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Exhibit 10.16
RIVER CAPITAL GROUP, INC.
2007 NON-QUALIFIED STOCK OPTION PLAN
ARTICLE I.
PURPOSE, ADOPTION AND TERM OF THE PLAN
1.01 Purpose. The purpose of the River Capital Group, Inc.
2007
Non-Qualified Stock Option Plan (hereinafter referred to as the
"Plan") is to
advance the interests of the Company (as hereinafter defined)
and its
Subsidiaries (as hereinafter defined) by encouraging and
providing for the
acquisition of an equity interest in the Company by non-employee
directors,
officers and key employees through the grant of options to
purchase Common Stock
(as hereinafter defined). The Plan will enable the Company to
retain the
services of non-employee directors, officers and key employees
upon whose
judgment, interest, and special effort the successful conduct of
its operations
is largely dependent and to compete effectively with other
enterprises for the
services of non-employee directors, officers and key employees
as may be needed
for the continued improvement of its business.
1.02 Adoption and Term. The Plan shall become effective on
[ , 2007] and shall terminate on [ , 2017], or such earlier date
as shall
be determined by the Board (as hereinafter defined).
ARTICLE II.
DEFINITIONS
For purposes of the Plan, capitalized terms shall have the
following
meanings:
2.01 "Beneficiary" means an individual, trust or estate who
or
that, by will or the laws of descent and distribution, succeeds
to the rights
and obligations of the Participant under the Plan and an Option
Agreement upon
the Participant's death.
2.02 "Board" means the Board of Directors of the Company.
2.03 "Code" means the Internal Revenue Code of 1986, as
amended
from time to time, or any successor thereto. References to a
section of the Code
shall include that section and any comparable section or
sections of any future
legislation that amends, supplements, or supersedes said
section.
2.04 "Committee" means a committee of the Board as may be
appointed, from time to time, by the Board.
(a) The Board may appoint more than one Committee to
administer the Plan. If it appoints more than one Committee, one
Committee (the
"Compensation and Stock Option Committee") shall have the
authority to grant
Options to a Participant who is either, at the Date of Grant of
the Option, a
"covered employee" as defined in Section 162(m) or who is
subject to Section 16
of the Exchange Act; however, such Committee shall also have the
authority to
grant Options to other Participants. The Compensation and Stock
Option Committee
shall be composed of at least two directors of the Company, each
of whom is a
"non-employee director" as defined in Rule 16b-3 and an "outside
director"
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within the meaning of Section 162(m). If, however, at least two
of the Company's
directors are not both "non-employee directors" and "outside
directors," the
Board may grant Options to a Participant who is either a
"covered employee" or
subject to Section 16 of the Exchange Act, in which case the
Board may also
administer the Plan and the term "Committee" as used herein
shall also include
the Board. The other Committee (the "Select Committee") shall be
composed of at
least one director, who may be an officer of the Company. The
Select Committee
shall have authority to grant Options to a Participant who is
not, at the Date
of Grant of the Option, either a "covered employee" as defined
in Section 162(m)
or subject to Section 16 of the Exchange Act.
(b) The Board may, from time to time, appoint members of
each Committee in substitution for those members who were
previously appointed
and may fill vacancies, however caused, in the Committee.
(c) The Compensation and Stock Option Committee and the
Select Committee shall each have the power and authority to
administer the Plan
in accordance with Article III with respect to particular
classes of
Participants (as specified in Section 2.04(a)) and, when used
herein, the term
"Committee" shall mean either the Compensation and Stock Option
Committee or the
Select Committee if the Board appoints more than one Committee
to administer the
Plan. If, however, there is a conflict between the
determinations made by the
Compensation and Stock Option Committee and the Select
Committee, the
determinations made by the Compensation and Stock Option
Committee shall
control.
2.05 "Common Stock" means the Common Stock, par value $.001
per
share, of the Company.
2.06 "Company" means River Capital Group, Inc., a
corporation
organized under the laws of the State of Delaware, and its
successors.
2.07 "Date of Grant" means the date designated by the Committee
as
the date as of which it grants an Option, which shall not be
earlier than the
date on which the Committee approves the granting of such
Option.
2.08 "Disability" has the meaning specified in Section 22(e)(3)
of
the Code.
2.09 "Disability Date" means the date, as determined by the
Committee, as of which an Employee Participant has a
Disability.
2.10 "Employee Participant" means a Participant who is not a
Non-Employee Director.
2.11 "ERISA" means the Employee Retirement Income Security Act
of
1974, as amended.
2.12 "Exchange Act" means the Securities Exchange Act of 1934,
as
amended.
2.13 "Fair Market Value" of a share of Common Stock means, as
of
any given date, the closing sales price of a share of Common
Stock on such date
on the principal national securities exchange on which the
Common Stock is then
traded or, if the Common Stock is not then traded on a national
securities
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exchange, the closing sales price or, if none, the average of
the bid and asked
prices of the Common Stock on such date as reported on the
Over-The-Counter
Bulletin Board (the "OTCBB"); provided, however, that, if there
were no sales
reported as of such date, Fair Market Value shall be computed as
of the last
date preceding such date on which a sale was reported; provided,
further, that,
if any such exchange or quotation system is closed on any day on
which Fair
Market Value is to be determined, Fair Market Value shall be
determined as of
the first date immediately preceding such date on which such
exchange or
quotation system was open for trading. If the Common Stock is
not admitted to
trade on a securities exchange or quoted on OTCBB, the Fair
Market Value of a
share of Common Stock as of any given date shall be as
determined in good faith
by the Committee, in its sole and absolute discretion, which
determination may
be based on, among other things, the opinion of one or more
independent and
reputable appraisers qualified to value companies in the
Company's line of
business. Notwithstanding the foregoing, the Fair Market Value
of a share of
Common Stock shall never be less than par value per share.
2.14 "Initial Option Price" means the option price per share
of
Common Stock to be determined by the Board or the Committee at
the time when the
Options are first granted under the Plan, which shall be the
"Warrant Exercise
Price," as that term is defined in the Share Exchange and
Additional Note
Purchase Agreement dated as of August 3, 2007 between the
Company and The
Longview Fund, L.P., a California limited partnership.
2.15 "Non-Employee Director" means each member of the Board or
of
the Board of Directors of a Subsidiary, in each case who is not
an employee of
the Company or of any of its Subsidiaries.
2.16 "Option Agreement" means a written agreement between
the
Company and a Participant specifically setting forth the terms
and conditions of
an Option granted to a Participant under the Plan.
2.17 "Option" means any option to purchase Common Stock
granted
under the Plan to an Employee Participant or to a Non-Employee
Director. All
Options granted under the Plan shall be Options that do not
qualify as incentive
stock options under Section 422 of the Code.
2.18 "Participant" means any employee or Non-Employee Director
of
the Company or any of its Subsidiaries selected by the Committee
to receive an
Option under the Plan in accordance with Articles V and/or
VI.
2.19 "Plan" means the River Capital Group, Inc. 2007
Non-Qualified
Stock Option Plan as set forth herein, and as the same may be
amended from time
to time.
2.20 "Rule 16b-3" means Rule 16b-3 promulgated by the SEC
under
Section 16 of the Exchange Act and any successor rule.
2.21 "SEC" means the Securities and Exchange Commission.
2.22 "Section 162(m)" means Section 162(m) of the Code and
the
regulations thereunder.
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2.23 "Section 409A" means Section 409A of the Code and the
regulations thereunder.
2.24 "Securities Exchange Agreement" means the Securities
Exchange
and Additional Note Purchase Agreement, dated August 3, 2007,
entered into by
and between the Company and The Longview Fund, L.P.
2.25 "Subsidiary" means a company more than 50% of the
equity
interests of which are beneficially owned, directly or
indirectly, by the
Company.
2.26 "Termination of Employment" means, with respect to an
Employee
Participant, the voluntary or involuntary termination of a
Participant's
employment with the Company or any of its Subsidiaries for any
reason,
including, without limitation, death, Disability, retirement or
as the result of
the sale or other divestiture of the Participant's employer or
any similar
transaction in which the Participant's employer ceases to be the
Company or one
of its Subsidiaries. Whether entering military or other
government service shall
constitute Termination of Employment, and whether a Termination
of Employment is
a result of Disability, shall be determined in each case by the
Committee in its
sole and absolute discretion.
ARTICLE III.
ADMINISTRATION
3.01 Committee. The Plan shall be administered by the
Committee,
which shall have exclusive and final authority in each
determination,
interpretation, or other action affecting the Plan and its
Participants. The
Committee shall have the sole and absolute discretion to
interpret the Plan, to
establish and modify administrative rules for the Plan, to
select the
Non-Employee Directors, officers and other key employees to whom
Options may be
granted, to determine the terms and provisions of the respective
Option
Agreements (which need not be identical), to determine all
claims for benefits
under the Plan, to impose such conditions and restrictions on
Options as it
determines appropriate, to determine whether the shares
delivered on exercise of
Options will be treasury shares or will be authorized but
previously unissued
shares, and to take such steps in connection with the Plan and
Options granted
hereunder as it may deem necessary or advisable. No action of
the Committee will
be effective if it contravenes or amends the Plan in any
respect.
3.02 Actions of the Committee. Except when the "Committee" is
the
"Board" in the circumstance described in the fourth sentence of
Section 2.04(a),
all determinations of the Committee shall be made by a majority
vote of its
members. A majority of a Committee's members shall constitute a
quorum. Any
decision or determination reduced to writing and signed by all
of the members
shall be fully as effective as if it had been made by a majority
vote at a
meeting duly called and held. The Committee shall also have
express
authorization to hold Committee meetings by conference
telephone, or similar
communication equipment by means of which all persons
participating in the
meeting can hear each other.
ARTICLE IV.
SHARES OF COMMON STOCK
4.01 Number of Shares of Common Stock Issuable. Subject to
adjustments as provided in Section 7.05, [ ] shares of Common
Stock shall be
available for Options under the Plan. Any and all of such shares
may be issued
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pursuant to Options granted to Employee Participants or to
Non-Employee
Directors. The Common Stock to be offered under the Plan shall
be authorized and
unissued Common Stock, or issued Common Stock that shall have
been reacquired by
the Company and held in its treasury.
4.02 Number of Shares of Common Stock Awarded to any
Participant.
In the event the purchase price of an Option is paid, or related
tax or
withholding payments are satisfied, in whole or in part through
the delivery of
shares of Common Stock issuable in connection with the exercise
of the Option, a
Participant will be deemed to have received an Option with
respect to those
shares of Common Stock.
4.03 Shares of Common Stock Subject to Terminated Options.
The
Common Stock covered by any unexercised portions of terminated
Options may again
be subject to new Options under the Plan.
ARTICLE V.
PARTICIPATION
5.01 Eligible Participants. Employee Participants shall be
such
officers and other key employees of the Company or its
Subsidiaries, whether or
not directors of the Company, as the Committee, in its sole and
absolute
discretion, may designate from time to time. Non-Employee
Director Participants
shall be such Non-Employee Directors as the Committee, in its
sole and absolute
discretion, may designate from time to time. In making such
designation, the
Committee may take into account the nature of the services
rendered by the
officers, key employees and Non-Employee Directors, their
present and potential
contributions to the success of the Company and its
Subsidiaries, and such other
factors as the Committee, in its sole and absolute discretion,
may deem
relevant. The Committee's designation of a Participant in any
year shall not
require the Committee to designate such person to receive
Options in any other
year. The Committee shall consider such factors as it deems
pertinent in
selecting Participants and in determining the type and amount of
their
respective Options. A Participant may hold more than one Option
granted under
the Plan. During the term of the Plan, no Employee Participant
may receive
Options to purchase more than [ ] shares of Common Stock under
the Plan in any
given year.
ARTICLE VI.
STOCK OPTIONS
6.01 Grant of Option. Any Option granted under the Plan shall
have
such terms as the Committee may, from time to time, approve, and
the terms and
conditions of Options need not be the same with respect to each
Participant.
6.02 Terms of Options. Options granted under the Plan shall
be
subject to the following terms and conditions and shall be in
such form and
contain such additional terms and conditions, not inconsistent
with the terms of
the Plan, as the Committee shall deem desirable:
(a) Option Price. The Options under the Plan shall
consist of three tranches: one third (1/3) of the Options shall
be granted at
the Initial Option Price, one third (1/3) of the Options shall
be granted at an
option price equal to 130% of the Initial Option Price and one
third (1/3) of
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the
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