirements of applicable law or
regulatory bodies having jurisdiction over the Company. If any Stock Option
would expire for any reason except the end of its term during such a suspension,
then if exercise of such Stock Option is duly tendered before its expiration,
such Stock Option shall be exercisable and exercised (unless the attempted
exercise is withdrawn) as of the first day after the end of such suspension. The
Company shall have no obligation to file any Registration Statement covering
resales of Option Shares.
3
2.5 Continuous Employment. Except as provided in Paragraph 2.7 below, an
Employee may not exercise a Stock Option unless from the date of grant to the
date of exercise the Employee remains continuously in the employ of the Company.
For purposes of this Paragraph 2.5, the period of continuous employment of an
Employee with the Company shall be deemed to include (without extending the term
of the Stock Option) any period during which the Employee is on leave of absence
with the consent of the Company, provided that such leave of absence shall not
exceed three months and that the Employee returns to the employ of the Company
at the expiration of such leave of absence. If the Employee fails to return to
the employ of the Company at the expiration of such leave of absence, the
Employee's employment with the Company shall be deemed terminated as of the date
such leave of absence commenced. The continuous employment of an Employee with
the Company shall also be deemed to include any period during which the Employee
is a member of the Armed Forces of the United States, provided that the Employee
returns to the employ of the Company within 90 days (or such longer period as
may be prescribed by law) from the date the Employee first becomes entitled to a
discharge from military service. If an Employee does not return to the employ of
the Company within 90 days (or such longer period as may be prescribed by law)
from the date the Employee first becomes entitled to a discharge from military
service, the Employee's employment with the Company shall be deemed to have
terminated as of the date the Employee's military service ended.
2.6 Restrictions on Transfer. Each Stock Option granted under this Plan
shall be transferable only by will or the laws of descent and distribution. No
interest of any Employee under this Plan shall be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other legal
or equitable process. Each Stock Option granted under this Plan shall be
exercisable during an Employee's lifetime only by the Employee or by the
Employee's legal representative.
2.7 Termination of Employment. Upon an Employee's Retirement, Disability
(both terms being defined below) or death, (a) all Stock Options to the extent
then presently exercisable shall remain in full force and effect and may be
exercised pursuant to the provisions thereof, including expiration at the end of
the fixed term thereof, and (b) unless otherwise provided by the Committee, all
Stock Options to the extent not then presently exercisable by the Employee shall
terminate as of the date of such termination of employment and shall not be
exercisable thereafter.
2.7.1 Upon the termination of the employment of an Employee for any reason
other than those specifically set forth in Paragraph 2.7.1, (a) all Stock
Options to the extent then presently exercisable by the Employee shall remain
exercisable only for a period of 90 days after the date of such termination of
employment (except that the 90 day period shall be extended to 12 months if the
Employee shall die during such 90 day period), and may be exercised pursuant to
the provisions thereof, including expiration at the end of the fixed term
thereof, and (b) unless otherwise provided by the Committee, all Stock Options
to the extent not then presently exercisable by the Employee shall terminate as
of the date of such termination of employment and shall not be exercisable
thereafter.
2.7.2 For purposes of this Plan:
(a) "Retirement" shall mean an Employee's retirement from the
employ of the Company on or after the date on which the Employee attains the age
of 65 years; and
(b) "Disability" shall mean total and permanent incapacity of
an Employee, due to physical impairment or legally established mental
incompetence, to perform the usual duties of the Employee's employment with the
Company, which disability shall be determined (i) on medical evidence by a
licensed physician designated by the Committee, or (ii) on evidence that the
Employee has become entitled to receive primary benefits as a disabled employee
under the Social Security Act in effect on the date of such disability.
4
3. Provisions Relating to Awards.
3.1 Grant of Awards. Subject to the provisions of this Plan, the Committee
shall have full and complete authority, in its discretion, but subject to the
express provisions of this Plan, to (1) grant Awards pursuant to this Plan, (2)
determine the number of shares of the Common Stock subject to each Award (the
"Award Shares"), (3) determine the terms and conditions (which need not be
identical) of each Award, including the consideration (if any) to be paid by the
Employee for such Common Stock, which may, in the Committee's discretion,
consist of the delivery of the Employee's promissory note meeting the
requirements of Paragraph 2.4.1, (4) establish and modify performance criteria
for Awards, and (5) make all of the determinations necessary or advisable with
respect to Awards under this Plan. Each Award under this Plan shall consist of a
grant of shares of the Common Stock subject to a restriction period (after which
the restrictions shall lapse), which shall be a period commencing on the date
the Award is granted and ending on such date as the Committee shall determine
(the "Restriction Period"). The Committee may provide for the lapse of
restrictions in installments, for acceleration of the lapse of restrictions upon
the satisfaction of such performance or other criteria or upon the occurrence of
such events as the Committee shall determine, and for the early expiration of
the Restriction Period upon an Employee's death, Disability or Retirement as
defined in Paragraph 2.7.3, or, following a Change of Control, upon termination
of an Employee's employment by the Company without "Cause" or by the Employee
for "Good Reason," as those terms are defined herein. For purposes of this Plan:
"Change of Control" shall be deemed to occur (a) on the date the Company
first has actual knowledge that any person (as such term is used in Sections
13(d) and 14(d)(2) of the Exchange Act) has become the beneficial owner (as
defined in Rule 13(d)-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 40 percent or more of the combined voting
power of the Company's then outstanding securities, or (b) on the date the
stockholders of the Company approve (i) a merger of the Company with or into any
other corporation in which the Company is not the surviving corporation or in
which the Company survives as a subsidiary of another corporation, (ii) a
consolidation of the Company with any other corporation, or (iii) the sale or
disposition of all or substantially all of the Company's assets or a plan of
complete liquidation.
"Cause," when used with reference to termination of the employment of an
Employee by the Company for "Cause," shall mean:
(a) The Employee's continuing willful and material breach of his
duties to the Company, after he receives a demand from the Chief Executive of
the Company specifying the manner in which he has willfully and materially
breached such duties, other than any such failure resulting from Disability of
the Employee or his resignation for "Good Reason," as defined herein; or
(b) The conviction of the Employee of a felony; or
(c) The Employee's commission of fraud in the course of his
employment with the Company, such as embezzlement or other material and
intentional violation of law against the Company; or
(d) The Employee's gross misconduct causing material harm to the
Company.
"Good Reason" shall mean any one or more of the following, occurring
following or in connection with a Change of Control and within 90 days prior to
the Employee's resignation, unless the Employee shall have consented thereto in
writing:
(a) The assignment to the Employee of duties inconsistent with his
executive status prior to the Change of Control or a substantive change in the
officer or officers to whom he reports from the officer or officers to whom he
reported immediately prior to the Change of Control; or
(b) The elimination or reassignment of a majority of the duties and
responsibilities that were assigned to the Employee immediately prior to the
Change of Control; or
5
(c) A reduction by the Company in the Employee's annual base salary
as in effect immediately prior to the Change of Control; or
(d) The Company requiring the Employee to be based anywhere outside
a 35-mile radius from his place of employment immediately prior to the Change of
Control, except for required travel on the Company's business to an extent
substantially consistent with the Employee's business travel obligations
immediately prior to the Change of Control; or
(e) The failure of the Company to grant the Employee a performance
bonus reasonably equivalent to the same percentage of salary the Employee
normally received prior to the Change of Control, given comparable performance
by the Company and the Employee; or
(f) The failure of the Company to obtain a satisfactory Assumption
Agreement (as defined in Paragraph 4.12 of this Plan) from a successor, or the
failure of such successor to perform such Assumption Agreement.
3.2 Incentive Agreements. Each Award granted under this Plan shall be
evidenced by a written agreement (an "Incentive Agreement") in a form approved
by the Committee and executed by the Company and the Employee to whom the Award
is granted. Each Incentive Agreement shall be subject to the terms and
conditions of this Plan and other such terms and conditions as the Committee may
specify.
3.3 Waiver of Restrictions. The Committee may modify or amend any Award
under this Plan or waive any restrictions or conditions applicable to the Award;
provided, however, that the Committee may not undertake any such modifications,
amendments or waivers if the effect thereof materially increases the benefits to
any Employee, or adversely affects the rights of any Employee without his
consent.
3.4 Terms and Conditions of Awards. Upon receipt of an Award of shares of
the Common Stock under this Plan, even during the Restriction Period, an
Employee shall be the holder of record of the shares and shall have all the
rights of a stockholder with respect to such shares, subject to the terms and
conditions of this Plan and the Award.
3.4.1 Except as otherwise provided in this Paragraph 3.4, no shares of the
Common Stock received pursuant to this Plan shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period applicable to such shares. Any purported disposition of such
Common Stock in violation of this Paragraph 3.4 shall be null and void.
3.4.2 If an Employee's employment with the Company terminates prior to the
expiration of the Restriction Period for an Award, subject to any provisions of
the Award with respect to the Employee's death, Disability or Retirement, or
Change of Control, all shares of the Common Stock subject to the Award shall be
immediately forfeited by the Employee and reacquired by the Company, and the
Employee shall have no further rights with respect to the Award. In the
discretion of the Committee, an Incentive Agreement may provide that, upon the
forfeiture by an Employee of Award Shares, the Company shall repay to the
Employee the consideration (if any) which the Employee paid for the Award Shares
on the grant of the Award. In the discretion of the Committee, an Incentive
Agreement may also provide that such repayment shall include an interest factor
on such consideration from the date of the grant of the Award to the date of
such repayment.
3.4.3 The Committee may require under such terms and conditions as it
deems appropriate or desirable that (a) the certificates for the Common Stock
delivered under this Plan are to be held in custody by the Company or a person
or institution designated by the Company until the Restriction Period expires,
(b) such certificates shall bear a legend referring to the restrictions on the
Common Stock pursuant to this Plan, and (c) the Employee shall have delivered to
the Company a stock power endorsed in blank relating to the Common Stock.
6
4. Miscellaneous Provisions.
4.1 Adjustments Upon Change in Capitalization.
4.1.1 The number and class of shares subject to each outstanding Stock
Option, the Exercise Price thereof (and the total price), the maximum number of
Stock Options that may be granted under this Plan, the minimum number of shares
as to which a Stock Option may be exercised at any one time, and the number and
class of shares subject to each outstanding Award, shall not be proportionately
adjusted in the event of any increase or decrease in the number of the issued
shares of the Common Stock which results from a split-up or consolidation of
shares, payment of a stock dividend or dividends exceeding a total of five
percent for which the record dates occur in any one fiscal year, a
recapitalization (other than the conversion of convertible securities according
to their terms), a combination of shares or other like capital adjustment, so
that (a) upon exercise of the Stock Option, the Employee shall receive the
number and class of shares the Employee would have received prior to any such
capital adjustment becoming effective, and (b) upon the lapse of restrictions of
the Award Shares, the Employee shall receive the number and class of shares the
Employee would have received prior to any such capital adjustment becoming
effective.
4.1.2 Upon a reorganization, merger or consolidation of the Company with
one or more corporations as a result of which the Company is not the surviving
corporation or in which the Company survives as a wholly-owned subsidiary of
another corporation, or upon a sale of all or substantially all of the property
of the Company to another corporation, or any dividend or distribution to
stockholders of more than 10 percent of the Company's assets, adequate
adjustment or other provisions shall be made by the Company or other party to
such transaction so that there shall remain and/or be substituted for the Option
Shares and Award Shares provided for herein, the shares, securities or assets
which would have been issuable or payable in respect of or in exchange for such
Option Shares and Award Shares then remaining, as if the Employee had been the
owner of such shares as of the applicable date. Any securities so substituted
shall be subject to similar successive adjustments.
4.2 Withholding Taxes. The Company shall have the right at the time of
exercise of any Stock Option, the grant of an Award, or the lapse of
restrictions on Award Shares, to make adequate provision for any federal, state,
local or foreign taxes which it believes are or may be required by law to be
withheld with respect to such exercise (the "Tax Liability"), to ensure the
payment of any such Tax Liability. The Company may provide for the payment of
any Tax Liability by any of the following means or a combination of such means,
as determined by the Committee in its sole and absolute discretion in the
particular case (1) by requiring the Employee to tender a cash payment to the
Company, (2) by withholding from the Employee's salary, (3) by withholding from
the Option Shares which would otherwise be issuable upon exercise of the Stock
Option, or from the Award Shares on their grant or date of lapse of
restrictions, that number of Option Shares or Award Shares having an aggregate
Fair Market Value (determined in the manner prescribed by Paragraph 2.2) as of
the date the withholding tax obligation arises in an amount which is equal to
the Employee's Tax Liability or (4) by any other method deemed appropriate by
the Committee. Satisfaction of the Tax Liability of a Section 16 Reporting
Person may be made by the method of payment specified in clause (3) above only
if the following two conditions are satisfied:
(a) The withholding of Option Shares or Award Shares and the
exercise of the related Stock Option occur at least six months and one day
following the date of grant of such Stock Option or Award; and
(b) The withholding of Option Shares or Award Shares is made either
(i) pursuant to an irrevocable election (the "Withholding Election") made by the
Employee at least six months in advance of the withholding of Options Shares or
Award Shares, or (ii) on a day within a 10-day "window period" beginning on the
third business day following the date of release of the Company's quarterly or
annual summary statement of sales and earnings.
Anything herein to the contrary notwithstanding, a Withholding Election
may be disapproved by the Committee at any time.
7
4.3 Relationship to Other Employee Benefit Plans. Stock Options and Awards
granted hereunder shall not be deemed to be salary or other compensation to any
Employee for purposes of any pension, thrift, profit-sharing, stock purchase or
any other employee benefit plan now maintained or hereafter adopted by the
Company.
4.4 Amendments and Termination. The Board of Directors may at any time
suspend, amend or terminate this Plan. No amendment, except as provided in
Paragraph 3.3, or modification of this Plan may be adopted, except subject to
stockholder approval, which would (1) materially increase the benefits accruing
to the Employees under this Plan, (2) materially increase the number of
securities which may be issued under this Plan (subject to Paragraph 4.1
hereof), or (3) materially modify the requirements as to eligibility for
participation in this Plan.
4.5 Successors in Interest. The provisions of this Plan and the actions of
the Committee shall be binding upon all heirs, successors and assigns of the
Company and of the Employees.
4.6 Other Documents. All documents prepared, executed or delivered in
connection with this Plan (including, without limitation, Option Agreements and
Incentive Agreements) shall be, in substance and form, as established and
modified by the Committee; provided, however, that all such documents shall be
subject in every respect to the provisions of this Plan, and in the event of any
conflict between the terms of any such document and this Plan, the provisions of
this Plan shall prevail.
4.7 No Obligation to Continue Employment. This Plan and the grants which
might be made hereunder shall not impose any obligation on the Company to
continue to employ any Employee. Moreover, no provision of this Plan or any
document executed or delivered pursuant to this Plan shall be deemed modified in
any way by any employment contract between an Employee (or other employee) and
the Company.
4.8 Misconduct of an Employee. Notwithstanding any other provision of this
Plan, if an Employee commits fraud or dishonesty toward the Company or
wrongfully uses or discloses any trade secret, confidential data or other
information proprietary to the Company, or intentionally takes any other action
which results in material harm to the Company, as determined by the Committee,
in its sole and absolute discretion, the Employee shall forfeit all rights and
benefits under this Plan.
4.9 Term of Plan. No Stock Option shall be exercisable, or Award granted,
unless and until the Directors of the Company have approved this Plan and all
other legal requirements have been met. This Amended Plan was adopted by the
Board effective December 6, 2004. No Stock Options or Awards may be granted
under this Plan after December 6, 2014.
4.10 Governing Law. This Plan and all actions taken thereunder shall be
governed by, and construed in accordance with, the laws of the State of Nevada.
4.11 Approval. No Stock Option shall be exercisable, or Award granted,
unless and until the Directors of the Company have approved this Plan and all
other legal requirements have been met.
4.11 Assumption Agreements. The Company will require each successor,
(direct or indirect, whether by purchase, merger, consolidation or otherwise),
to all or substantially all of the business or assets of the Company, prior to
the consummation of each such transaction, to assume and agree to perform the
terms and provisions remaining to be performed by the Company under each
Incentive Agreement and Stock Option and to preserve the benefits to the
Employees thereunder. Such assumption and agreement shall be set forth in a
written agreement in form and substance satisfactory to the Committee (an
"Assumption Agreement"), and shall include such adjustments, if any, in the
application of the provisions of the Incentive Agreements and Stock Options and
such additional provisions, if any, as the Committee shall require and approve,
in order to preserve such benefits to the Employees. Without limiting the
generality of the foregoing, the Committee may require an Assumption Agreement
to include satisfactory undertakings by a successor:
(a) To provide liquidity to the Employees at the end of the
Restriction Period applicable to the Common Stock awarded to them under this
Plan, or on the exercise of Stock Options;
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(b) If the succession occurs before the expiration of any period
specified in the Incentive Agreements for satisfaction of performance criteria
applicable to the Common Stock awarded thereunder, to refrain from interfering
with the Company's ability to satisfy such performance criteria or to agree to
modify such performance criteria and/or waive any criteria that cannot be
satisfied as a result of the succession;
(c) To require any future successor to enter into an Assumption
Agreement; and
(d) To take or refrain from taking such other actions as the
Committee may require and approve, in its discretion.
The Committee referred to in this Section 4.12 is the Committee appointed
by a Board of Directors in office prior to the succession then under
consideration.
4.13 Approval. This Plan must be approved by a majority of the outstanding
securities entitled to vote within 12 months before or after this Plan is
adopted or the date the agreement is entered into. Any securities purchased
before security holder approval is obtained must be rescinded if security holder
approval is not obtained within 12 months before or after this Plan is adopted
or the date the agreement is entered into. Such securities shall not be counted
in determining whether such approval is obtained.
4.14 Compliance with Rule 16b-3. Transactions under this Plan are intended
to comply with all applicable conditions of Rule 16b-3 promulgated under the
Exchange Act. To the extent that any provision of this Plan or action by the
Committee fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee.
4.15 Information to Shareholders. The Company shall furnish to each of its
stockholders financial statements of the Company at least annually.
IN WITNESS WHEREOF, this Amended and Restated Plan has been amended
effective as of December 6, 2004.
ZANNWELL INC.
By /s/ Steve Bonenberger
--------------------------------
Steve Bonenberger, President
9
AMENDED AND RESTATED
ZANNWELL INC.
2004 NON-EMPLOYEE DIRECTORS
AND CONSULTANTS RETAINER STOCK PLAN
1. Introduction. This Plan shall be known as the "Amended and Restated
Zannwell Inc. 2004 Non-Employee Directors and Consultants Retainer Stock Plan"
and is hereinafter referred to as the "Plan." The purposes of this Plan are to
enable ZannWell Inc., a Nevada corporation formerly known as USA Telcom
Internationale (the "Company"), to promote the interests of the Company and its
stockholders by attracting and retaining non-employee Directors and Consultants
capable of furthering the future success of the Company and by aligning their
economic interests more closely with those of the Company's stockholders, by
paying their retainer or fees in the form of shares of the Company's common
stock, par value $0.001 per share (the "Common Stock").
2. Definitions. The following terms shall have the meanings set forth
below:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Change in Control" has the meaning set forth in Section 12.4 hereof.
2.3 "Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder. References to any provision of the Code or
rule or regulation thereunder shall be deemed to include any amended or
successor provision, rule or regulation.
2.4 "Committee" means the committee that administers this Plan, as more
fully defined in Section 13 hereof.
2.5 "Common Stock" has the meaning set forth in Section 1 hereof.
2.6 "Company" has the meaning set forth in Section 1 hereof.
2.7 "Deferral" has the meaning set forth in Section 6 hereof.
2.8 Deferred Stock Account" means a bookkeeping account maintained by the
Company for a Participant representing the Participant's interest in the shares
credited to such Deferred Stock Account pursuant to Section 7 hereof.
2.9 "Delivery Date" has the meaning set forth in Section 6 hereof.
2.10 "Director" means an individual means an individual who is a member of
the Board of Directors of the Company.
2.11 "Dividend Equivalent" for a given dividend or other distribution
means a number of shares of the Common Stock having a Fair Market Value, as of
the record date for such dividend or distribution, equal to the amount of cash,
plus the Fair Market Value on the date of distribution of any property, that is
distributed with respect to one share of the Common Stock pursuant to such
dividend or distribution; such Fair Market Value to be determined by the
Committee in good faith.
2.12 "Effective Date" has the meaning set forth in Section 3 hereof.
2.13 "Exchange Act" has the meaning set forth in Section 13.2 hereof.
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2.14 "Fair Market Value" means the mean between the highest and lowest
reported sales prices of the Common Stock on the New York Stock Exchange
Composite Tape or, if not listed on such exchange, on any other national
securities exchange on which the Common Stock is listed or on The Nasdaq Stock
Market, or, if not so listed on any other national securities exchange or The
Nasdaq Stock Market, then the average of the bid price of the Common Stock
during the last five trading days on the OTC Bulletin Board immediately
preceding the last trading day prior to the date with respect to which the Fair
Market Value is to be determined. If the Common Stock is not then publicly
traded, then the Fair Market Value of the Common Stock shall be the book value
of the Company per share as determined on the last day of March, June,
September, or December in any year closest to the date when the determination is
to be made. For the purpose of determining book value hereunder, book value
shall be determined by adding as of the applicable date called for herein the
capital, surplus, and undivided profits of the Company, and after having
deducted any reserves theretofore established; the sum of these items shall be
divided by the number of shares of the Common Stock outstanding as of said date,
and the quotient thus obtained shall represent the book value of each share of
the Common Stock of the Company.
2.15 "Participant" has the meaning set forth in Section 4 hereof.
2.16 "Payment Time" means the time when a Stock Retainer is payable to a
Participant pursuant to Section 5 hereof (without regard to the effect of any
Deferral Election).
2.17 "Stock Retainer" has the meaning set forth in Section 5 hereof.
2.18 "Third Anniversary" has the meaning set forth in Section 6 hereof.
3. Effective Date of the Plan. This Plan was amended and restated by the
Board effective December 6, 2004 (the "Effective Date").
4. Eligibility. Each individual who is a Director or Consultant on the
Effective Date and each individual who becomes a Director or Consultant
thereafter during the term of this Plan, shall be a participant (the
"Participant") in this Plan, in each case during such period as such individual
remains a Director or Consultant and is not an employee of the Company or any of
its subsidiaries. Each credit of shares of the Common Stock pursuant to this
Plan shall be evidenced by a written agreement duly executed and delivered by or
on behalf of the Company and a Participant, if such an agreement is required by
the Company to assure compliance with all applicable laws and regulations.
5. Grants of Shares. Commencing on the Effective Date, the amount of
compensation for service to directors or consultants shall be payable in shares
of the Common Stock (the "Stock Retainer") pursuant to this Plan at the deemed
issuance price of the Fair Market Value of the Common Stock on the date of the
issuance of such shares. As used herein, "Fair Market Value" means the mean
between the highest and lowest reported sales prices of the Common Stock on the
New York Stock Exchange Composite Tape or, if not listed on such exchange, on
any other national securities exchange on which the Common Stock is listed or on
The Nasdaq Stock Market, or, if not so listed on any other national securities
exchange or The Nasdaq Stock Market, then the average of the bid price of the
Common Stock during the last five trading days on the OTC Bulletin Board
immediately preceding the last trading day prior to the date with respect to
which the Fair Market Value is to be determined. If the Common Stock is not then
publicly traded, then the Fair Market Value of the Common Stock shall be the
book value of the Company per share as determined on the last day of March,
June, September, or December in any year closest to the date when the
determination is to be made. For the purpose of determining book value
hereunder, book value shall be determined by adding as of the applicable date
called for herein the capital, surplus, and undivided profits of the Company,
and after having deducted any reserves theretofore established; the sum of these
items shall be divided by the number of shares of the Common Stock outstanding
as of said date, and the quotient thus obtained shall represent the book value
of each share of the Common Stock of the Company.
6. Deferral Option. From and after the Effective Date, a Participant may
make an election (a "Deferral Election") on an annual basis to defer delivery of
the Stock Retainer specifying which one of the following ways the Stock Retainer
is to be delivered (a) on the date which is three years after the Effective Date
for which it was originally payable (the "Third Anniversary"), (b) on the date
upon which the Participant ceases to be a Director or Consultant for any reason
(the "Departure Date") or (c) in five equal annual installments commencing on
the Departure Date (the "Third Anniversary" and "Departure Date" each being
referred to herein as a "Delivery Date"). Such Deferral Election shall remain in
effect for each Subsequent Year unless changed, provided that, any Deferral
Election with respect to a particular Year may not be changed less than six
months prior to the beginning of such Year, and provided, further, that no more
than one Deferral Election or change thereof may be made in any Year. Any
Deferral Election and any change or revocation thereof shall be made by
delivering written notice thereof to the Committee no later than six months
prior to the beginning of the Year in which it is to be effected; provided that,
with respect to the Year beginning on the Effective Date, any Deferral Election
or revocation thereof must be delivered no later than the close of business on
the 30th day after the Effective Date.
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7. Deferred Stock Accounts. The Company shall maintain a Deferred Stock
Account for each Participant who makes a Deferral Election to which shall be
credited, as of the applicable Payment Time, the number of shares of the Common
Stock payable pursuant to the Stock Retainer to which the Deferral Election
relates. So long as any amounts in such Deferred Stock Account have not been
delivered to the Participant under Section 8 hereof, each Deferred Stock Account
shall be credited as of the payment date for any dividend paid or other
distribution made with respect to the Common Stock, with a number of shares of
the Common Stock equal to (a) the number of shares of the Common Stock shown in
such Deferred Stock Account on the record date for such dividend or distribution
multiplied by (b) the Dividend Equivalent for such dividend or distribution.
8. Delivery of Shares.
8.1 Delivery. The shares of the Common Stock in a Participant's Deferred
Stock Account with respect to any Stock Retainer for which a Deferral Election
has been made (together with dividends attributable to such shares credited to
such Deferred Stock Account) shall be delivered in accordance with this Section
8 as soon as practicable after the applicable Delivery Date. Except with respect
to a Deferral Election pursuant to Section 6(c) hereof, or other agreement
between the parties, such shares shall be delivered at one time; provided that,
if the number of shares so delivered includes a fractional share, such number
shall be rounded to the nearest whole number of shares. If the Participant has
in effect a Deferral Election pursuant to Section 6(c) hereof, then such shares
shall be delivered in five equal annual installments (together with dividends
attributable to such shares credited to such Deferred Stock Account), with the
first such installment being delivered on the first anniversary of the Delivery
Date; provided that, if in order to equalize such installments, fractional
shares would have to be delivered, such installments shall be adjusted by
rounding to the nearest whole share. If any such shares are to be delivered
after the Participant has died or become legally incompetent, they shall be
delivered to the Participant's estate or legal guardian, as the case may be, in
accordance with the foregoing; provided that, if the Participant dies with a
Deferral Election pursuant to Section 6(c) hereof in effect, the Committee shall
deliver all remaining undelivered shares to the Participant's estate
immediately. References to a Participant in this Plan shall be deemed to refer
to the Participant's estate or legal guardian, where appropriate.
8.2 Trust. The Company may, but shall not be required to, create a grantor
trust or utilize an existing grantor trust (in either case, "Trust") to assist
it in accumulating the shares of the Common Stock needed to fulfill its
obligations under this Section 8. However, Participants shall have no beneficial
or other interest in the Trust and the assets thereof, and their rights under
this Plan shall be as general creditors of the Company, unaffected by the
existence or nonexistence of the Trust, except that deliveries of Stock
Retainers to Participants from the Trust shall, to the extent thereof, be
treated as satisfying the Company's obligations under this Section 8.
9. Share Certificates, Voting and Other Rights. The certificates for
shares delivered to a Participant pursuant to Section 8 above shall be issued in
the name of the Participant, and from and after the date of such issuance the
Participant shall be entitled to all rights of a stockholder with respect to the
Common Stock for all such shares issued in his name, including the right to vote
the shares, and the Participant shall receive all dividends and other
distributions paid or made with respect thereto.
3
10. General Restrictions.
10.1 Restrictions. Notwithstanding any other provision of this Plan or
agreements made pursuant thereto, the Company shall not be required to issue or
deliver any certificate or certificates for shares of the Common Stock under
this Plan prior to fulfillment of all of the following conditions:
(i) Listing or approval for listing upon official notice of
issuance of such shares on the New York Stock Exchange, Inc., or such other
securities exchange as may at the time be a market for the Common Stock;
(ii) Any registration or other qualification of such shares
under any state or federal law or regulation, or the maintaining in effect of
any such registration or other qualification which the Committee shall, upon the
advice of counsel, deem necessary or advisable; and
(iii) Obtaining any other consent, approval, or permit from
any state or federal governmental agency which the Committee shall, after
receiving the advice of counsel, determine to be necessary or advisable.
10.2 Other Compensation. Nothing contained in this Plan shall prevent the
Company from adopting other or additional compensation arrangements for the
Participants.
11. Shares Available. Subject to Section 12 below, the maximum number of
shares of the Common Stock which may in the aggregate be paid as Stock Retainers
pursuant to this Plan is 21,500,000. Shares of the Common Stock issuable under
this Plan may be taken from treasury shares of the Company or purchased on the
open market. In the event that any outstanding Stock Retainer under this Plan
for any reason expires or is terminated, the shares of Common Stock allocable to
the unexercised portion of the Stock Retainer shall be available for issuance
under the Amended and Restated Zannwell Inc. 2004 Employee Stock Incentive Plan.
The Compensation Committee may, in its discretion, increase the number of shares
available for issuance under this Plan, while correspondingly decreasing the
number of shares available for issuance under the Amended and Restated Zannwell
Inc. 2004 Employee Stock Incentive Plan.
12. Adjustments, Change of Control.
12.1 Change in Capitalization; Change of Control. In the event that there
is, at any time after the Board adopts this Plan, any change in corporate
capitalization, such as a stock split, combination of shares, exchange of
shares, warrants or rights offering to purchase the Common Stock at a price
below its Fair Market Value, reclassification, or recapitalization, or a
corporate transaction, such as any merger, consolidation, separation, including
a spin-off, stock dividend, or other extraordinary distribution of stock or
property of the Company, any reorganization (whether or not such reorganization
comes within the definition of such term in Section 368 of the Code) or any
partial or complete liquidation of the Company (each of the foregoing a
"Transaction"), in each case other than any such Transaction which constitutes a
Change of Control (as defined below), (i) the Deferred Stock Accounts shall not
be credited with the amount and kind of shares or other property which would
have been received by a holder of the number of shares of the Common Stock held
in such Deferred Stock Account had such shares of the Common Stock been
outstanding as of the effectiveness of any such Transaction, (ii) the number and
kind of shares or other property subject to this Plan shall also not be
appropriately adjusted to reflect the effectiveness of any such Transaction, and
(iii) the Committee will not adjust any other relevant provisions of this Plan
to reflect any such transaction.
12.2 Property. If the shares of the Common Stock credited to the Deferred
Stock Accounts are converted pursuant to Section 12.1 into another form of
property, references in this Plan to the Common Stock shall be deemed, where
appropriate, to refer to such other form of property, with such other
modifications as may be required for this Plan to operate in accordance with its
purposes. Without limiting the generality of the foregoing, references to
delivery of certificates for shares of the Common Stock shall be deemed to refer
to delivery of cash and the incidents of ownership of any other property held in
the Deferred Stock Accounts.
4
12.3 Change of Control Alternative. In the event of a Change of Control,
the following shall occur on the date of the Change of Control (i) the shares of
the Common Stock held in each Participant's Deferred Stock Account shall be
deemed to be issued and outstanding as of the Change of Control; (ii) the
Company shall forthwith deliver to each Participant who has a Deferred Stock
Account all of the shares of the Common Stock or any other property held in such
Participant's Deferred Stock Account; and (iii) this Plan shall be terminated.
12.4 Change of Control Events. For purposes of this Plan, Change of
Control shall mean any of the following events:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20
percent or more of either (1) the then outstanding shares of the Common Stock of
the Company (the "Outstanding Company Common Stock"), or (2) the combined voting
power of then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following acquisitions shall not
constitute a Change of Control (A) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a conversion privilege
unless the security being so converted was itself acquired directly from the
Company), (B) any acquisition by the Company, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (D) any acquisition by any
corporation pursuant to a reorganization, merger or consolidation, if, following
such reorganization, merger or consolidation, the conditions described in
clauses (A), (B) and (C) of paragraph (iii) of this Section 12.4 are satisfied;
or
(ii) Individuals who, as of the date hereof, constitute the
Board of the Company (as of the date hereof, "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's stockholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board; or
(iii) Approval by the stockholders of the Company of a
reorganization, merger, binding share exchange or consolidation, unless,
following such reorganization, merger, binding share exchange or consolidation
(1) more than 60 percent of, respectively, then outstanding shares of common
stock of the corporation resulting from such reorganization, merger, binding
share exchange or consolidation and the combined voting power of then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger,
binding share exchange or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger, binding share
exchange or consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (2) no Person
(excluding the Company, any employee benefit plan (or related trust) of the
Company or such corporation resulting from such reorganization, merger, binding
share exchange or consolidation and any Person beneficially owning, immediately
prior to such reorganization, merger, binding share exchange or consolidation,
directly or indirectly, 20 percent or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 20 percent or more of, respectively, then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger, binding share exchange or consolidation or the combined
voting power of then outstanding voting securities of such corporation entitled
to vote generally in the election of directors, and (3) at least a majority of
the members of the board of directors of the corporation resulting from such
reorganization, merger, binding share exchange or consolidation were members of
the Incumbent Board at the time of the execution of the initial agreement
providing for such reorganization, merger, binding share exchange or
consolidation; or
5
(iv) Approval by the stockholders of the Company of (1) a
complete liquidation or dissolution of the Company, or (2) the sale or other
disposition of all or substantially all of the assets of the Company, other than
to a corporation, with respect to which following such sale or other
disposition, (A) more than 60 percent of, respectively, then outstanding shares
of common stock of such corporation and the combined voting power of then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company and any employee benefit plan (or related trust) of the
Company or such corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, 20 percent or
more of the Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 20
percent or more of, respectively, then outstanding shares of common stock of
such corporation and the combined voting power of then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors, and (3) at least a majority of the members of the board of directors
of such corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company.
13. Administration, Amendment and Termination.
13.1 Administration. This Plan shall be administered by a committee
consisting of two members who shall be the current directors of the Company or
senior executive officers or other directors who are not Participants as may be
designated by the Chief Executive Officer (the "Committee"), which shall have
full authority to construe and interpret this Plan, to establish, amend and
rescind rules and regulations relating to this Plan, and to take all such
actions and make all such determinations in connection with this Plan as it may
deem necessary or desirable.
13.2 Amendment and Termination. The Board may from time to time make such
amendments to this Plan, including to preserve or come within any exemption from
liability under Section 16(b) of the Exchange Act, as it may deem proper and in
the best interest of the Company without further approval of the Company's
stockholders, provided that, to the extent required under Nevada law or to
qualify transactions under this Plan for exemption under Rule 16b-3 promulgated
under the Exchange Act, no amendment to this Plan shall be adopted without
further approval of the Company's stockholders and, provided, further, that if
and to the extent required for this Plan to comply with Rule 16b-3 promulgated
under the Exchange Act, no amendment to this Plan shall be made more than once
in any six month period that would change the amount, price or timing of the
grants of the Common Stock hereunder other than to comport with changes in the
Code, the Employee Retirement Income Security Act of 1974, as amended, or the
regulations thereunder. The Board may terminate this Plan at any time by a vote
of a majority of the members thereof.
14. Miscellaneous.
14.1 No Obligation. Nothing in this Plan shall be deemed to create any
obligation on the part of the Board to nominate any Director for reelection by
the Company's stockholders or to limit the rights of the stockholders to remove
any Director.
14.2 Withholding Taxes. The Company shall have the right to require, prior
to the issuance or delivery of any shares of the Common Stock pursuant to this
Plan, that a Participant make arrangements satisfactory to the Committee for the
withholding of any taxes required by law to be withheld with respect to the
issuance or delivery of such shares, including, without limitation, by the
withholding of shares that would otherwise be so issued or delivered, by
withholding from any other payment due to the Participant, or by a cash payment
to the Company by the Participant.
6
14.3 Governing Law. The Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Nevada.
14.4 Information to Stockholders. The Company shall furnish to each of its
stockholders financial statements of the Company at least annually.
IN WITNESS WHEREOF, this Amended and Restated Plan has been amended
effective as of December 6, 2004.
ZANNWELL INC.
By /s/ Steve Bonenberger
----------------------------------
Steve Bonenberger, President
7
THE BLACKHAWK FUND
EMPLOYEE STOCK INCENTIVE PLAN FOR THE YEAR 2005
1. General Provisions.
-------------------
1.1 Purpose. This Stock Incentive Plan (the "Plan") is intended to
-------
allow designated officers and employees (all of whom are sometimes collectively
referred to herein as the "Employees," or individually as the "Employee") of The
BlackHawk Fund, a Nevada corporation, formerly known as USA Telcom
Internationale and Zannwell, Inc., (the "Company") and its Subsidiaries (as that
term is defined below) which they may have from time to time (the Company and
such Subsidiaries are referred to herein as the "Company") to receive certain
options (the "Stock Options") to purchase common stock of the Company, par value
$0.001 per share (the "Common Stock"), and to receive grants of the Common Stock
subject to certain restrictions (the "Awards"). As used in this Plan, the term
"Subsidiary" shall mean each corporation which is a "subsidiary corporation" of
the Company within the meaning of Section 424(f) of the Internal Revenue Code of
1986, as amended (the "Code"). The purpose of this Plan is to provide the
Employees, who make significant and extraordinary contributions to the long-term
growth and performance of the Company, with equity-based compensation
incentives, and to attract and retain the Employees.
1.2 Administration.
--------------
1.2.1 The Plan shall be administered by the Compensation Committee (the
"Committee") of, or appointed by, the Board of Directors of the Company (the
"Board"). The Committee shall select one of its members as Chairman and shall
act by vote of a majority of a quorum, or by unanimous written consent. A
majority of its members shall constitute a quorum. The Committee shall be
governed by the provisions of the Company's Bylaws and of Nevada law applicable
to the Board, except as otherwise provided herein or determined by the Board.
1.2.2 The Committee shall have full and complete authority, in its
discretion, but subject to the express provisions of this Plan (a) to approve
the Employees nominated by the management of the Company to be granted Awards or
Stock Options; (b) to determine the number of Awards or Stock Options to be
granted to an Employee; (c) to determine the time or times at which Awards or
Stock Options shall be granted; (d) to establish the terms and conditions upon
which Awards or Stock Options may be exercised; (e) to remove or adjust any
restrictions and conditions upon Awards or Stock Options; (f) to specify, at the
time of grant, provisions relating to exercisability of Stock Options and to
accelerate or otherwise modify the exercisability of any Stock Options; and (g)
to adopt such rules and regulations and to make all other determinations deemed
necessary or desirable for the administration of this Plan. All interpretations
and constructions of this Plan by the Committee, and all of its actions
hereunder, shall be binding and conclusive on all persons for all purposes.
1.2.3 The Company hereby agrees to indemnify and hold harmless each
Committee member and each Employee, and the estate and heirs of such Committee
member or Employee, against all claims, liabilities, expenses, penalties,
damages or other pecuniary losses, including legal fees, which such Committee
member or Employee, his estate or heirs may suffer as a result of his
responsibilities, obligations or duties in connection with this Plan, to the
extent that insurance, if any, does not cover the payment of such items. No
member of the Committee or the Board shall be liable for any action or
determination made in good faith with respect to this Plan or any Award or Stock
Option granted pursuant to this Plan.
1.3 Eligibility and Participation. The Employees eligible under this
-------------------------------
Plan shall be approved by the Committee from those Employees who, in the opinion
of the management of the Company, are in positions which enable them to make
significant contributions to the long-term performance and growth of the
Company. In selecting the Employees to whom Award or Stock Options may be
granted, consideration shall be given to factors such as employment position,
duties and responsibilities, ability, productivity, length of service, morale,
interest in the Company and recommendations of supervisors.
1.4 Shares Subject to this Plan. The maximum number of shares of the
-----------------------------
Common Stock that may be issued pursuant to this Plan shall be 700,000,000
subject to the provisions of Paragraph 4.1. If shares of the Common Stock
awarded or issued under this Plan are reacquired by the Company due to a
forfeiture or for any other
1
reason, such shares shall be cancelled and thereafter shall again be available
for purposes of this Plan. If a Stock Option expires, terminates or is
cancelled for any reason without having been exercised in full, the shares of
the Common Stock not purchased thereunder shall again be available for purposes
of this Plan. In the event that any outstanding Stock Option or Award under
this Plan for any reason expires or is terminated, the shares of Common Stock
allocable to the unexercised portion of the Stock Option or Award shall be
available for issuance under the The BlackHawk Fund Non-Employee Directors and
Consultants Retainer Stock Plan for the Year 2005. The Compensation Committee
may, in its discretion, increase the number of shares available for issuance
under this Plan, while correspondingly decreasing the number of shares available
for issuance under The BlackHawk Fund Non-Employee Directors and Consultants
Retainer Stock Plan for the Year 2005.
2. Provisions Relating to Stock Options.
----------------------------------------
2.1 Grants of Stock Options. The Committee may grant Stock Options in
------------------------
such amounts, at such times, and to the Employees nominated by the management of
the Company as the Committee, in its discretion, may determine. Stock Options
granted under this Plan shall constitute "incentive stock options" within the
meaning of Section 422 of the Code, if so designated by the Committee on the
date of grant. The Committee shall also have the discretion to grant Stock
Options which do not constitute incentive stock options, and any such Stock
Options shall be designated non-statutory stock options by the Committee on the
date of grant. The aggregate Fair Market Value (determined as of the time an
incentive stock option is granted) of the Common Stock with respect to which
incentive stock options are exercisable for the first time by any Employee
during any one calendar year (under all plans of the Company and any parent or
subsidiary of the Company) may not exceed the maximum amount permitted under
Section 422 of the Code (currently, $100,000.00). Non-statutory stock options
shall not be subject to the limitations relating to incentive stock options
contained in the preceding sentence. Each Stock Option shall be evidenced by a
written agreement (the "Option Agreement") in a form approved by the Committee,
which shall be executed on behalf of the Company and by the Employee to whom the
Stock Option is granted, and which shall be subject to the terms and conditions
of this Plan. In the discretion of the Committee, Stock Options may include
provisions (which need not be uniform), authorized by the Committee in its
discretion, that accelerate an Employee's rights to exercise Stock Options
following a "Change in Control," upon termination of the Employee's employment
by the Company without "Cause" or by the Employee for "Good Reason," as such
terms are defined in Paragraph 3.1 hereof. The holder of a Stock Option shall
not be entitled to the privileges of stock ownership as to any shares of the
Common Stock not actually issued to such holder.
The exercise price per share for the Stock covered by a Stock Option shall
be determined by the Committee at the time of grant but in the case of Incentive
Stock Options shall not be less than 100% of the Fair Market Value on the date
of grant. If an employee owns or is deemed to own (by reason of the attribution
rules applicable under Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company or any parent or subsidiary
corporation and an Incentive Stock Option is granted to such employee, the
option price of such Incentive Stock Option shall be not less than 110% of the
Fair Market Value on the grant date.
2.2 Purchase Price. The purchase price (the "Exercise Price") of
---------------
shares of the Common Stock subject to each Stock Option (the "Option Shares")
shall not be less than 85 percent of the Fair Market Value of the Common Stock
on the date of the grant of the option. For an Employee holding greater than 10
percent of the total voting power of all stock of the Company, either Common or
Preferred, the Exercise Price of an incentive stock option shall be at least 110
percent of the Fair Market Value of the Common Stock on the date of the grant of
the option. As used herein, "Fair Market Value" means the mean between the
highest and lowest reported sales prices of the Common Stock on the New York
Stock Exchange Composite Tape or, if not listed on such exchange, on any other
national securities exchange on which the Common Stock is listed or on The
Nasdaq Stock Market, or, if not so listed on any other national securities
exchange or The Nasdaq Stock Market, then the average of the bid price of the
Common Stock during the last five trading days on the OTC Bulletin Board
immediately preceding the last trading day prior to the date with respect to
which the Fair Market Value is to be determined. If the Common Stock is not
then publicly traded, then the Fair Market Value of the Common Stock shall be
the book value of the Company per share as determined on the last day of March,
June, September, or December in any year closest to the date when the
determination is to be made. For the purpose of determining book value
hereunder, book value shall be determined by adding as of the applicable date
called for herein the capital, surplus, and undivided profits of the Company,
and after having deducted any reserves theretofore established; the sum of these
items shall be divided by
2
the number of shares of the Common Stock outstanding as of said date, and the
quotient thus obtained shall represent the book value of each share of the
Common Stock of the Company.
2.3 Option Period. The Stock Option period (the "Term") shall commence
-------------
on the date of grant of the Stock Option and shall be 10 years or such shorter
period as is determined by the Committee. Each Stock Option shall provide that
it is exercisable over its term in such periodic installments as the Committee
may determine, subject to the provisions of Paragraph 2.4.1. Section 16(b) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") exempts
persons normally subject to the reporting requirements of Section 16(a) of the
Exchange Act (the "Section 16 Reporting Persons") pursuant to a qualified
employee stock option plan from the normal requirement of not selling until at
least six months and one day from the date the Stock Option is granted.
2.4 Exercise of Options.
---------------------
2.4.1 Each Stock Option may be exercised in whole or in part (but not
as to fractional shares) by delivering it for surrender or endorsement to the
Company, attention of the Corporate Secretary, at the principal office of the
Company, together with payment of the Exercise Price and an executed Notice and
Agreement of Exercise in the form prescribed by Paragraph 2.4.2. Payment may be
made (a) in cash, (b) by cashier's or certified check, (c) by surrender of
previously owned shares of the Common Stock valued pursuant to Paragraph 2.2 (if
the Committee authorizes payment in stock in its discretion), (d) by withholding
from the Option Shares which would otherwise be issuable upon the exercise of
the Stock Option that number of Option Shares equal to the exercise price of the
Stock Option, if such withholding is authorized by the Committee in its
discretion, (e) in the discretion of the Committee, by the delivery to the
Company of the optionee's promissory note secured by the Option Shares, bearing
interest at a rate sufficient to prevent the imputation of interest under
Sections 483 or 1274 of the Code, and having such other terms and conditions as
may be satisfactory to the Committee., or (f) if the Employee and the Company so
agree, deliver to the Optionee's NASD licensed broker-dealer and to the Company
an irrevocable notice of exercise of the option, together with irrevocable
instructions from the Optionee to the Company to deliver the Option Shares to
the broker-dealer. Upon receipt of such notice, the Company shall immediately
deliver to the Employee's broker-dealer the share certificate(s) representing
the Option Shares so purchased, and upon receipt of such certificate(s), the
broker shall sell the Option Shares and remit the purchase price for all Option
Shares then being purchased, and any withholding taxes to the Corporation.
2.4.2 Exercise of each Stock Option is conditioned upon the agreement
of the Employee to the terms and conditions of this Plan and of such Stock
Option as evidenced by the Employee's execution and delivery of a Notice and
Agreement of Exercise in a form to be determined by the Committee in its
discretion. Such Notice and Agreement of Exercise shall set forth the agreement
of the Employee that (a) no Option Shares will be sold or otherwise distributed
in violation of the Securities Act of 1933, as amended (the "Securities Act") or
any other applicable federal or state securities laws, (b) each Option Share
certificate may be imprinted with legends reflecting any applicable federal and
state securities law restrictions and conditions, (c) the Company may comply
with said securities law restrictions and issue "stop transfer" instructions to
its Transfer Agent and Registrar without liability, (d) if the Employee is a
Section 16 Reporting Person, the Employee will furnish to the Company a copy of
each Form 4 or Form 5 filed by said Employee and will timely file all reports
required under federal securities laws, and (e) the Employee will report all
sales of Option Shares to the Company in writing on a form prescribed by the
Company.
2.4.3 No Stock Option shall be exercisable unless and until any
applicable registration or qualification requirements of federal and state
securities laws, and all other legal requirements, have been fully complied
with. The Company will use reasonable efforts to maintain the effectiveness of a
registration statement under the Securities Act (a "Registration Statement") for
the issuance of Stock Options and shares acquired thereunder, but there may be
times when no such Registration Statement will be currently effective. The
exercise of Stock Options may be temporarily suspended without liability to the
Company during times when no such Registration Statement is currently effective,
or during times when, in the reasonable opinion of the Committee, such
suspension is necessary to preclude violation of any requirements of applicable
law or regulatory bodies having jurisdiction over the Company. If any Stock
Option would expire for any reason except the end of its term during such a
suspension, then if exercise of such Stock Option is duly tendered before its
expiration, such Stock Option shall be exercisable and exercised (unless the
attempted exercise is withdrawn) as of the first day after the end of such
suspension. The Company shall have no obligation to file any Registration
Statement covering resales of Option Shares.
3
2.5 Continuous Employment. Except as provided in Paragraph 2.7 below,
----------------------
an Employee may not exercise a Stock Option unless from the date of grant to the
date of exercise the Employee remains continuously in the employ of the Company.
For purposes of this Paragraph 2.5, the period of continuous employment of an
Employee with the Company shall be deemed to include (without extending the term
of the Stock Option) any period during which the Employee is on leave of absence
with the consent of the Company, provided that such leave of absence shall not
exceed three months and that the Employee returns to the employ of the Company
at the expiration of such leave of absence. If the Employee fails to return to
the employ of the Company at the expiration of such leave of absence, the
Employee's employment with the Company shall be deemed terminated as of the date
such leave of absence commenced. The continuous employment of an Employee with
the Company shall also be deemed to include any period during which the Employee
is a member of the Armed Forces of the United States, provided that the Employee
returns to the employ of the Company within 90 days (or such longer period as
may be prescribed by law) from the date the Employee first becomes entitled to a
discharge from military service. If an Employee does not return to the employ
of the Company within 90 days (or such longer period as may be prescribed by
law) from the date the Employee first becomes entitled to a discharge from
military service, the Employee's employment with the Company shall be deemed to
have terminated as of the date the Employee's military service ended.
2.6 Restrictions on Transfer. Each Stock Option granted under this
--------------------------
Plan shall be transferable only by will or the laws of descent and distribution.
No interest of any Employee under this Plan shall be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other legal
or equitable process. Each Stock Option granted under this Plan shall be
exercisable during an Employee's lifetime only by the Employee or by the
Employee's legal representative.
2.7 Termination of Employment. Upon an Employee's Retirement,
---------------------------
Disability (both terms being defined below) or death, (a) all Stock Options to
the extent then presently exercisable shall remain in full force and effect and
may be exercised pursuant to the provisions thereof, including expiration at the
end of the fixed term thereof, and (b) unless otherwise provided by the
Committee, all Stock Options to the extent not then presently exercisable by the
Employee shall terminate as of the date of such termination of employment and
shall not be exercisable thereafter.
2.7.1 Upon the termination of the employment of an Employee for any
reason other than those specifically set forth in Paragraph 2.7.1, (a) all Stock
Options to the extent then presently exercisable by the Employee shall remain
exercisable only for a period of 90 days after the date of such termination of
employment (except that the 90 day period shall be extended to 12 months if the
Employee shall die during such 90 day period), and may be exercised pursuant to
the provisions thereof, including expiration at the end of the fixed term
thereof, and (b) unless otherwise provided by the Committee, all Stock Options
to the extent not then presently exercisable by the Employee shall terminate as
of the date of such termination of employment and shall not be exercisable
thereafter.
2.7.2 For purposes of this Plan:
(a) "Retirement" shall mean an Employee's retirement from the
employ of the Company on or after the date on which the Employee attains the age
of 65 years; and
(b) "Disability" shall mean total and permanent incapacity of an
Employee, due to physical impairment or legally established mental incompetence,
to perform the usual duties of the Employee's employment with the Company, which
disability shall be determined (i) on medical evidence by a licensed physician
designated by the Committee, or (ii) on evidence that the Employee has become
entitled to receive primary benefits as a disabled employee under the Social
Security Act in effect on the date of such disability.
4
3. Provisions Relating to Awards.
3.1 Grant of Awards. Subject to the provisions of this Plan, the
-----------------
Committee shall have full and complete authority, in its discretion, but subject
to the express provisions of this Plan, to (1) grant Awards pursuant to this
Plan, (2) determine the number of shares of the Common Stock subject to each
Award (the "Award Shares"), (3) determine the terms and conditions (which need
not be identical) of each Award, including the consideration (if any) to be paid
by the Employee for such Common Stock, which may, in the Committee's discretion,
consist of the delivery of the Employee's promissory note meeting the
requirements of Paragraph 2.4.1, (4) establish and modify performance criteria
for Awards, and (5) make all of the determinations necessary or advisable with
respect to Awards under this Plan. Each Award under this Plan shall consist of
a grant of shares of the Common Stock subject to a restriction period (after
which the restrictions shall lapse), which shall be a period commencing on the
date the Award is granted and ending on such date as the Committee shall
determine (the "Restriction Period"). The Committee may provide for the lapse
of restrictions in installments, for acceleration of the lapse of restrictions
upon the satisfaction of such performance or other criteria or upon the
occurrence of such events as the Committee shall determine, and for the early
expiration of the Restriction Period upon an Employee's death, Disability or
Retirement as defined in Paragraph 2.7.3, or, following a Change of Control,
upon termination of an Employee's employment by the Company without "Cause" or
by the Employee for "Good Reason," as those terms are defined herein. For
purposes of this Plan:
"Change of Control" shall be deemed to occur (a) on the date the Company
first has actual knowledge that any person (as such term is used in Sections
13(d) and 14(d)(2) of the Exchange Act) has become the beneficial owner (as
defined in Rule 13(d)-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 40 percent or more of the combined voting
power of the Company's then outstanding securities, or (b) on the date the
stockholders of the Company approve (i) a merger of the Company with or into any
other corporation in which the Company is not the surviving corporation or in
which the Company survives as a subsidiary of another corporation, (ii) a
consolidation of the Company with any other corporation, or (iii) the sale or
disposition of all or substantially all of the Company's assets or a plan of
complete liquidation.
"Cause," when used with reference to termination of the employment of an
Employee by the Company for "Cause," shall mean:
(a) The Employee's continuing willful and material breach of
his duties to the Company, after he receives a demand from the Chief Executive
of the Company specifying the manner in which he has willfully and materially
breached such duties, other than any such failure resulting from Disability of
the Employee or his resignation for "Good Reason," as defined herein; or
(b) The conviction of the Employee of a felony; or
(c) The Employee's commission of fraud in the course of his
employment with the Company, such as embezzlement or other material and
intentional violation of law against the Company; or
(d) The Employee's gross misconduct causing material harm to
the Company.
"Good Reason" shall mean any one or more of the following, occurring
following or in connection with a Change of Control and within 90 days prior to
the Employee's resignation, unless the Employee shall have consented thereto in
writing:
(a) The assignment to the Employee of duties inconsistent
with his executive status prior to the Change of Control or a substantive change
in the officer or officers to whom he reports from the officer or officers to
whom he reported immediately prior to the Change of Control; or
(b) The elimination or reassignment of a majority of the
duties and responsibilities that were assigned to the Employee immediately prior
to the Change of Control; or
5
(c) A reduction by the Company in the Employee's annual base
salary as in effect immediately prior to the Change of Control; or
(d) The Company requiring the Employee to be based anywhere
outside a 35-mile radius from his place of employment immediately prior to the
Change of Control, except for required travel on the Company's business to an
extent substantially consistent with the Employee's business travel obligations
immediately prior to the Change of Control; or
(e) The failure of the Company to grant the Employee a
performance bonus reasonably equivalent to the same percentage of salary the
Employee normally received prior to the Change of Control, given comparable
performance by the Company and the Employee; or
(f) The failure of the Company to obtain a satisfactory
Assumption Agreement (as defined in Paragraph 4.12 of this Plan) from a
successor, or the failure of such successor to perform such Assumption
Agreement.
3.2 Incentive Agreements. Each Award granted under this Plan shall be
---------------------
evidenced by a written agreement (an "Incentive Agreement") in a form approved
by the Committee and executed by the Company and the Employee to whom the Award
is granted. Each Incentive Agreement shall be subject to the terms and
conditions of this Plan and other such terms and conditions as the Committee may
specify.
3.3 Waiver of Restrictions. The Committee may modify or amend any
------------------------
Award under this Plan or waive any restrictions or conditions applicable to the
Award; provided, however, that the Committee may not undertake any such
modifications, amendments or waivers if the effect thereof materially increases
the benefits to any Employee, or adversely affects the rights of any Employee
without his consent.
3.4 Terms and Conditions of Awards. Upon receipt of an Award of shares
------------------------------
of the Common Stock under this Plan, even during the Restriction Period, an
Employee shall be the holder of record of the shares and shall have all the
rights of a stockholder with respect to such shares, subject to the terms and
conditions of this Plan and the Award.
3.4.1 Except as otherwise provided in this Paragraph 3.4, no shares of
the Common Stock received pursuant to this Plan shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period applicable to such shares. Any purported disposition of such
Common Stock in violation of this Paragraph 3.4 shall be null and void.
3.4.2 If an Employee's employment with the Company terminates prior to
the expiration of the Restriction Period for an Award, subject to any provisions
of the Award with respect to the Employee's death, Disability or Retirement, or
Change of Control, all shares of the Common Stock subject to the Award shall be
immediately forfeited by the Employee and reacquired by the Company, and the
Employee shall have no further rights with respect to the Award. In the
discretion of the Committee, an Incentive Agreement may provide that, upon the
forfeiture by an Employee of Award Shares, the Company shall repay to the
Employee the consideration (if any) which the Employee paid for the Award Shares
on the grant of the Award. In the discretion of the Committee, an Incentive
Agreement may also provide that such repayment shall include an interest factor
on such consideration from the date of the grant of the Award to the date of
such repayment.
3.4.3 The Committee may require under such terms and conditions as it
deems appropriate or desirable that (a) the certificates for the Common Stock
delivered under this Plan are to be held in custody by the Company or a person
or institution designated by the Company until the Restriction Period expires,
(b) such certificates shall bear a legend referring to the restrictions on the
Common Stock pursuant to this Plan, and (c) the Employee shall have delivered to
the Company a stock power endorsed in blank relating to the Common Stock.
6
4. Miscellaneous Provisions.
4.1 Adjustments Upon Change in Capitalization.
---------------------------------------------
4.1.1 The number and class of shares subject to each outstanding Stock
Option, the Exercise Price thereof (and the total price), the maximum number of
Stock Options that may be granted under this Plan, the minimum number of shares
as to which a Stock Option may be exercised at any one time, and the number and
class of shares subject to each outstanding Award, shall not be proportionately
adjusted in the event of any increase or decrease in the number of the issued
shares of the Common Stock which results from a split-up or consolidation of
shares, payment of a stock dividend or dividends exceeding a total of five
percent for which the record dates occur in any one fiscal year, a
recapitalization (other than the conversion of convertible securities according
to their terms), a combination of shares or other like capital adjustment, so
that (a) upon exercise of the Stock Option, the Employee shall receive the
number and class of shares the Employee would have received prior to any such
capital adjustment becoming effective, and (b) upon the lapse of restrictions of
the Award Shares, the Employee shall receive the number and class of shares the
Employee would have received prior to any such capital adjustment becoming
effective.
4.1.2 Upon a reorganization, merger or consolidation of the Company
with one or more corporations as a result of which the Company is not the
surviving corporation or in which the Company survives as a wholly-owned
subsidiary of another corporation, or upon a sale of all or substantially all of
the property of the Company to another corporation, or any dividend or
distribution to stockholders of more than 10 percent of the Company's assets,
adequate adjustment or other provisions shall be made by the Company or other
party to such transaction so that there shall remain and/or be substituted for
the Option Shares and Award Shares provided for herein, the shares, securities
or assets which would have been issuable or payable in respect of or in exchange
for such Option Shares and Award Shares then remaining, as if the Employee had
been the owner of such shares as of the applicable date. Any securities so
substituted shall be subject to similar successive adjustments.
4.2 Withholding Taxes. The Company shall have the right at the time of
-----------------
exercise of any Stock Option, the grant of an Award, or the lapse of
restrictions on Award Shares, to make adequate provision for any federal, state,
local or foreign taxes which it believes are or may be required by law to be
withheld with respect to such exercise (the "Tax Liability"), to ensure the
payment of any such Tax Liability. The Company may provide for the payment of
any Tax Liability by any of the following means or a combination of such means,
as determined by the Committee in its sole and absolute discretion in the
particular case (1) by requiring the Employee to tender a cash payment to the
Company, (2) by withholding from the Employee's salary, (3) by withholding from
the Option Shares which would otherwise be issuable upon exercise of the Stock
Option, or from the Award Shares on their grant or date of lapse of
restrictions, that number of Option Shares or Award Shares having an aggregate
Fair Market Value (determined in the manner prescribed by Paragraph 2.2) as of
the date the withholding tax obligation arises in an amount which is equal to
the Employee's Tax Liability or (4) by any other method deemed appropriate by
the Committee. Satisfaction of the Tax Liability of a Section 16 Reporting
Person may be made by the method of payment specified in clause (3) above only
if the following two conditions are satisfied:
(a) The withholding of Option Shares or Award Shares and the
exercise of the related Stock Option occur at least six months and one day
following the date of grant of such Stock Option or Award; and
(b) The withholding of Option Shares or Award Shares is made
either (i) pursuant to an irrevocable election (the "Withholding Election") made
by the Employee at least six months in advance of the withholding of Options
Shares or Award Shares, or (ii) on a day within a 10-day "window period"
beginning on the third business day following the date of release of the
Company's quarterly or annual summary statement of sales and earnings.
Anything herein to the contrary notwithstanding, a Withholding Election may
be disapproved by the Committee at any time.
7
4.3 Relationship to Other Employee Benefit Plans. Stock Options and
---------------------------------------------
Awards granted hereunder shall not be deemed to be salary or other compensation
to any Employee for purposes of any pension, thrift, profit-sharing, stock
purchase or any other employee benefit plan now maintained or hereafter adopted
by the Company.
4.4 Amendments and Termination. The Board of Directors may at any time
--------------------------
suspend, amend or terminate this Plan. No amendment, except as provided in
Paragraph 3.3, or modification of this Plan may be adopted, except subject to
stockholder approval, which would (1) materially increase the benefits accruing
to the Employees under this Plan, (2) materially increase the number of
securities which may be issued under this Plan (subject to Paragraph 4.1
hereof), or (3) materially modify the requirements as to eligibility for
participation in this Plan.
4.5 Successors in Interest. The provisions of this Plan and the
------------------------
actions of the Committee shall be binding upon all heirs, successors and assigns
of the Company and of the Employees.
4.6 Other Documents. All documents prepared, executed or delivered in
----------------
connection with this Plan (including, without limitation, Option Agreements and
Incentive Agreements) shall be, in substance and form, as established and
modified by the Committee; provided, however, that all such documents shall be
subject in every respect to the provisions of this Plan, and in the event of any
conflict between the terms of any such document and this Plan, the provisions of
this Plan shall prevail.
4.7 No Obligation to Continue Employment. This Plan and the grants
----------------------------------------
which might be made hereunder shall not impose any obligation on the Company to
continue to employ any Employee. Moreover, no provision of this Plan or any
document executed or delivered pursuant to this Plan shall be deemed modified in
any way by any employment contract between an Employee (or other employee) and
the Company.
4.8 Misconduct of an Employee. Notwithstanding any other provision of
--------------------------
this Plan, if an Employee commits fraud or dishonesty toward the Company or
wrongfully uses or discloses any trade secret, confidential data or other
information proprietary to the Company, or intentionally takes any other action
which results in material harm to the Company, as determined by the Committee,
in its sole and absolute discretion, the Employee shall forfeit all rights and
benefits under this Plan.
4.9 Term of Plan. No Stock Option shall be exercisable, or Award
--------------
granted, unless and until the Directors of the Company have approved this Plan
and all other legal requirements have been met. This Plan was adopted by the
Board effective February 28, 2005. No Stock Options or Awards may be granted
under this Plan after February 27, 2015.
4.10 Governing Law. This Plan and all actions taken thereunder shall
--------------
be governed by, and construed in accordance with, the laws of the State of
Nevada.
4.11 Approval. No Stock Option shall be exercisable, or Award granted,
--------
unless and until the Directors of the Company have approved this Plan and all
other legal requirements have been met.
4.11 Assumption Agreements. The Company will require each successor,
----------------------
(direct or indirect, whether by purchase, merger, consolidation or otherwise),
to all or substantially all of the business or assets of the Company, prior to
the consummation of each such transaction, to assume and agree to perform the
terms and provisions remaining to be performed by the Company under each
Incentive Agreement and Stock Option and to preserve the benefits to the
Employees thereunder. Such assumption and agreement shall be set forth in a
written agreement in form and substance satisfactory to the Committee (an
"Assumption Agreement"), and shall include such adjustments, if any, in the
application of the provisions of the Incentive Agreements and Stock Options and
such additional provisions, if any, as the Committee shall require and approve,
in order to preserve such benefits to the Employees. Without limiting the
generality of the foregoing, the Committee may require an Assumption Agreement
to include satisfactory undertakings by a successor:
(a) To provide liquidity to the Employees at the end of the
Restriction Period applicable to the Common Stock awarded to them under this
Plan, or on the exercise of Stock Options;
8
(b) If the succession occurs before the expiration of any
period specified in the Incentive Agreements for satisfaction of performance
criteria applicable to the Common Stock awarded thereunder, to refrain from
interfering with the Company's ability to satisfy such performance criteria or
to agree to modify such performance criteria and/or waive any criteria that
cannot be satisfied as a result of the succession;
(c) To require any future successor to enter into an
Assumption Agreement; and
(d) To take or refrain from taking such other actions as the
Committee may require and approve, in its discretion.
The Committee referred to in this Section 4.12 is the Committee appointed
by a Board of Directors in office prior to the succession then under
consideration.
4.13 Compliance with Rule 16b-3. Transactions under this Plan are
-----------------------------
intended to comply with all applicable conditions of Rule 16b-3 promulgated
under the Exchange Act. To the extent that any provision of this Plan or action
by the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.
4.14 Information to Shareholders. The Company shall furnish to each of
---------------------------
its stockholders financial statements of the Company at least annually.
IN WITNESS WHEREOF, this Plan has been executed effective as of February
28, 2005.
THE BLACKHAWK FUND
By /s/ Steve Bonenberger
----------------------------------
Steve Bonenberger, President
9
THE BLACKHAWK FUND
NON-EMPLOYEE DIRECTORS
AND CONSULTANTS RETAINER STOCK PLAN FOR THE YEAR 2005
1. Introduction. This Plan shall be known as the "The BlackHawk Fund
------------
Non-Employee Directors and Consultants Retainer Stock Plan for the Year 2005"
and is hereinafter referred to as the "Plan." The purposes of this Plan are to
enable The BlackHawk Fund, a Nevada corporation formerly known as USA Telcom
Internationale and Zannwell, Inc., (the "Company"), to promote the interests of
the Company and its stockholders by attracting and retaining non-employee
Directors and Consultants capable of furthering the future success of the
Company and by aligning their economic interests more closely with those of the
Company's stockholders, by paying their retainer or fees in the form of shares
of the Company's common stock, par value $0.001 per share (the "Common Stock").
2. Definitions. The following terms shall have the meanings set forth
-----------
below:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Change in Control" has the meaning set forth in Section
12.4 hereof.
2.3 "Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder. References to any provision of the Code or
rule or regulation thereunder shall be deemed to include any amended or
successor provision, rule or regulation.
2.4 "Committee" means the committee that administers this Plan, as more
fully defined in Section 13 hereof.
2.5 "Common Stock" has the meaning set forth in Section 1 hereof.
2.6 "Company" has the meaning set forth in Section 1 hereof.
2.7 "Deferral" has the meaning set forth in Section 6 hereof.
2.8 Deferred Stock Account" means a bookkeeping account maintained by
the Company for a Participant representing the Participant's interest in the
shares credited to such Deferred Stock Account pursuant to Section 7 hereof.
2.9 "Delivery Date" has the meaning set forth in Section 6 hereof.
2.10 "Director" means an individual who is a member of the Board of
Directors of the Company.
2.11 "Dividend Equivalent" for a given dividend or other distribution
means a number of shares of the Common Stock having a Fair Market Value, as of
the record date for such dividend or distribution, equal to the amount of cash,
plus the Fair Market Value on the date of distribution of any property, that is
distributed with respect to one share of the Common Stock pursuant to such
dividend or distribution; such Fair Market Value to be determined by the
Committee in good faith.
2.12 "Effective Date" has the meaning set forth in Section 3 hereof.
2.13 'Exchange Act" has the meaning set forth in Section 13.2 hereof.
2.14 "Fair Market Value" means the mean between the highest and lowest
reported sales prices of the Common Stock on the New York Stock Exchange
Composite Tape or, if not listed on such exchange, on any other
1
national securities exchange on which the Common Stock is listed or on The
Nasdaq Stock Market, or, if not so listed on any other national securities
exchange or The Nasdaq Stock Market, then the average of the bid price of the
Common Stock during the last five trading days on the OTC Bulletin Board
immediately preceding the last trading day prior to the date with respect to
which the Fair Market Value is to be determined. If the Common Stock is not then
publicly traded, then the Fair Market Value of the Common Stock shall be the
book value of the Company per share as determined on the last day of March,
June, September, or December in any year closest to the date when the
determination is to be made. For the purpose of determining book value
hereunder, book value shall be determined by adding as of the applicable date
called for herein the capital, surplus, and undivided profits of the Company,
and after having deducted any reserves theretofore established; the sum of these
items shall be divided by the number of shares of the Common Stock outstanding
as of said date, and the quotient thus obtained shall represent the book value
of each share of the Common Stock of the Company.
2.15 "Participant" has the meaning set forth in Section 4 hereof.
2.16 "Payment Time" means the time when a Stock Retainer is payable to
a Participant pursuant to Section 5 hereof (without regard to the effect of any
Deferral Election).
2.17 "Stock Retainer" has the meaning set forth in Section 5 hereof.
2.18 "Third Anniversary" has the meaning set forth in Section 6 hereof.
3. Effective Date of the Plan. This Plan was approved by the Board
-----------------------------
effective February 28, 2005 (the "Effective Date").
4. Eligibility. Each individual who is a Director or Consultant on
-----------
the Effective Date and each individual who becomes a Director or Consultant
thereafter during the term of this Plan, shall be a participant (the
"Participant") in this Plan, in each case during such period as such individual
remains a Director or Consultant and is not an employee of the Company or any of
its subsidiaries. Each credit of shares of the Common Stock pursuant to this
Plan shall be evidenced by a written agreement duly executed and delivered by or
on behalf of the Company and a Participant, if such an agreement is required by
the Company to assure compliance with all applicable laws and regulations.
5. Grants of Shares. Commencing on the Effective Date, the amount of
------------------
compensation for service to directors or consultants shall be payable in shares
of the Common Stock (the "Stock Retainer") pursuant to this Plan at the deemed
issuance price of the Fair Market Value of the Common Stock on the date of the
issuance of such shares. As used herein, "Fair Market Value" means the mean
between the highest and lowest reported sales prices of the Common Stock on the
New York Stock Exchange Composite Tape or, if not listed on such exchange, on
any other national securities exchange on which the Common Stock is listed or on
The Nasdaq Stock Market, or, if not so listed on any other national securities
exchange or The Nasdaq Stock Market, then the average of the bid price of the
Common Stock during the last five trading days on the OTC Bulletin Board
immediately preceding the last trading day prior to the date with respect to
which the Fair Market Value is to be determined. If the Common Stock is not then
publicly traded, then the Fair Market Value of the Common Stock shall be the
book value of the Company per share as determined on the last day of March,
June, September, or December in any year closest to the date when the
determination is to be made. For the purpose of determining book value
hereunder, book value shall be determined by adding as of the applicable date
called for herein the capital, surplus, and undivided profits of the Company,
and after having deducted any reserves theretofore established; the sum of these
items shall be divided by the number of shares of the Common Stock outstanding
as of said date, and the quotient thus obtained shall represent the book value
of each share of the Common Stock of the Company.
6. Deferral Option. From and after the Effective Date, a Participant
----------------
may make an election (a "Deferral Election") on an annual basis to defer
delivery of the Stock Retainer specifying which one of the following ways the
Stock Retainer is to be delivered (a) on the date which is three years after the
Effective Date for which it was originally payable (the "Third Anniversary"),
(b) on the date upon which the Participant ceases to be a Director or Consultant
for any reason (the "Departure Date") or (c) in five equal annual installments
commencing on the Departure Date (the "Third Anniversary" and "Departure Date"
each being referred to herein as a "Delivery Date"). Such Deferral Election
shall remain in effect for each Subsequent Year unless changed, provided that,
any
2
Deferral Election with respect to a particular Year may not be changed less than
six months prior to the beginning of such Year, and provided, further, that no
more than one Deferral Election or change thereof may be made in any Year. Any
Deferral Election and any change or revocation thereof shall be made by
delivering written notice thereof to the Committee no later than six months
prior to the beginning of the Year in which it is to be effected; provided that,
with respect to the Year beginning on the Effective Date, any Deferral Election
or revocation thereof must be delivered no later than the close of business on
the 30th day after the Effective Date.
7. Deferred Stock Accounts. The Company shall maintain a Deferred
-------------------------
Stock Account for each Participant who makes a Deferral Election to which shall
be credited, as of the applicable Payment Time, the number of shares of the
Common Stock payable pursuant to the Stock Retainer to which the Deferral
Election relates. So long as any amounts in such Deferred Stock Account have
not been delivered to the Participant under Section 8 hereof, each Deferred
Stock Account shall be credited as of the payment date for any dividend paid or
other distribution made with respect to the Common Stock, with a number of
shares of the Common Stock equal to (a) the number of shares of the Common Stock
shown in such Deferred Stock Account on the record date for such dividend or
distribution multiplied by (b) the Dividend Equivalent for such dividend or
distribution.
8. Delivery of Shares.
--------------------
8.1 Delivery. The shares of the Common Stock in a Participant's
--------
Deferred Stock Account with respect to any Stock Retainer for which a Deferral
Election has been made (together with dividends attributable to such shares
credited to such Deferred Stock Account) shall be delivered in accordance with
this Section 8 as soon as practicable after the applicable Delivery Date. Except
with respect to a Deferral Election pursuant to Section 6(c) hereof, or other
agreement between the parties, such shares shall be delivered at one time;
provided that, if the number of shares so delivered includes a fractional share,
such number shall be rounded to the nearest whole number of shares. If the
Participant has in effect a Deferral Election pursuant to Section 6(c) hereof,
then such shares shall be delivered in five equal annual installments (together
with dividends attributable to such shares credited to such Deferred Stock
Account), with the first such installment being delivered on the first
anniversary of the Delivery Date; provided that, if in order to equalize such
installments, fractional shares would have to be delivered, such installments
shall be adjusted by rounding to the nearest whole share. If any such shares are
to be delivered after the Participant has died or become legally incompetent,
they shall be delivered to the Participant's estate or legal guardian, as the
case may be, in accordance with the foregoing; provided that, if the Participant
dies with a Deferral Election pursuant to Section 6(c) hereof in effect, the
Committee shall deliver all remaining undelivered shares to the Participant's
estate immediately. References to a Participant in this Plan shall be deemed to
refer to the Participant's estate or legal guardian, where appropriate.
8.2 Trust. The Company may, but shall not be required to, create a
-----
grantor trust or utilize an existing grantor trust (in either case, "Trust") to
assist it in accumulating the shares of the Common Stock needed to fulfill its
obligations under this Section 8. However, Participants shall have no
beneficial or other interest in the Trust and the assets thereof, and their
rights under this Plan shall be as general creditors of the Company, unaffected
by the existence or nonexistence of the Trust, except that deliveries of Stock
Retainers to Participants from the Trust shall, to the extent thereof, be
treated as satisfying the Company's obligations under this Section 8.
9. Share Certificates, Voting and Other Rights. The certificates for
---------------------------------------------
shares delivered to a Participant pursuant to Section 8 above shall be issued in
the name of the Participant, and from and after the date of such issuance the
Participant shall be entitled to all rights of a stockholder with respect to the
Common Stock for all such shares issued in his name, including the right to vote
the shares, and the Participant shall receive all dividends and other
distributions paid or made with respect thereto.
3
10. General Restrictions.
---------------------
10.1 Restrictions. Notwithstanding any other provision of this Plan or
------------
agreements made pursuant thereto, the Company shall not be required to issue or
deliver any certificate or certificates for shares of the Common Stock under
this Plan prior to fulfillment of all of the following conditions:
(i) Listing or approval for listing upon official notice of
issuance of such shares on the New York Stock Exchange, Inc., or such other
securities exchange as may at the time be a market for the Common Stock;
(ii) Any registration or other qualification of such shares
under any state or federal law or regulation, or the maintaining in effect of
any such registration or other qualification which the Committee shall, upon the
advice of counsel, deem necessary or advisable; and
(iii) Obtaining any other consent, approval, or permit from any
state or federal governmental agency which the Committee shall, after receiving
the advice of counsel, determine to be necessary or advisable.
10.2 Other Compensation. Nothing contained in this Plan shall prevent
------------------
the Company from adopting other or additional compensation arrangements for the
Participants.
11. Shares Available. Subject to Section 12 below, the maximum number
-----------------
of shares of the Common Stock which may in the aggregate be paid as Stock
Retainers pursuant to this Plan is 275,000,000. Shares of the Common Stock
issuable under this Plan may be taken from treasury shares of the Company or
purchased on the open market. In the event that any outstanding Stock Retainer
under this Plan for any reason expires or is terminated, the shares of Common
Stock allocable to the unexercised portion of the Stock Retainer shall be
available for issuance under The BlackHawk Fund Employee Stock Incentive Plan
for the Year 2005. The Compensation Committee may, in its discretion, increase
the number of shares available for issuance under this Plan, while
correspondingly decreasing the number of shares available for issuance under The
BlackHawk Fund Employee Stock Incentive Plan for the Year 2005.
12. Adjustments, Change of Control.
---------------------------------
12.1 Change in Capitalization; Change of Control. In the event that
----------------------------------------------
there is, at any time after the Board adopts this Plan, any change in corporate
capitalization, such as a stock split, combination of shares, exchange of
shares, warrants or rights offering to purchase the Common Stock at a price
below its Fair Market Value, reclassification, or recapitalization, or a
corporate transaction, such as any merger, consolidation, separation, including
a spin-off, stock dividend, or other extraordinary distribution of stock or
property of the Company, any reorganization (whether or not such reorganization
comes within the definition of such term in Section 368 of the Code) or any
partial or complete liquidation of the Company (each of the foregoing a
"Transaction"), in each case other than any such Transaction which constitutes a
Change of Control (as defined below), (i) the Deferred Stock Accounts shall not
be credited with the amount and kind of shares or other property which would
have been received by a holder of the number of shares of the Common Stock held
in such Deferred Stock Account had such shares of the Common Stock been
outstanding as of the effectiveness of any such Transaction, (ii) the number and
kind of shares or other property subject to this Plan shall also not be
appropriately adjusted to reflect the effectiveness of any such Transaction, and
(iii) the Committee will not adjust any other relevant provisions of this Plan
to reflect any such transaction.
12.2 Property. If the shares of the Common Stock credited to the
--------
Deferred Stock Accounts are converted pursuant to Section 12.1 into another form
of property, references in this Plan to the Common Stock shall be deemed, where
appropriate, to refer to such other form of property, with such other
modifications as may be required for this Plan to operate in accordance with its
purposes. Without limiting the generality of the foregoing,
4
references to delivery of certificates for shares of the Common Stock shall be
deemed to refer to delivery of cash and the incidents of ownership of any other
property held in the Deferred Stock Accounts.
12.3 Change of Control Alternative. In the event of a Change of
--------------------------------
Control, the following shall occur on the date of the Change of Control (i) the
shares of the Common Stock held in each Participant's Deferred Stock Account
shall be deemed to be issued and outstanding as of the Change of Control; (ii)
the Company shall forthwith deliver to each Participant who has a Deferred Stock
Account all of the shares of the Common Stock or any other property held in such
Participant's Deferred Stock Account; and (iii) this Plan shall be terminated.
12.4 Change of Control Events. For purposes of this Plan, Change of
---------------------------
Control shall mean any of the following events:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20
percent or more of either (1) the then outstanding shares of the Common Stock of
the Company (the "Outstanding Company Common Stock"), or (2) the combined voting
power of then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following acquisitions shall not
constitute a Change of Control (A) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a conversion privilege
unless the security being so converted was itself acquired directly from the
Company), (B) any acquisition by the Company, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (D) any acquisition by any
corporation pursuant to a reorganization, merger or consolidation, if, following
such reorganization, merger or consolidation, the conditions described in
clauses (A), (B) and (C) of paragraph (iii) of this Section 12.4 are satisfied;
or
(ii) Individuals who, as of the date hereof, constitute the
Board of the Company (as of the date hereof, "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's stockholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board; or
(iii) Approval by the stockholders of the Company of a
reorganization, merger, binding share exchange or consolidation, unless,
following such reorganization, merger, binding share exchange or consolidation
(1) more than 60 percent of, respectively, then outstanding shares of common
stock of the corporation resulting from such reorganization, merger, binding
share exchange or consolidation and the combined voting power of then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger,
binding share exchange or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger, binding share
exchange or consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (2) no Person
(excluding the Company, any employee benefit plan (or related trust) of the
Company or such corporation resulting from such reorganization, merger, binding
share exchange or consolidation and any Person beneficially owning, immediately
prior to such reorganization, merger, binding share exchange or consolidation,
directly or indirectly, 20 percent or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 20 percent or more of, respectively, then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger, binding share exchange or consolidation or the combined
voting power of then outstanding voting securities of such corporation entitled
to vote generally in the election of directors, and (3) at least a majority of
the members of the board of directors of the corporation resulting from such
reorganization, merger, binding
5
share exchange or consolidation were members of the Incumbent Board at the time
of the execution of the initial agreement providing for such reorganization,
merger, binding share exchange or consolidation; or
(iv) Approval by the stockholders of the Company of (1) a
complete liquidation or dissolution of the Company, or (2) the sale or other
disposition of all or substantially all of the assets of the Company, other than
to a corporation, with respect to which following such sale or other
disposition, (A) more than 60 percent of, respectively, then outstanding shares
of common stock of such corporation and the combined voting power of then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company and any employee benefit plan (or related trust) of the
Company or such corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, 20 percent or
more of the Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 20
percent or more of, respectively, then outstanding shares of common stock of
such corporation and the combined voting power of then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors, and (3) at least a majority of the members of the board of directors
of such corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company.
13. Administration, Amendment and Termination.
--------------------------------------------
13.1 Administration. This Plan shall be administered by a committee
--------------
consisting of two members who shall be the current directors of the Company or
senior executive officers or other directors who are not Participants as may be
designated by the Chief Executive Officer (the "Committee"), which shall have
full authority to construe and interpret this Plan, to establish, amend and
rescind rules and regulations relating to this Plan, and to take all such
actions and make all such determinations in connection with this Plan as it may
deem necessary or desirable.
13.2 Amendment and Termination. The Board may from time to time make
---------------------------
such amendments to this Plan, including to preserve or come within any exemption
from liability under Section 16(b) of the Exchange Act, as it may deem proper
and in the best interest of the Company without further approval of the
Company's stockholders, provided that, to the extent required under Nevada law
or to qualify transactions under this Plan for exemption under Rule 16b-3
promulgated under the Exchange Act, no amendment to this Plan shall be adopted
without further approval of the Company's stockholders and, provided, further,
that if and to the extent required for this Plan to comply with Rule 16b-3
promulgated under the Exchange Act, no amendment to this Plan shall be made more
than once in any six month period that would change the amount, price or timing
of the grants of the Common Stock hereunder other than to comport with changes
in the Code, the Employee Retirement Income Security Act of 1974, as amended, or
the regulations thereunder. The Board may terminate this Plan at any time by a
vote of a majority of the members thereof.
14. Miscellaneous.
-------------
14.1 No Obligation. Nothing in this Plan shall be deemed to create any
-------------
obligation on the part of the Board to nominate any Director for reelection by
the Company's stockholders or to limit the rights of the stockholders to remove
any Director.
14.2 Withholding Taxes. The Company shall have the right to require,
------------------
prior to the issuance or delivery of any shares of the Common Stock pursuant to
this Plan, that a Participant make arrangements satisfactory to the Committee
for the withholding of any taxes required by law to be withheld with respect to
the issuance or delivery of such shares, including, without limitation, by the
withholding of shares that would otherwise be so issued or delivered, by
withholding from any other payment due to the Participant, or by a cash payment
to the Company by the Participant.
6
14.3 Governing Law. The Plan and all actions taken thereunder shall be
-------------
governed by and construed in accordance with the laws of the State of Nevada.
14.4 Information to Stockholders. The Company shall furnish to each of
---------------------------
its stockholders financial statements of the Company at least annually.
IN WITNESS WHEREOF, this Plan has been executed effective as of February
28, 2005.
THE BLACKHAWK FUND
By /s/ Steve Bonenberger
------------------------------------
Steve Bonenberger, President
7