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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
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NEW ENVIRONMENTAL TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
87-0564472
(IRS Employer Identification Number)
7860 Mission Center Court, #100 San Diego California 92108
(Address of principal executive offices)
John Smaha, Attorney
7860 Mission Center Court #100
San Diego, California 92108
(Name and address of agent for service)
(619) 688-1557
(Telephone number, including area code of agent for service)
2003 Stock Award Plan
(Full title of the Plans)
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Copy to:
Ascot Investments, Inc
11718 Barrington Court #709
Los Angeles, CA 90049
CALCULATION OF REGISTRATION FEE
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Proposed maximum Proposed maximum
Title of securities to Amount to be offering price per aggregate offering Amount of
be registered Registered(1) share (2) price (2) registration fee(3)
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Common Stock,
$.001 par value 10,000,000 $.05 $500,000.00 $6.44
---------------------- ----------------------
TOTAL 10,000,000 $6.44
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(1) Includes Common Stock underlying Series B, Series C and Series D
Warrants plus such indeterminate number of shares of Common Stock of
the Registrant as may be issuable by reason of the anti-dilution
provisions of the Plan.
(2) Pursuant to Rule 457(h) under the Securities Act of 1933, as amended,
the registration fee was computed on the basis of the market value of
the shares of Common Stock to be registered hereby estimated in
accordance with Rule 457(c), solely for the purpose of computing the
registration fee, on the basis of the average of the high and low sales
prices per share of Common Stock of the Registrant on August 1, 2003.
(3) The Registration Fee is based upon the exercise price of the warrants
pursuant to Rule 457(f)(2).
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THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
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NEW ENVIRONMENTAL TECHNOLOGIES CORPORATION
Common Stock, No Par Value
____________________
2003 Stock Award Plan
_____________________
This Prospectus covers 10,000,000 shares of common stock, no par value per share
(the "Common Stock"), of NEW ENVIRONMENTAL TECHNOLOGIES CORPORATION, a Nevada
corporation (the "Company") reserved for issuance pursuant to the Company's 2003
Stock Award Plan (the "Plan").
This Prospectus may not be used in connection with resales of Common Stock
acquired by participants in the Plan. Participants who are not "affiliates" may
make resales in brokerage transactions or otherwise without the need to comply
with Rule 144. Participants who are "affiliates" may make resales of the shares
of Common Stock acquired upon exercise of stock options granted under the Plan
in brokerage transactions upon compliance with Rule 144 of the Securities and
Exchange Commission (except that the one-year holding period of Rule 144 will
not be required). For this purpose, an "affiliate" is a participant who
directly, or through one or more intermediaries, controls or is controlled by,
or is under common control with, the Company and includes, among others, all
executive officers and directors of the Company. See the section entitled
"RESTRICTIONS ON RESALE" below.
The statements herein concerning the terms and provisions of the Plan are
summaries and do not purport to be complete. All such statements are qualified
in their entirety by reference to the full text of the documents filed as
exhibits to the Company's publicly available documents. A copy of the Plan has
been attached as Attachment A hereto.
Additional updating and other information with respect to the Plan and the
Common Stock issuable thereunder may be provided in the future to participants
in the Plan.
Participants in the Plan may obtain additional information about the Plan and
its administrators from the Company's compliance officer, c/o John Smaha,
Attorney, Smaha & Daley, APC, 7860 Mission Center Court #100 San Diego, CA
92108. Mr Smaha may be reached by telephone at (619)688.1557.
The date of this Prospectus is
April 22, 2003.
TABLE OF CONTENTS
Page
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GENERAL INFORMATION............................................................1
DESCRIPTION OF THE PLAN........................................................1
Purpose; Eligibility..................................................1
Effectiveness; Termination............................................1
Administration........................................................1
Suspension, Discontinuance, Revision and Amendment of the Plan........2
Shares Subject to the Plan............................................2
Plan Awards...........................................................3
Nonassignability of Plan Awards.......................................4
Effect of Change in Control...........................................4
Accounting Treatment..................................................5
FEDERAL INCOME TAX ASPECTS.....................................................5
Incentive Stock Options...............................................5
Non-qualified Stock Options...........................................6
Stock Awards and Stock Purchase Rights................................7
Capital Gains.........................................................7
RESTRICTIONS ON RESALE.........................................................7
RISK FACTORS...................................................................8
REGISTRANT INFORMATION AND ADDITIONAL PLAN INFORMATION.........................9
Attachment A - 2003 Stock Award Plan (as amended through the date hereof)....A-1
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NOTE: Italicized section references contained in this Prospectus refer to the
specific sections of the Plan summarized or described herein.
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i
GENERAL INFORMATION
This Prospectus covers 10,000,000 shares of common stock, no par value, of
NEW ENVIRONMENTAL TECHNOLOGIES CORPORATION, a Nevada corporation, reserved
for issuance pursuant to the 2003 Stock Award Plan. The Plan was adopted by
the Company on April 1, 2003.
DESCRIPTION OF THE PLAN
PURPOSE; ELIGIBILITY
The purpose of the Plan is to promote the interests of the Company and its
Subsidiaries and shareholders by using investment interests in the Company to
attract, retain and motivate its key officers, employees, directors, advisors
and consultants to encourage and reward their contributions to the long range
performance goals of the Company and to link their compensation interests with
the long term interests of the Company and its shareholders. Section 1.
The Plan authorizes the granting of incentive stock options under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), nonqualified stock
options, or options that do not qualify as incentive stock options under the
Code (each, an "Option"), Stock Awards and Stock Purchase Rights to directors,
officers, employees, consultants, and advisors of the Company. Sections 1, 3.1,
6.1, 7.1 and 8.1.
EFFECTIVENESS; TERMINATION
The Plan was approved and adopted by the Board of Directors of the Company on
April 1, 2003, to be effective March 31, 2003. Unless previously
discontinued by the Committee, the Plan will terminate April 30, 2013.
Sections 12.1 and 12.2.
ADMINISTRATION
The Plan is administered by the Board of Directors of the Company or a
"Committee" to be appointed by the Board. As of the date of this Prospectus, the
Plan is administered by the Board, but it is anticipated that a Committee will
be appointed in the future in order to ensure (i) compliance with the profit
disgorgement rules of Section 16 of the Securities Exchange Act of 1934, as
amended, (ii) that any grants of Plan Awards are deemed "performance based"
under Section 162(m) of the Code and (3) ease of administration of the Plan.
The Board of Directors has authority under the Plan to disband the Committee at
any time and revest in the board the full administration of the Plan. The
administrating body of the Plan (whether the Board or the Committee) is referred
to herein as the "Committee." Sections 3.1.
1
The Committee has authority to, among other things:
o designate the persons to whom Plan Awards will be granted
(each, a "Participant") from the pool of eligible directors,
officers, employees, consultants and advisors of the Company
("Eligible Persons");
o determine the nature of each Plan Award granted;
o determine, in its discretion, the number of shares of Common
Stock for which each Plan Award shall be granted;
o set the exercise price for the Plan Awards (provided the
Administrator may not select a per share exercise price less
than the fair market value of the shares of Common Stock
underlying the Plan Award) and determine whether and to what
extent, and under what circumstances Plan Awards may be
settled in cash, other shares of common stock or options or
security of the Company, or for bona fide services rendered on
behalf of the Company;
o establish certain other terms of the Plan Awards (including
vesting schedules and option exercisability period) made under
the Plan;
o interpret, construe and implement the provisions of the Plan
(including the authority to adopt rules and regulations for
carrying out the purposes of the Plan); and
o terminate, modify or amend the Plan.
Sections 3.1 - 3.6.
The Plan is not subject to the provisions of the Employee Retirement Income
Security Act of 1974.
SUSPENSION, DISCONTINUANCE, REVISION AND AMENDMENT OF THE PLAN
The Committee may, at any time, suspend, discontinue, revise or amend the Plan
and the Plan as so revised or amended will govern all Plan Awards granted
thereunder, including those granted before such revision or amendment. The Plan
acknowledges, however, that no revision or amendment will function to alter,
impair or diminish any rights or obligations under any Plan Award previously
granted (without the written consent of the affected Participant(s)). Section
11.
SHARES SUBJECT TO THE PLAN
Subject to adjustment as described below, an aggregate of 10,000,000 shares of
Common Stock is available for grants of Plan Awards under the Plan. The
aggregate number of shares as to which Plan Awards may be granted to
Participants under the Plan, the number and kind of shares thereof covered by
each outstanding Plan Award, and/or the price per share thereof in each such
Plan Award may, upon a determination made by the Committee, all be
2
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from any merger, consolidation, sale or
exchange of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split, spin-off or other distribution with respect to such shares.
It is not anticipated that any such adjustment will be made simply because the
Company elects to sell or issue additional shares of Common Stock or other
securities of the Company. Common Stock subject to the provisions of the Plan
will be shares of authorized but unissued Common Stock or shares of Common Stock
held as treasury stock (including shares purchased on the open market). Sections
4.1, 4.2, 4.3 and 4.4.
PLAN AWARDS
Under the Plan, the Committee may grant, Incentive Stock Options, Nonqualified
Stock Options, Stock Awards and/or Stock Purchase Rights. Sections 6.1 and 8.1.
As of April 1, 2003, the Company had not granted any Plan Awards under the
Plan.
The exercise price or consideration for any Plan Award granted under the Plan
must be equal to the fair market value of the Common Stock on the date of the
grant. The Plan defines "fair market value" to mean (i) the closing sales price
of the Shares on any exchange on which the shares are traded, on such date, or
in the absence of reported sales on such date, the closing sales price on the
immediately preceding date on which sales were reported or (ii) in the event
there is no public market for the Shares on such date, the fair market value as
determined, in good faith, by the Committee in its sole discretion, and for
purposes of a sale of a Share as of any date, the actual sales price on that
date. Section 2(m).
Neither the Plan nor any Plan Award granted under the Plan confers upon any
Participant any right to continue to provide services to the Company. Section
13.7.
The Plan specifically provides that the aggregate fair market value of the
Common Stock for which one or more Options granted to any recipient may for the
first time become exercisable as incentive stock options shall not exceed
$1,000,000 during any one calendar year. Section 6.1.
Each Plan Award granted under the Plan will be evidenced by a written Plan Award
Agreement issued by the Company. The Company will not make verbal Plan Awards.
Please recognize that the Company is under no obligation to ensure that the
terms contained in the various Plan Award Agreements issued by the Company are
identical. As such, Participants in the Plan may have different rights under the
Plan. Section 13.5.
Each Plan Award is exercisable at any time after the date on which the Plan
Award, or any portion thereof, vests until the Plan Award expires. Sections 6.4
and 8.1. A Plan Award shall be deemed exercised when (1) the Secretary of the
Company (or other designated official) has received written notice of such
exercise in accordance with the terms of the applicable Plan Award Agreement and
(2) full payment of the aggregate exercise price (and, to the extent applicable,
withholding taxes) of the shares as to which the Plan Award is exercised has
been made. THE PLAN PROVIDES THAT THE COMMITTEE MAY IMPOSE ADDITIONAL CONDITIONS
UPON THE EXERCISE OF OPTIONS. SECTIONS 3.1, 6.4 AND 8.4.
3
Subject to the terms of the applicable Plan Award Agreement, the Plan provides
that, the Committee shall have full power and authority to determine the terms
and conditions that shall apply to any Plan Award upon a termination of
employment with the Company. Section 9.
The Company and the Participant may agree in writing to shorter or longer
periods in which to exercise Options granted under the Plan. Further, the
Committee may, in its discretion, elect to accelerate the vesting of Options
that had not fully vested prior to the date of termination. Section 3.1.
In no event shall an Option be exercisable more than ten (10) years after the
date of grant. Section 6.3.
The exercise price of any Plan Award must be paid in cash, shares of common
stock or other securities of the Company, options and/or bona fide services
performed on behalf of the Company, as determined by the Committee. Sections
3.1, 6.2 and 8.2.
Prior to the issuance of stock certificates upon exercise of a Plan Award, the
Committee may request certain agreements or undertakings to assure compliance
with any of the provisions of the Plan, the applicable Plan Award Agreement or
any law or regulation. Section 13.3.
NONASSIGNABILITY OF PLAN AWARDS
The Plan provides that no Plan Award granted under the Plan shall be assignable
or transferable by the Participant otherwise than as follows:
o by will or the laws of descent and distribution; or
o in other instances expressly permitted by the Committee
pursuant to the terms of the Plan.
SECTION 13.1.
EFFECT OF CHANGE IN CONTROL
The Plan provides that, in the event of a "Change in Control," to the extent
permitted by applicable law, the Plan Awards shall continue in full force and
effect, or the surviving or acquiring entity shall:
o assume any Plan Awards; or
o substitute similar awards covering the securities of a
successor entity.
Notwithstanding the foregoing, if the surviving or acquiring entity refuses to
assume the Plan Awards, or substitute similar awards for those outstanding under
the Plan, then each Participant who is then performing services on behalf of the
Company shall have the right, prior to the Change in Control event, to
accelerate the vesting of and exercise the Participant's Plan Awards to the
fullest extent, including any Plan Awards which had not previously vested.
Section 10.
4
For purposes of the Plan, "Change in Control" is defined, in general, to mean
the occurrence of any of the following events:
o any person or entity acquires the beneficial ownership of 50%
or more of the combined voting power of all voting securities
of the Company;
o the "Incumbent Board" members cease for any reason to
constitute two-thirds of the Board;
o the Shareholders of the Company approve a merger,
consolidation or reorganization of the Company (other than (1)
a transaction in which the previous Company shareholders
maintain at least 50% of the combined voting power of the
voting securities of the successor entity or (2) the Incumbent
Board continues to constitute at least a majority of the
members of the Board of Directors of the surviving entity;
o the shareholders of the Company approve a Plan of dissolution
or Liquidation for the Company; or
o the shareholders of the Company approve the sale or other
disposition of all or substantially all of the assets of the
Company.
ACCOUNTING TREATMENT
Under present accounting rules for nonqualified and incentive stock options, to
the extent the fair market value of the shares subject to such options is equal
to the option price at the date of grant of the option, no direct charge to
earnings for compensation expense is necessary. However, the computation of
earnings per share may be adjusted for the impact of stock subject to options.
If the fair market value of the shares subject to those options increases
subsequent to the date of grant, the appreciation is not recorded as a charge to
earnings.
FEDERAL INCOME TAX ASPECTS
The following is a brief summary of the federal income tax consequences that may
occur under the Plan to Participants based on the Code, as currently in effect.
This summary is not intended to be exhaustive and does not describe state or
local tax consequences. PARTICIPANTS IN THE PLAN ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS.
INCENTIVE STOCK OPTIONS
An incentive stock option will not result in any taxable income to the
Participant when it is granted or exercised (except that the alternative minimum
tax may apply). To obtain the special tax treatment applicable to incentive
stock options, the Option must not be exercised later than three months after
the Participant ceases to be an employee (one year if the Participant is
disabled) unless the Participant has died. If the optioned stock is disposed of
more than two years from the grant of the Option and more than one year after
the transfer of the stock to the Participant, the Participant will be taxed on
any gain on the sale of such stock at long-term capital gain rates (See the
section entitled "Capital Gains" below).
5
If stock acquired on the exercise of an incentive stock option is sold,
exchanged, or otherwise disposed of before the end of the required holding
periods, the Participant will generally realize ordinary income at the time of
disposition equal to the lesser of the excess of the fair market value of the
stock at the time of exercise or the selling price of the stock over the option
price.
With respect to the exercise of an incentive stock option and the payment of the
option price by the delivery of shares of Common Stock, to the extent that the
number of shares received does not exceed the number of shares surrendered, no
taxable income will be realized by the Participant at that time; the tax basis
of the shares received will be the same as the tax basis of the shares of Common
Stock surrendered and the holding period (except for purposes of the one-year
holding period referred to above) of the Participant in Common Stock received
will include his holding period in the shares surrendered. To the extent that
the number of shares of Common Stock received exceeds the number of shares
surrendered, no taxable income will be realized by the Participant at that time,
such excess shares will be considered incentive stock option stock with a zero
basis, and the holding period of the Participant in such shares will begin on
the date such shares are transferred to the Participant. If the shares of Common
Stock surrendered were acquired as the result of the prior exercise of an
incentive stock option and the surrender takes place within two years from the
date of the option grant or one year after the transfer of shares to the
Participant, the surrender will result in the realization of ordinary income by
the Participant at that time in the amount of the excess, if any, of the fair
market value of the shares of Common Stock surrendered over the option price of
such shares.
NON-QUALIFIED STOCK OPTIONS
A non-qualified stock option generally will not result in any taxable income to
the Participant at the time it is granted. In general, the holder of a
non-qualified stock option will realize ordinary income at the time of exercise
of the option in an amount measured by the excess of the fair market value of
the optioned shares at the time of exercise over the option price.
With respect to the exercise of a non-qualified stock option and the payment of
the option price by the delivery of shares of Common Stock, to the extent that
the number of shares received does not exceed the number of shares surrendered,
no taxable income will be realized by the Participant at that time, the tax
basis of the shares received will be the same as the tax basis of the shares
surrendered, and the holding period of the Participant in the shares received
will include his holding period in the shares surrendered. To the extent that
the number of shares of Common Stock received exceeds the number of share
surrendered, ordinary income will be realized by the Participant at that time in
the amount of the fair market value of such excess shares, the tax basis of such
excess shares will be equal to their fair market value at the time of exercise,
and the holding period of the Participant in the excess shares received will
begin on the date such shares are transferred to the Participant.
6
To the extent that an employee recognizes ordinary income in the circumstances
described above, the Company would be entitled to a corresponding tax deduction,
provided, among other things, that such income meets the test of reasonableness,
is an ordinary and necessary business expense and is not subject to the
limitation on deduction of compensation in Section 162(m) of the Code.
Participants subject to Section 16(b) of the Exchange Act may be subject to
special tax rules.
STOCK AWARDS AND STOCK PURCHASE RIGHTS.
The issuance of Stock Awards to the Participant in exchange for services
rendered will cause the Participant to realize ordinary income at the time of
issuance in an amount equal to the fair market value of the shares issued
pursuant to the Stock Award for the services rendered. Similarly, the
Participant will also realize ordinary income at the time of purchase of shares
pursuant to the grant of Stock Purchase Rights if such Participant purchases
such shares in exchange for services rendered in an amount equal to the fair
market value of the shares issued pursuant to the Stock Purchase Rights acquired
in exchange for services rendered.
To the extent that an employee recognizes ordinary income in the circumstances
described above, the Company would be entitled to a corresponding tax deduction,
provided, among other things, that such income meets the test of reasonableness,
is an ordinary and necessary business expense and is not subject to the
limitation on deduction of compensation in Section 162(m) of the Code.
Participants subject to Section 16(b) of the Exchange Act may be subject to
special tax rules.
Withholding of all applicable taxes will be required in connection with ordinary
income recognized by a Participant with respect to benefits under the Plan.
CAPITAL GAINS
Generally, under the law existing as of the date of this Prospectus, the maximum
tax rate on long-term capital gains is 20% (10% for individuals in the 15% tax
bracket). This long-term rate is available for capital assets held for more than
one year. The maximum tax rate for long-term capital gains for assets that meet
a 5-year holding period is 18% (8% for individuals in the 15% tax bracket).
Capital losses, however, are not treated like ordinary losses. In general,
capital losses in excess of capital gains may offset up to $3,000 ($1,500 in the
case of a married taxpayer filing a separate return) of ordinary income in a
year.
RESTRICTIONS ON RESALE
Shares of Common Stock distributed pursuant to the Plan may be sold only in
compliance with the registration requirements of the Securities Act of 1933, as
amended ("Securities Act") and applicable state securities laws.
The Company has filed a registration statement on Form S-8 (the "Registration
Statement") with the Securities and Exchange Commission ("SEC") registering
under the Securities Act the shares of Common Stock offered under the Plan. This
document is a prospectus under the Registration Statement. Under the federal
securities laws, persons not deemed to be affiliates by the SEC may resell the
shares of Common Stock acquired under the Plan without limitation as to either
the quantity sold or the period during which such stock was held, provided such
shares are acquired while a registration statement covering the offer of such
shares by the Company to such person is in effect.
7
Persons who are affiliates of the Company may resell shares of Common Stock
acquired pursuant to the Plan under the Securities Act only: (1) in accordance
with the provisions of Rule 144 promulgated by the SEC under the Securities Act
(except that the one (1) year holding period will not apply), (2) pursuant to
some other exemption from registration under the Securities Act, or (3) pursuant
to an applicable, current and effective registration statement under the
Securities Act. The Registration Statement referred to above is insufficient for
purposes of (3) above. Delivery of this memorandum to a third party receiving
shares of Common Stock from an individual affiliate who acquired the shares
under the Plan will not satisfy the requirement to deliver a prospectus to such
third party.
The determination of whether a person is an affiliate of the Company is
primarily a factual one. As defined by the SEC, an affiliate of the Company is a
person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the issuer. The SEC
defines "control" to mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract, or otherwise.
Interpretations of this definition have recognized the concept of a "control
group." Therefore, a person may be an affiliate if he or she possess, directly
or indirectly, individually or in concert with others, the power to direct or
cause the direction of the management or policies of the Company, whether
through the ownership of voting stock, by executive position, by membership on
the Board, by contract or otherwise.
Most affiliates (which, as indicated above, generally includes executive
officers and directors) will likely resell the shares of Common Stock acquired
in connection with the exercise of a Plan Award under Rule 144. In this context,
the rule generally requires that:
o the amount of securities which may be sold in reliance upon
the rule (together with all other sales of the Company's
Common Stock made within the preceding three (3) months shall
not exceed the greater of (1) One Percent (1%) of the shares
of Common Stock outstanding or (2) the average weekly trading
volume during the four calendar weeks preceding the filing of
the required notice with the SEC;
o the Company is current with its publicly-filed reports with
the SEC;
o the shares be sold in a brokers' transaction or in a
transaction directly with a market maker; and
o a notice on Form 144 shall be filed with the SEC
contemporaneously with the order to sell.
Rule 144 is reasonably complex and contains numerous exceptions, qualifications
and additional provisions to the above generalizations. Accordingly, you are
advised to consult an attorney before proceeding to sell shares of Common Stock
upon reliance on this rule.
8
RISK FACTORS
An investment in the Company's Common Stock, including an investment
upon exercise of a Plan Award granted under the Plan, involves a high degree of
risk.
REGISTRANT INFORMATION AND ADDITIONAL PLAN INFORMATION
The Company has filed with the SEC a Registration Statement on Form S-8 with
respect to the shares of Common Stock that may be purchased under the Plan. The
Company hereby undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, on the written or oral request of
any such person, including any beneficial owner, a copy of any or all of the
documents referred to below, which have been or may be incorporated into this
Prospectus by reference (other than exhibits to such documents unless the
exhibits are specifically incorporated by reference into the information that
the Prospectus incorporates):
o the Company's Registration Statement on Form S-8; and
o all documents filed by the Company with the SEC pursuant to
Sections 13(a) or 15(d) of the Exchange Act subsequent to the
date of the S-1 Registration Statement.
Requests for copies should be directed to John Smaha, Attorney, New
Environmental Technologies ,7860 Mission Center Court #100 San Diego, CA 92108.
Mr. Smaha may be reached by telephone at (619)688.1557.
9
--------------------------------------------------
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
--------------------------------------------------
NEW ENVIRONMENTAL TECHNOLOGIES CORPORATION
2003 STOCK AWARD PLAN
SECTION 1. PURPOSE
This plan shall be known as the "NEW ENVIRONMENTAL TECHNOLOGIES
CORPORATION 2003 STOCK AWARD PLAN" (the "Plan"). The purpose of the Plan is to
promote the interests of NEW ENVIRONMENTAL TECHNOLOGIES CORPORATION (the
"Company") and its Subsidiaries and the Company's stockholders by (i) attracting
and retaining key officers, employees, and directors of, and consultants to, the
Company and its Subsidiaries and any future Affiliates; (ii) motivating such
individuals by means of performance-related incentives to achieve long-range
performance goals, (iii) enabling such individuals to participate in the
long-term growth and financial success of the Company, (iv) encouraging
ownership of stock in the Company by such individuals, and (v) linking their
compensation to the long-term interests of the Company and its stockholders by
providing them with opportunities to acquire shares of the Company's common
stock, no par value (the "Common Stock") . With respect to any Options granted
under the Plan that are intended to comply with the requirements of
"performance-based compensation" under Section 162(m) of the Code, the Plan
shall be interpreted in a manner consistent with such requirements. Options
granted under the plan may be Incentive Stock Options or Non-Qualified Stock
Options, as determined by the Committee at the time of the grant. Stock Awards
and Stock Purchase Rights may also be granted under the Plan.
SECTION 2. DEFINITIONS
As used in the Plan, the following terms shall have the meanings set
forth below:
(b) "AFFILIATE" shall mean (i) any entity that, directly or
indirectly, is controlled by the Company, (ii) any entity in which the Company
has a significant equity interest, (iii) an affiliate of the Company, as defined
in Rule 12b-2 promulgated under Section 12 of the Exchange Act, and (iv) any
entity in which the Company has at least twenty percent (20%) of the combined
voting power of the entity's outstanding voting securities, in each case as
designated by the Board as being a participating employer in the Plan.
(c) "BOARD" shall mean the board of directors of the Company.
(d) "CHANGE IN CONTROL" shall mean, unless otherwise defined
in the applicable Plan Award Agreement, any of the following events:
(i) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting Securities") by
any "Person" (as the term Person is used for purposes of Section 13 (d) or 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
immediately after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%)
or more of the combined voting power of the then outstanding Voting Securities;
provided, however, that in determining whether a Change in Control has occurred,
Voting Securities which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which would cause a
Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (i)
an employee benefit plan (or a trust forming a part thereof) maintained by (A)
the Company or (B) any subsidiary or (ii) the Company or any Subsidiary;
(ii) The individuals who, as of the date hereof, are
members of the Board (the "Incumbent Board"), cease for any reason to constitute
at least two-thirds of the Board; provided, however, that if the election or
nomination for election by the Company's stockholders of any new director was
approved by a vote of at least a majority of the Incumbent Board, such new
director shall, for purposes of this Agreement, be considered as a member of the
Incumbent Board; provided, further, however, that no individual shall be
considered a member of the Incumbent Board if (1) such individual initially
assumed office as a result of either an actual or threatened "Election Contest"
(as described in Rule 14a-11 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 (a "Proxy Contest") including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy Contest or (2) such
individual was designated by a Person who has entered into an agreement with the
Company to effect a transaction described in clause (i) or (iii) of this
paragraph; or
(iii) Approval by stockholders of the Company of:
(A) A merger, consolidation or
reorganization involving the Company, unless,
(1) The stockholders of the Company
immediately before such merger, consolidation or reorganization, own, directly
or indirectly, immediately following such merger, consolidation or
reorganization, at least fifty percent (50%) of the combined voting power of the
outstanding Voting Securities of the corporation (the "Surviving Corporation")
in substantially the same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization;
(2) The individuals who were members
of the Incumbent Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization constitute at least a
majority of the members of the board of directors of the Surviving Corporation;
and
(3) no Person (other than the
Company, any Subsidiary, any employee benefit plan (or any trust forming a part
thereof) maintained by the Company, the Surviving Corporation or any Subsidiary,
or any Person who, immediately prior to such merger, consolidation or
reorganization, had Beneficial Ownership of fifty percent (50%) or more of the
then outstanding Voting Securities) has Beneficial Ownership of fifty percent
(50%) or more of the combined voting power of the Surviving Corporation's then
outstanding Voting Securities.
2
(B) A complete liquidation or dissolution of
the Company; or
(C) An agreement for the sale or other
disposition of all or substantially all of the assets of the Company to any
Person (other than a transfer to a Subsidiary).
(e) "CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(f) "COMMITTEE" shall mean (i) the Board or (ii) a committee
of the Board composed of not less than two Non-Employee Directors, each of whom
shall be a "Non-Employee Director" for purposes of Exchange Act Section 16 and
Rule 16b-3 thereunder and an "outside director" for purposes of Section 162(m)
and the regulations promulgated under the Code, and which shall be administering
the Plan in accordance with Section 3 hereof.
(g) "CONSULTANT" shall mean any natural person who serves as a
consultant to the Company or its Subsidiaries or Affiliates.
(h) "DIRECTOR" shall mean a member of the Board.
(i) "DISABILITY" shall mean, unless otherwise defined in the
applicable Plan Award Agreement, a disability that would qualify as a total and
permanent disability under the Company's then current long-term disability plan.
(j) "ELIGIBLE PERSON" shall mean any Employee, Director, or
Consultant shall be eligible to be designated a Participant
(k) "EMPLOYEE" shall mean a current or prospective officer or
employee of the Company or of any Subsidiary or Affiliate.
(l) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(m) "FAIR MARKET VALUE" with respect to the Shares, shall
mean, for purposes of a grant of a Plan Award as of any date, (i) the closing
sales price of the Shares on any exchange on which the shares are traded, on
such date, or in the absence of reported sales on such date, the closing sales
price on the immediately preceding date on which sales were reported or (ii) in
the event there is no public market for the Shares on such date, the fair market
value as determined, in good faith, by the Committee in its sole discretion, and
for purposes of a sale of a Share as of any date, the actual sales price on that
date.
3
(n) "INCENTIVE STOCK OPTION" shall mean an option to purchase
Shares from the Company that is granted under Section 6 of the Plan and that is
intended to meet the requirements of Section 422 of the Code or any successor
provision thereto.
(o) "NON-QUALIFIED STOCK OPTION" shall mean an option to
purchase Shares from the Company that is granted under Section 6 of the Plan and
is not intended to be an Incentive Stock Option.
(p) "NON-EMPLOYEE DIRECTOR" shall mean a member of the Board
who is not an officer or employee of the Company or any Subsidiary or Affiliate.
(q) "OPTION" shall mean an Incentive Stock Option or a
Non-Qualified Stock Option.
(r) "OPTION PRICE" shall mean the purchase price payable to
purchase one Share upon the exercise of an option.
(s) "OUTSIDE DIRECTOR" shall mean, with respect to the grant
of an Option, a member of the Board then serving on the Committee.
(t) "PLAN AWARD" shall mean any Incentive Stock Option,
Non-Qualified Stock Option, Stock Award or Stock Purchase Right granted pursuant
to the Plan.
(u) "PLAN AWARD AGREEMENT" shall mean any written agreement,
contract, or other instrument or document evidencing any Option, Stock Award or
Stock Purchase Right, which may, but need not, be executed or acknowledged by a
Participant.
(v) "PARTICIPANT" shall mean any Employee, Director,
Consultant or other person who receives an option under the Plan.
(w) "PERSON" shall mean any individual, corporation,
partnership, limited liability company, associate, joint-stock company, trust,
unincorporated organization, government or political subdivision thereof or
other entity.
(x) "RETIREMENT" shall mean, unless otherwise defined in the
applicable Plan Award Agreement, retirement of a Participant from the employ or
service of the Company or any of its Subsidiaries or Affiliates in accordance
with the terms of the applicable Company retirement plan or, if a Participant is
not covered by any such plan, retirement on or after such Participant's 65th
birthday.
(y) "SEC" shall mean the Securities and Exchange Commission or
any successor thereto.
(z) "SECTION 16" shall mean Section 16 of the Exchange Act and
the rules promulgated thereunder and any successor provision thereto as in
effect from time to time.
4
(aa) "SECTION 162 (M)" shall mean Section 162 (m) of the Code
and the regulations promulgated thereunder and any successor or provision
thereto as in effect from time to time.
(bb) "SHARES" shall mean shares of the Common Stock, no par
value, of the Company.
(cc) "STOCK AWARD" shall mean a Plan Award made under the Plan
in Common Stock for which the Participant is not obligated to pay additional
consideration, pursuant to Section 8 below.
(dd) "STOCK PURCHASE RIGHT" shall mean a right to purchase
Common Stock pursuant to Section 8 below.
(ee) "STOCK PURCHASE RIGHT PRICE" shall mean the purchase
price payable to purchase one Share upon the exercise of Stock Purchase Right.
(ff) "SUBSIDIARY" shall mean any Person (other than the
Company) of which a majority of its voting power or its equity securities or
equity interest is owned directly or indirectly by the Company.
SECTION 3. ADMINISTRATION
3.1 APPOINTMENT AND AUTHORITY OF COMMITTEE. The Plan shall be
administered by the Board or a Committee, which shall be appointed, in the sole
discretion by and serve at the pleasure of the Board; provided, however, with
respect to Plan Awards to Outside Directors, all references in the Plan to the
Committee shall be deemed to be references to the Board. In the event a
Committee is appointed, the Board may from time to time increase or decrease
(subject to the requirements of Section 2(f)) the number of members of the
Committee, remove from membership on the Committee all or any portion of its
members, and/or appoint such person or persons as it desires to fill any vacancy
existing on the Committee, whether caused by removal, resignation or otherwise.
The Board may also disband the Committee at any time and revest in the Board the
administration of this Plan. Subject to the terms of the Plan and applicable
law, and in addition to other express powers and authorizations conferred on the
Committee by the Plan, the Committee shall have full power and authority in its
discretion to: (i) designate Participants; (ii) determine the type or types of
Plan Awards to be granted to a Participant; (iii) determine the number of Shares
to be covered by, or with respect to which payments, rights, or other matters
are to be calculated in connection with Plan Awards; (iv) determine the timing,
terms, and conditions of any Plan Award; (v) accelerate the time at which all or
any part of a Plan Award may be settled or exercised; (vi) determine whether, to
what extent, and under what circumstances Plan Awards may be settled or
exercised in cash, Shares, other securities, other options, bona fide services
or other property, or canceled, forfeited, or suspended and the method or
methods by which options may be settled, exercised, canceled, forfeited, or
suspended; (vii) determine whether, to what extent, and under what circumstances
cash, Shares, other securities, other Options, Stock Awards, Stock Purchase
Rights, other property, and other amounts payable with respect to a Plan Award
shall be deferred either automatically or at the election of the holder thereof
5
or of the Committee; (viii) interpret and administer the Plan and any instrument
or agreement relating to, or Plan Award made under, the Plan; (ix) except to the
extent prohibited by Section 6.2, amend or modify the terms of any Plan Award at
or after grant with the consent of the holder of the Plan Award; (x) establish,
amend, suspend, or waive such rules and regulations and appoint such agents as
it shall deem appropriate for the proper administration of the Plan; and (xi)
make any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan, subject to the
exclusive authority of the Board under Section 11 hereunder to amend or
terminate the Plan.
3.2 COMMITTEE DISCRETION BINDING. Unless otherwise expressly provided
in the Plan, all designations, determinations, interpretations, and other
decisions under or with respect to the Plan or any Plan Award shall be within
the sole discretion of the Committee, may be made at any time and shall be
final, conclusive, and binding upon all Persons, including the Company, any
Subsidiary or Affiliate, any Participant and any holder or beneficiary of any
Plan Award.
3.3 ACTION BY THE COMMITTEE. The Committee shall select one of its
members as its Chairperson and shall hold its meetings at such times and places
and in such manner as it may determine. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by not
less than a majority of its members. Any decision or determination reduced to
writing and signed by all of the members of the Committee shall be fully
effective as if it had been made by a majority vote at a meeting duly called and
held. The exercise of a Plan Award or receipt of a Plan Award shall be effective
only if a Plan Award Agreement shall have been duly executed and delivered on
behalf of the Company following the grant of the Plan Award. The Committee may
appoint a Secretary and may make such rules and regulations for the conduct of
its business, as it shall deem advisable.
3.4 DELEGATION. Subject to the terms of the Plan and applicable law,
the Committee may delegate to one or more officers or managers of the Company or
of any Subsidiary or Affiliate, or to a Committee of such officers or managers,
the authority, subject to such terms and limitations as the Committee shall
determine, to grant Plan Awards to, or to cancel, modify or waive rights with
respect to, or to alter, discontinue, suspend, or terminate Plan Awards held by
Participants who are not officers or directors of the Company.
3.5 NO LIABILITY. No member of the Board or Committee shall be liable
for any action taken or determination made in good faith with respect to the
Plan or any Plan Award granted hereunder.
3.6 ISSUANCE FOR SERVICES. Plan Awards may be granted to Eligible
Persons in exchange for bona fide services performed on behalf of the Company,
or any Subsidiary or Affiliate; provided, however, such services may not be in
connection with the offer or sale of securities in a capital raising
transaction, including, without limitation, any services and/or transaction
which directly or indirectly promote or maintain a market for the Company's
stock.
6
SECTION 4. SHARES AVAILABLE FOR PLAN AWARDS
4.1 SHARES AVAILABLE. Subject to the provisions of Section 4.2 hereof,
the stock to be subject to Plan Awards under the Plan shall be the Shares of the
Company and the maximum number of Shares with respect to which Plan Awards may
be granted under the Plan shall be 10,000,000. The shares may be authorized but
unissued, or reacquired Common Stock. Notwithstanding the foregoing and subject
to adjustment as provided in Section 4.2, the maximum number of Shares with
respect to which Awards may be granted under the Plan may be increased, from
time to time, by the Committee.
If, after the effective date of the Plan, any Shares covered by a Plan
Award granted under this Plan, or to which such a Plan Award relates, are
forfeited or repurchased, or if such a Plan Award is settled for cash or
otherwise terminates, expires unexercised, or is canceled without the delivery
of Shares, then the Shares covered by such Plan Award, or to which such Plan
Award relates, or the number of Shares otherwise counted against the aggregate
number of Shares with respect to which Plan Awards may be granted, to the extent
of any such settlement, forfeiture, termination, expiration, or cancellation,
shall again become Shares with respect to which Plan Awards may be granted. In
the event that any Plan Award granted hereunder is exercised through the
delivery of Shares or in the event that withholding tax liabilities arising from
such Plan Award are satisfied by the withholding of Shares by the Company, the
number of Shares available for Plan Awards under the Plan shall be increased by
the number of Shares so surrendered or withheld.
4.2 ADJUSTMENTS. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Committee, in its sole discretion, to be
appropriate, then the Committee shall, in such manner as it may deem equitable
(and, with respect to Incentive Stock Options, in such manner as is consistent
with Section 422 of the Code and the regulations thereunder) : (i) adjust any or
all of (1) the aggregate number of Shares or other securities of the Company (or
number and kind of other securities or property) with respect to which Plan
Awards may be granted under the Plan; (2) the number of Shares or other
securities of the Company (or number and kind of other securities or property)
subject to outstanding Plan Awards under the Plan; and (3) the grant or exercise
price with respect to any Plan Award under the Plan, provided that the number of
shares subject to any Plan Award shall always be a whole number; (ii) if deemed
appropriate, provide for an equivalent option in respect of securities of the
surviving entity of any merger, consolidation or other transaction or event
having a similar effect; or (iii) if deemed appropriate, make provision for a
cash payment to the holder of an outstanding Plan Award.
4.3 SUBSTITUTE OPTIONS. Any Shares issued by the Company as substitute
options or similar stock purchase rights ("Substitute Options") in connection
with the assumption or substitution of outstanding grants from any acquired
corporation shall not reduce the Shares available for Plan Awards under the
Plan.
7
4.4 SOURCES OF SHARES DELIVERABLE UNDER PLAN AWARDS. Any Shares
delivered pursuant to a Plan Award may consist, in whole or in part, of
authorized and unissued Shares or of issued Shares that have been reacquired by
the Company.
SECTION 5. ELIGIBILITY
Any Employee, Director, or Consultant shall be eligible to be designated
a Participant; provided, however, that Outside Directors shall only be eligible
to receive Plan Awards granted pursuant to Section 7 of this Plan.
SECTION 6. STOCK OPTIONS
6.1 GRANT. Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Participants to whom Options
shall be granted ("Optionees"), the number of Shares subject to each Option, the
exercise price and the conditions and limitations applicable to the exercise of
each Option. The Committee shall have the authority to grant Incentive Stock
Options, or to grant Non-Qualified Stock Options, or to grant both types of
Options evidenced by a Stock Option Agreement and such other documents as shall
be determined by the Committee in accordance with the Plan ("Option Agreement").
In the case of Incentive Stock Options, the terms and conditions of such grants
shall be subject to and comply with such rules as may be prescribed by Section
422 of the Code, as from time to time amended, and any regulations implementing
such statute. A person who has been granted an option under this Plan may be
granted additional Options under the Plan if the Committee shall so determine;
provided, however, that to the extent the aggregate Fair Market Value
(determined at the time the Incentive Stock Option related thereto is granted)
of the Shares with respect to which all Incentive Stock Options related to such
option are exercisable for the first time by an Employee during any calendar
year (under all plans described in subsection (d) of Section 422 of the Code of
the Company and its Subsidiaries) exceeds $100,000 (or such higher amount as is
permitted in the future under Section 422(d) of the Code, such Options shall be
treated as Non-Qualified Stock Options.
6.2 PRICE. The Committee in its sole discretion shall establish the
Option Price at the time each Option is granted. Except in the case of
Substitute Options, the option Price of an Option may not be less than 100% of
the Fair Market Value of the Shares with respect to which the Option is granted
on the date of grant of such Option. Payment for any Option granted pursuant to
the terms of this Plan may be in such legal consideration, including for bona
fide services rendered, as approved by the Committee. Notwithstanding the
foregoing and except as permitted by the provisions of Section 4.2 and Section
11 hereof, the Committee shall not have the power to (i) amend the terms of
previously granted options to reduce the Option Price of such Options, or (ii)
cancel such Options and grant Substitute Options with a lower Option Price than
the canceled Options.
6.3 TERM. Subject to the Committee's authority under Section 3.1 and
the provisions of Section 6.5, each Option and all rights and obligations
thereunder shall expire on the date determined by the Committee and specified in
the Option Agreement. The Committee shall be under no duty to provide terms of
like duration for Options granted under the Plan. Notwithstanding the foregoing,
no Option shall be exercisable after the expiration of ten (10) years from the
date such Option was granted.
8
6.4 EXERCISE.
(a) Each Option shall be exercisable at such times and subject
to such terms and conditions as the Committee may, in its sole discretion,
specify in the applicable Option Agreement or thereafter. The Committee shall
have full and complete authority to determine, subject to Section 6.5 herein,
whether an Option will be exercisable in full at any time or from time to time
during the tern of the Option, or to provide for the exercise thereof in such
installments, upon the occurrence of such events and at such times during the
term of the Option as the Committee may determine.
(b) The Committee may impose such conditions with respect to
the exercise of Options, including without limitation, any relating to the
application of federal state or foreign securities laws or the Code, as it may
deem necessary or advisable. The exercise of any Option granted hereunder shall
be effective only at such time as the sale of Shares pursuant to such exercise
will not violate any state or federal securities or other laws.
(c) An Option may be exercised in whole or in part at any
time, with respect to whole Shares only, within the period permitted thereunder
for the exercise thereof, and shall be exercised by written notice of intent to
exercise the option, delivered to the Company at its principal office, and
payment in full to the Company at the direction of the Committee of the amount
of the Option Price for the number of Shares with respect to which the option is
then being exercised. The exercise of an Option shall result in the termination
of the other to the extent of the number of Shares with respect to which the
Option is exercised.
(d) Payment of the Option Price shall be made in cash or cash
equivalents, or, at the discretion of the Committee, (i) in whole Shares valued
at the Fair Market Value of such Shares on the date of exercise (or next
succeeding trading date, if the date of exercise is not a trading date),
together with any applicable withholding taxes, (ii) by a combination of such
cash (or cash equivalents) and such Shares, or (iii) such legal consideration,
including for bona fide services rendered, as approved by the Committee;
provided, however, that the Optionee shall not be entitled to tender Shares
pursuant to successive, substantially simultaneous exercises of an Option or any
other stock option of the Company. Subject to applicable securities laws, an
option may also be exercised by delivering a notice of exercise of the option
and simultaneously selling the Shares thereby acquired, pursuant to a brokerage
or similar agreement approved in advance by proper officers of the Company,
using the proceeds of such sale as payment of the option Price, together with
any applicable withholding taxes. Until the Optionee has been issued the Shares
subject to such exercise, he or she shall possess no rights as a stockholder
with respect to such Shares.
9
6.5 TEN PERCENT STOCK RULE. Notwithstanding any other provisions in the
Plan, if at the time an Option is otherwise to be granted pursuant to the Plan
the Optionee or rights holder owns directly or indirectly (within the meaning of
Section 424(d) of the Code) Shares of the Company possessing more than ten
percent (10%) of the total combined voting power of all classes of Stock of the
Company or its parent or Subsidiary or Affiliate corporations (within the
meaning of Section 422 (b) (6) of the Code), then any Incentive Stock Option to
be granted to such Optionee or rights holder pursuant to the Plan shall satisfy
the requirement of Section 422(c) (5) of the Code, and the option Price shall be
not less than 110% of the Fair Market Value of the Shares of the Company, and
such Option by its terms shall not be exercisable after the expiration of five
(5) years from the date such Option is granted.
SECTION 7. NON-EMPLOYEE DIRECTOR AND OUTSIDE DIRECTOR OPTIONS
7.1 The Board may provide that all or a portion of a Non-Employee
Director's annual retainer, meeting fees and/or other Options or compensation as
determined by the Board, be payable (either automatically or at the election of
a Non-Employee Director) in the form of Non-Qualified Stock Options, Stock
Awards or Stock Purchase Rights. The Board shall determine the terms and
conditions of any such Options, Stock Awards or Stock Purchase Rights, including
the terms and conditions which shall apply upon a termination of the
Non-Employee Director's service as a member of the Board, and shall have full
power and authority in its discretion to administer such Options, Stock Awards
or Stock Purchase Rights, subject to the terms of the Plan and applicable law.
7.2 The Board may also grant Non-Qualified Stock Options, Stock Awards
and/or Stock Purchase Rights to Outside Directors pursuant to the terms of the
Plan. With respect to such Options, Stock Awards or Stock Purchase Rights, all
references in the Plan to the Committee shall be deemed to be references to the
Board.
SECTION 8. STOCK AWARDS AND STOCK PURCHASE RIGHTS.
8.1 STOCK AWARDS AND STOCK PURCHASE RIGHTS. Stock Awards and Stock
Purchase Rights may be issued either alone, in addition to, or in tandem with
other Plan Awards and/or cash awards made outside of the Plan. After the
Committee determines that it will issue Stock Awards and/or offer Stock Purchase
Rights under the Plan, it shall advise the offeree in writing or electronically
of the terms, conditions and restrictions related to the issuance/offer,
including the number of Shares awarded to such person the price to be paid, if
any, and the time within which such person must accept such offer. The terms of
the offer shall comply in all respects with the Nevada Business Corporations
Act, N.R.S. ss.ss. 7-101-101 ET SEQ., to the extent such sections are
applicable. A Stock Award or Stock Purchase Right Agreement shall be in such
form and include such other documents as determined by the Committee in
accordance with the Plan.
8.2 PRICE. The Committee in its sole discretion shall establish (i) the
fair market value of bona fide services rendered for shares issued pursuant to a
Stock Award, and/or (ii) the price for Shares issued pursuant to a Stock
Purchase Right at the time each Stock Award and/or Stock Purchase Right is
granted. The value of services rendered for Shares issued pursuant to Stock
Awards and the purchase price of Shares issued pursuant to a Stock Purchase
Right may not be less than 100% of the Fair Market Value of the Shares with
10
respect to which the Stock Award or Stock Purchase Right is granted on the date
of grant. Payment for any Shares acquired by exercise of a Stock Purchase Right
granted pursuant to the terms of this Plan may be in such legal consideration,
including for bona fide services rendered, as approved by the Committee.
Notwithstanding the foregoing and except as permitted by the provisions of
Section 4.2 and Section 11 hereof, the Committee shall not have the power to (i)
amend the terms of previously granted Stock Purchase Rights to reduce the
purchase Price of such Stock Purchase Rights , or (ii) cancel such Stock
Purchase Rights and grant substitute Stock Purchase Rights with a lower purchase
Price than the canceled Stock Purchase Rights.
8.3 REPURCHASE OPTION. The Stock Award Agreement or Stock Purchase
Right Agreement may contain such repurchase option as determined by the
Committee and be exercisable upon the voluntary or involuntary termination of
the purchasee's service with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the Stock
Award Agreement and/or Stock Purchase Right Agreement shall be the original fair
market value of the Stock Award or the original purchase price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the Committee
may determine. Except with respect to Shares purchased by Officers, Directors,
and Consultants, the repurchase option shall in no case lapse at a rate of less
than 20% per year over five (5) years from the date of purchase.
8.4 OTHER PROVISIONS. The Stock Award Agreement and/or Stock Purchase
Right Agreement shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Committee in its sole
discretion.
8.5 RIGHTS AS A SHAREHOLDER. Once the Stock Award has been issued
and/or the Stock Purchase Right has been exercised, the Participant shall have
rights equivalent to those of a shareholder and shall be a shareholder when his
or her purchase is entered upon the records of the duly authorized transfer
agent of the Company. No adjustment shall be made for a dividend or other right
for which the record date is prior to the date the Stock Award is issued or the
Stock Purchase Right is exercised, except as provided in Section 4 of the Plan.
SECTION 9. TERMINATION OF EMPLOYMENT
The Committee shall have the full power and authority to determine the
terms and conditions that shall apply to any Plan Award upon a termination of
employment with the Company, its Subsidiaries and Affiliates, including a
termination by the Company with or without cause, by a Participant voluntarily,
or by reason of death, Disability or Retirement, and may provide such terms and
conditions in the Plan Award Agreement or in such rules and regulations as it
may prescribe.
SECTION 10. CHANGE IN CONTROL
Upon a Change in Control, to the extent permitted by applicable law: (i)
any surviving or acquiring corporation shall assume any Plan Awards outstanding
under the Plan or shall substitute similar Plan Awards (including an option to
acquire the same consideration paid to the stockholders in the transaction
11
described in this section 10) for those outstanding under the Plan, or (ii) such
options shall continue in full force and effect. In the event any surviving or
acquiring corporation refuses to assume such Plan Awards, or to substitute
similar Plan Awards for those outstanding under the Plan, then, with respect to
Plan Awards held by persons then performing services as Employees, Directors or
Consultants, the time during which such options may be exercised shall be
accelerated prior to such event and the Plan Awards shall be terminated if not
exercised after such acceleration and at or prior to such event.
SECTION 11. AMENDMENT AND TERMINATION OF PLAN; PLAN AWARDS
11.1 AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without stockholder approval if such approval is necessary to
comply with any tax or regulatory requirement for which or with which the Board
deems it necessary or desirable to comply.
11.2 AMENDMENTS TO PLAN AWARDS. Subject to the restrictions of Sections
6.2 and 8.2, the Committee may waive any conditions or rights under, amend any
terms of, or alter, suspend, discontinue, cancel or terminate, any Plan Award
theretofore granted, prospectively or retroactively; provided that any such
waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would adversely affect the rights of any Participant or any
holder or beneficiary of any Plan Award theretofore granted shall not to that
extent be effective without the consent of the affected Participant, holder, or
beneficiary.
11.3 ADJUSTMENTS OF PLAN AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL
OR NONRECURRING EVENTS. The Committee is hereby authorized to make adjustments
in the terms and conditions of, and the criteria included in, Plan Awards in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4.2 hereof) affecting the Company, any
Subsidiary or Affiliate, or the financial statements of the Company or any
Subsidiary or Affiliate, or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that such adjustments
are appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
11.4 EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any person
holding a Plan Award, unless mutually agreed otherwise between such person and
the Committee, which agreement must be in writing and signed by such person and
the Company. Termination of the Plan shall not affect the Committee's ability to
exercise the powers granted to it hereunder with respect to Plan Awards granted
under the Plan prior to the date of such termination.
SECTION 12. TERM OF THE PLAN
12.1 EFFECTIVE DATE. The Plan shall be effective as of April 1, 2003
provided it is approved and ratified by the Company's stockholders on or prior
to April 30, 2003 to the degree and manner such stockholder approval is
required under applicable laws.
12
12.2 EXPIRATION DATE. No new Plan Awards shall be granted under the
Plan after the tenth (10th) anniversary of the Effective Date. Unless otherwise
expressly provided in the Plan or in an applicable Plan Award Agreement, any
Plan Award granted hereunder may, and the authority of the Board or the
Committee to amend, alter, adjust, suspend, discontinue, or terminate any such
Plan Award or to waive any conditions or rights under any such Plan Award shall,
continue after the tenth (10th) anniversary of the Effective Date.
SECTION 13. GENERAL PROVISIONS
13.1 LIMITED TRANSFERABILITY OF PLAN AWARDS. Except as otherwise
provided in the Plan, no Plan Award shall be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a Participant, except
by will or the laws of descent and distribution and/or as may be provided by the
Committee in its discretion, at or after grant, in the Plan Award Agreement. No
transfer of a Plan Award by will or by laws of descent and distribution shall be
effective to bind the Company unless the Company shall have been furnished with
written notice thereof and an authenticated copy of the will and/or such other
evidence as the Committee may deem necessary or appropriate to establish the
validity of the transfer.
13.2 NO RIGHTS TO PLAN AWARDS. No Person shall have any claim to be
granted any Plan Award, and there is no obligation for uniformity of treatment
of Participants or holders or beneficiaries of Plan Awards. The terms and
conditions of Plan Awards need not be the same with respect to each Participant.
13.3 SHARE CERTIFICATES. All certificates for Shares or other
securities of the Company or any Subsidiary or Affiliate delivered under the
Plan pursuant to any Plan Award or the exercise thereof shall be subject to such
stop transfer orders and other restrictions as the Committee may deem advisable
under the Plan or the rules, regulations and other requirements of the SEC or
any state securities commission or regulatory authority, any stock exchange or
other market upon which such Shares or other securities are then listed, and any
applicable Federal or state laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.
13.4 WITHHOLDING. A Participant may be required to pay to the Company
or any Subsidiary or Affiliate and the Company or any Subsidiary or Affiliate
shall have the right and is hereby authorized to withhold from any Plan Award,
from any payment due or transfer made under any Plan Award or under the Plan, or
from any compensation or other amount owing to a Participant the amount (in
cash, Shares, other securities, other Plan Awards or other property) of any
applicable withholding or other taxes in respect of a Plan Award, its exercise,
or any payment or transfer under a Plan Award or under the Plan and to take such
other action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes.
13.5 PLAN AWARD AGREEMENTS. Each Plan Award hereunder shall be
evidenced by a Plan Award Agreement that shall be delivered to the Participant
and may specify the terms and conditions of the Plan Award and any rules
applicable thereto. In the event of a conflict between the terms of the Plan and
any Plan Award Agreement, the terms of the Plan shall prevail.
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13.6 NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in
the Plan shall prevent the Company or any Subsidiary or Affiliate from adopting
or continuing in effect other compensation arrangements, which may, but need
not, provide for the grant of Plan Awards.
13.7 NO RIGHT TO EMPLOYMENT. The grant of a Plan Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Subsidiary or Affiliate. Further, the Company or a Subsidiary or
Affiliate may at any time dismiss a Participant from employment, free from any
liability or any claim under the Plan, unless otherwise expressly provided in a
Plan Award Agreement.
13.8 NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the Plan
and the applicable Plan Award Agreement, no Participant or holder or beneficiary
of any Plan Award have any rights as a stockholder with respect to any Shares to
be distributed under the Plan until such person has become a holder of such
Shares.
13.9 GOVERNING LAW. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan and any Plan Award Agreement
shall be determined in accordance with the laws of the State of Nevada without
giving effect to conflicts of laws principles.
13.10 SEVERABILITY. If any provision of the Plan or any Plan Award
Agreement is, or becomes, or is deemed to be invalid, illegal, or unenforceable
in any jurisdiction or as to any Person or Plan Award, or would disqualify the
Plan or any Plan Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to the applicable
laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Plan Award, such provision shall be stricken as to such jurisdiction, Person
or Plan Award and the remainder of the Plan and any such Plan Award shall remain
in full force and effect.
13.11 OTHER LAWS. The Committee may refuse to issue or transfer any
Shares or other consideration under a Plan Award if, acting in its sole
discretion, it determines that the issuance or transfer of such Shares or such
other consideration might violate any applicable law or regulation (including
applicable non-U.S. laws or regulations) or entitle the Company to recover the
same under Exchange Act Section 16 (b), and any payment tendered to the Company
by a Participant, other holder or beneficiary in connection with the exercise of
such Plan Award shall be promptly refunded to the relevant Participant, holder,
or beneficiary.
13.12 NO TRUST OR FUND CREATED. Neither the Plan nor any Plan Award
shall create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Subsidiary or Affiliate and a
Participant or any other Person. To the extent that any Person acquires a right
to receive payments from the Company or any Subsidiary or Affiliate pursuant to
a Plan Award, such right shall be no greater than the right of any unsecured
general creditor of the Company or any Subsidiary or Affiliate.
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13.13 NO FRACTIONAL SHARES. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Plan Award, and the Committee shall
determine whether cash, other securities, or other property shall be paid or
transferred in lieu of any fractional Shares or whether such fractional Shares
or any rights thereto shall be canceled, terminated or otherwise eliminated.
13.14 CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to
the exercise of an Plan Award unless the exercise of such Plan Award and the
issuance and delivery of such Shares shall comply with Applicable Laws.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise
of an Option, the Committee may require the person exercising such Plan Award to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
13.15 INABILITY TO OBTAIN AUTHORITY. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
13.16 RESERVATION OF SHARES. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
13.17 INFORMATION TO OPTIONEES AND PURCHASERS. The Company shall
provide to each Optionee and to each individual who acquires Shares pursuant to
the Plan, not less frequently than annually during the period such Optionee or
purchaser has one or more Plan Awards outstanding, and, in the case of an
individual who acquires Shares pursuant to the Plan, during the period such
individual owns such Shares, copies of annual financial statements. The Company
shall not be required to provide such statements to key employees whose duties
in connection with the Company assure their access to equivalent information.
13.18 HEADINGS. Headings are given to the sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
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