Exhibit 4.1
OCTOBER 2004 EMPLOYEE STOCK INCENTIVE PLAN OF AXIA GROUP, INC.
1.
General Provisions.
1.1 Purpose. This October 2004 Employee Stock Incentive Plan
of Axia Group, Inc. (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 Axia Group, 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, $0.001 par value (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 Colorado 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.
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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 Four
Hundred Million (400,000,000), 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.
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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, and in the case of any other stock
option, shall not be less than 85 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.
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Subject to the provisions of this Section 2.4 and Section 2.5,
the
Employee shall have the right to exercise
the Employee's Stock Options at the
rate of at least twenty percent (20%) per
year over five (5) years from the date
the stock option is granted.
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. At no time shall the total
number of securities issuable upon the
exercise of all outstanding options under
this Plan, and the total number of
securities provided for under any bonus or
similar plan or agreement of the
Company exceed a number of securities which
is equal to 30 percent (30%) of the
then outstanding securities of the Company,
unless a percentage higher than 30
percent (30%) is approved by at least a
two-thirds of the outstanding securities
entitled to vote. 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.
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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
