EYI INDUSTRIES, INC.
STOCK COMPENSATION PROGRAM
Purpose.
This Stock Compensation Program
(this “Program”) is established by EYI Industries, Inc.
(the “Company”). The purposes of this Program are (a)
to ensure the retention of the services of existing executive
personnel, key employees, and directors of the Company or its
affiliates; (b) to attract and retain competent new executive
personnel, key employees, and directors; (c) to provide incentive
to all such personnel, employees and directors to devote their
utmost effort and skill to the advancement and betterment of the
Company, by permitting them to participate in the ownership of the
Company and thereby in the success and increased value of the
Company; and (d) to allow vendors, service providers, consultants,
business associates, strategic partners, and others, with or that
the Board of Directors anticipates will have an important business
relationship with the Company or its affiliates, the opportunity to
participate in the ownership of the Company and thereby to have an
interest in the success and increased value of the
Company.
Elements
of the Program. In
order to maintain flexibility in the award of stock benefits, the
Program constitutes a single “omnibus” plan, but is
composed of three parts. The first part is the Qualified Incentive
Stock Option Plan (the “ISO Plan”) (see Exhibit A
below) which provides grants of qualified incentive stock options
(“ISOs”). The second part is the Nonqualified Stock
Option Plan (“NQSO Plan”) (see Exhibit B below) which
provides grants of nonqualified stock options
(“NQSOs”). The third part is the Restricted Shares Plan
(“Restricted Shares Plan”) (see Exhibit C below) which
provides grants of restricted shares of Company common stock
(“Restricted Shares”). The ISO Plan, the NQSO Plan and
the Restricted Shares Plan respectively comprise Plan I, Plan II
and Plan III of the Program. (The grant of ISOs, NQSOs, and
Restricted Shares shall herein be referred to as
“Awards.”)
Applicability
of General Provisions. Unless any Plan specifically indicates to the
contrary, all Plans shall be subject to the General Provisions of
the Stock Compensation Program set forth below, and references to
the Program could also mean reference to the Plans.
GENERAL PROVISIONS OF THE
STOCK COMPENSATION PROGRAM
Article 1 .
Administration . The Program shall be administered by a
committee (“Committee”) consisting of not less than one
director of the Company as designated by the Board of Directors of
the Company (“Board”). The Board may from time to time
remove members from the Committee, fill all vacancies in the
Committee, however caused, and may select one of the members of the
Committee as its Chairman. Any action of the Committee shall be
taken by a majority vote or the unanimous written consent of the
Committee members. The Committee shall hold meetings at such times
and places as it may determine, shall keep minutes of its meetings,
and shall adopt, amend, and revoke such rules and procedures as it
may deem
appropriate
with respect to the Program. In the event that the Board has not
appointed a committee than the entire Board of directors will act
as the committee.
Notwithstanding any other provision
of the Program (and without limiting the Committee’s
authority), in connection with any action concerning grants of
Awards to or transactions by “Insiders,” the Committee
may adopt such procedures as its deems necessary or desirable to
assure the availability of exemptions from Section 16 of the
Securities Exchange Act of 1934 afforded by Rule 16b-3 thereunder
or any successor rule. Without limiting the foregoing, in
connection with approval of any transaction by an
“Insider” involving a grant, award or other acquisition
from the Company, or involving the disposition to the Company of
the Company’s equity securities, the Committee may delegate
its approval authority to a subcommittee thereof comprised of two
or more “Non-Employee Directors” (as defined in Rule
16b-3), or take action by the affirmative vote of two or more
Non-Employee Directors (with all other members of the Committee
abstaining or recusing themselves from participating in the
matter), or refer the matter to the full Board of Directors for
action. For this purpose, and “Insider” shall mean an
individual who is, on the relevant date, a specifically identified
officer, director, or 10% beneficial owner of the Company, as
defined under Section 16 of the Securities Exchange Act of
1934.
Article 2.
Authority of Committee .
Subject to the other provisions of this Program, and with a view to
effecting its purpose, the Committee shall have the sole authority,
in its absolute discretion: (a) to construe and interpret the
Program; (b) to define the terms used herein; (c) to determine, to
the extent not provided by the Program or the relevant Plan, the
terms and conditions of Options and Restricted Shares granted
pursuant to the terms of the Program; and (d) to make all other
determinations necessary or advisable for the administration of the
Program and to do all things necessary or desirable for the
administration of the Program. All decisions, determinations, and
interpretations made by the Committee shall be binding and
conclusive on all affected individuals having an interest in the
Program and on their legal representatives, heirs and
beneficiaries.
Article 3.
Maximum Number of Shares Subject to the Program . Subject to
adjustment from time to time as provided in Article 6, the number
of shares of common stock available for issuance under the Program
shall be Twenty Five Million (25,000,000) authorized and unissued
shares of common stock of the Company, $0.001 par value (the
“Common Stock”).
The shares of Common Stock to be
issued upon exercise of an Option or issued as Restricted Shares
may be authorized but unissued shares or shares reacquired by the
Company. If any of the Options granted under the Program expire or
terminate for any reason before they have been exercised in full,
the unpurchased shares subject to those expired or terminated
Options shall cease to reduce the number of shares available for
purposes of the Program. If the conditions associated with the
grant of Restricted Shares are not achieved within the period
specified for satisfaction of the applicable conditions, or if the
Restricted Shares grant terminates for any reason before the date
on which the conditions must be satisfied, the shares of Common
Stock associated with such Restricted Shares shall cease to reduce
the number of shares available for purposes of the
Program.
The proceeds received by the Company
from the sale of its Common Stock pursuant to the exercise of
Options or transfer of Restricted Shares under the Program, if in
the form of cash, shall be added to the Company’s general
funds and used for general corporate purposes.
Article 4.
Eligibility and
Participation . Officers,
employees, directors (whether employee directors or nonemployee
directors), and independent contractors or agents of the Company or
its subsidiaries (“Subsidiaries”) who are responsible
for or contribute to the management, growth, or profitability of
the business of the Company or its Subsidiaries shall be eligible
to participate in the Program to the extent designated by the
Committee in its sole and complete discretion
(“Participants”). However, ISOs may be granted under
the ISO Plan only to a person who is an employee of the Company or
its Subsidiaries. The grant of ISOs and NQSOs to a Participant
shall be the grant of separate options and each ISO and each NQSO
shall be specifically designated as such in accordance with
applicable provisions of the Treasury regulations. A person may be
granted multiple Awards under the Program.
For purposes of this Program, the
term “Subsidiary” shall mean any corporation (other
than the Company) in an unbroken chain of corporations beginning
with the Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more
of the total combined voting power of all classes of stock in one
of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the adoption of the
Program shall be considered a Subsidiary commencing as of such
date.
Article 5.
Effective Date and Term of
Program . The Program shall become effective upon its adoption
by the Board of Directors of the Company. The Program shall
continue in effect for a term of 10 years unless sooner terminated
under Article 7 of these General Provisions.
Article 6.
Adjustments . If the then
outstanding shares of Common Stock are increased, decreased,
changed or exchanged for a different number or kind or shares or
securities through merger, consolidation, combination, exchange of
shares, other reorganization, recapitalization, reclassification,
stock dividend, stock split or reverse stock split, then an
appropriate and proportionate adjustment shall be made in the
maximum number and kind of shares or securities as to which Options
and Restricted Shares may be granted under this Program. A
corresponding adjustment changing the number and kind of shares or
securities allocated to unexercised Options, Restricted Shares, or
portions thereof, which shall have been granted prior to any such
change, shall likewise be made. Any such adjustment in outstanding
Options shall be made without change in the aggregate purchase
price applicable to the unexercised portion of the Option, but with
a corresponding adjustment in the price for each share or other
unit of any security covered by the Option.
Article 7.
Termination and Amendment of the
Program . The Program shall terminate at the end of the term of
the Program as described in Article 5. No Options or Restricted
Shares shall be granted under the Program after the effective date
of such termination.
Further, subject to the limitation
contained in Article 8 of these General Provisions, the Board of
Directors may, at any time and without approval of the
Company’s stockholders, terminate or suspend the Program or
amend or revise its terms, including the form and substance of the
Option and Restricted Share agreements used for the administration
of the Program.
Article 8.
Prior Rights and Obligations
. No termination, suspension, or amendment of the Program shall,
without the consent of the Participant who has received an Option
or Restricted Share, alter or impair any of that person’s
rights or obligations under the Option or Restricted Shared granted
under the Program prior to that termination, suspension, or
amendment without the written consent of the
Participant.
The Committee may modify, extend, or
renew outstanding Options or Restricted Shares and authorize the
grant of new Options or Restricted Shares in substitution
therefore, provided that any action may not, without the written
consent of a Participant, impair any of such Participant’s
rights under any Option or Restricted Share. Any outstanding ISO
that is modified, extended, renewed, or otherwise altered will be
treated in accordance with Section 424(h) of the Internal Revenue
Code of 1986, as amended (the “Code”).
Article 9.
Privileges of Stock Ownership
. Notwithstanding the exercise of any Option granted pursuant to
the terms of this Program or the achievement of any conditions
specified in any Restricted Share granted pursuant to the terms of
this Program, no Participant shall have any of the rights or
privileges of a stockholder of the company with respect to any
shares of Common Stock issuable upon the exercise of his or her
Option or the satisfaction of his or her Restricted Share
conditions until certificates representing the shares have been
issued and delivered. No shares shall be required to be issued and
delivered upon exercise of any Option or satisfaction of any
conditions with respect to a Restricted Share unless and until all
of the requirements of law and of all regulatory agencies having
jurisdiction over the issuance and delivery of the securities shall
have been fully complied with.
Article 10.
Reservation of Shares of Common
Stock . The Company, during the term of this Program, shall at
all times reserve and keep available such number of shares of its
Common Stock as shall be sufficient to satisfy the requirements of
the Program. In addition, the Company shall from time to time, as
is necessary to accomplish the purposes of this Program, seek or
obtain from any regulatory agency having jurisdiction any requisite
authority in order to issue and sell shares of Common Stock
hereunder. The inability of the Company to obtain from any
regulatory agency the authority deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any
Common Stock hereunder shall relieve the Company of any liability
in respect of the failure to issue or sell the stock for which the
requisite authority was not obtained.
Article 11.
Tax Withholding . The
exercise of any Option or delivery of any Restricted Share granted
under this Program is subject to the condition that if at any time
the Company shall determine, in its discretion, that the
satisfaction of withholding tax or other withholding liabilities
under any state or federal law is necessary or desirable as a
condition to, or in connection with, such exercise or the delivery
or purchase of shares, then in such event, the
exercise of
the Option or Restricted Share shall not be effective unless such
withholding shall have been effected or obtained in a manner
acceptable to the Company.
Article 12.
Compliance with Securities
Laws . Shares of Common Stock shall not be issued with
respected to any Option or Restricted Share under the Program
unless the issuance and delivery of those shares shall comply will
all relevant provisions of state and federal law including, without
limitation, the Securities Act of 1933, as amended, the rules and
regulations promulgated thereunder, and the requirements of any
stock exchange upon which the shares may then be listed, and shall
be further subject to the approval of counsel for the Company with
respect to such compliance. The Committee may also require an
individual to furnish evidence satisfactory to the Company,
including a written and signed representation letter and consent to
be bound by any transfer restriction imposed by law, legend,
condition, or otherwise, that the shares are being purchased only
for investment and without any present intention to sell or
distribute the shares in violation of any state or federal law,
rule or regulation. Further, an individual shall consent to the
imposition of a legend on the shares of Common Stock relating to
his or her Option or Restricted Share restricting their
transferability as required by law or by this Article
12.
Notwithstanding any other provision
set forth in the Program, if required by the then current Section
16 of the Securities Exchange Act of 1934, any “derivative
security” or “equity security” offered pursuant
to the Program to any Insider may not be sold or transferred for at
least six months after the date of grant of such Award. The terms
“equity security” and “derivative security”
shall have the meaning s ascribed to them in the then current Rule
16(a) under the Securities Exchange Act of 1934.
Article 13.
Corporate Transactions . In
the event of (a) a dissolution or liquidation of the Company, (b)
merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a
different jurisdiction, or other transaction in which there is no
substantial change in the stockholders of the company or their
relative stock holdings and the Awards granted under this Plan are
assumed, converted, or replaced by the successor corporation, which
assumption is binding on all Participants), (c) merger in which the
Company is the surviving corporation but after which the
stockholders of the Company immediately prior to such merger (other
than any stockholder that merges, or which owns or controls another
corporation that merges with the Company in such merger) cease to
own their shares or other equity interest in the Company, (d) the
sale of substantially all of the assets of the Company, or (e) the
acquisition, sale, or transfer of more than 50% of the outstanding
shares of the Company by tender offer or similar transaction, then
any or all outstanding Awards may be assumed, converted or replaced
by the successor corporation (if any), which assumption,
conversion, or replacement shall be binding on all Participants. In
the alternative, the successor corporation may substitute
equivalent Awards or provide substantially similar consideration to
Participants as was provided to stockholders (after taking into
account the existing provisions of the Awards). The successor
corporation may also issue, in place of outstanding shares of the
Company held by the Participant, substantially similar shares or
other property subject to repurchase restrictions no less favorable
to the Participant.
In the event such successor
corporation (if any) refuses to assume or substitute Awards as
provided above pursuant to a transaction described in this Article
13, such Awards shall expire on such transaction at such time and
on such conditions as the Committee may determine at its sole and
complete discretion. In any case, notwithstanding anything in this
Program to the contrary, the Committee may, in its sole and
complete discretion, provide that the vesting (that is, full
exercisability in the case of Options, and full nonforfeitability
and elimination of all condition to full ownership in the case of
Restricted Shares) shall accelerate into full vesting upon a
transaction described in this Article 13. If the Committee
exercises such discretion with respect to an Award, su
