Exhibit 4.10
DEEP DOWN, INC.
2003 DIRECTORS, OFFICERS AND
CONSULTANTS
STOCK OPTION, STOCK WARRANT AND
STOCK AWARD PLAN
SECTION 1.
PURPOSE OF THE PLAN. The purpose of the 2003 Directors, Officers
and Consultants Stock Option, Stock Warrant and Stock Award Plan
("Plan") is to maintain the ability of DeepDown, Inc., a Nevada
corporation (the "Company") and its subsidiaries to attract and
retain highly qualified and experienced directors, employees and
consultants and to give such directors, employees and consultants a
continued proprietary interest in the success of the Company and
its subsidiaries. In addition the Plan is intended to encourage
ownership of common stock, $.01 par value ("Common Stock"), of the
Company by the directors, employees and consultants of the Company
and its Affiliates (as defined below) and to provide increased
incentive for such persons to render services and to exert maximum
effort for the success of the Company's business. The Plan provides
eligible employees and consultants the opportunity to participate
in the enhancement of shareholder value by the grants of warrants,
options, restricted common or convertible preferred stock,
unrestricted common or convertible preferred stock and other awards
under this Plan and to have their bonuses and/or consulting fees
payable in warrants, restricted common or convertible preferred
stock, unrestricted common or convertible preferred stock and other
awards, or any combination thereof. In addition, the Company
expects that the Plan will further strengthen the identification of
the directors, employees and consultants with the stockholders.
Certain options and warrants to be granted under this Plan are
intended to qualify as Incentive Stock Options ("ISOs") pursuant to
Section 422 of the Internal Revenue Code of 1986, as amended
("Code"), while other options and warrants and preferred stock
granted under this Plan will be nonqualified options or warrants
which are not intended to qualify as ISOs ("Nonqualified Options"),
either or both as provided in the agreements evidencing the options
or warrants described in Section 5 hereof and shares of preferred
stock. As provided in the designation described in
Section
7. Employees,
consultants and directors who participate or become eligible to
participate in this Plan from time to time are referred to
collectively herein as "Participants". As used in this Plan, the
term "Affiliates" means any "parent corporation" of the Company and
any "subsidiary corporation" of the Company within the meaning of
Code Sections 424(e) and (f), respectively.
SECTION 2.
ADMINISTRATION OF THE PLAN.
(a) Composition
of Committee. The Plan shall be administered by the Board of
Directors of the Company (the "Board"). When acting in such
capacity the Board is herein referred to as the "Committee," which
shall also designate the Chairman of the Committee. If the Company
is governed by Rule 16b-3 promulgated by the Securities and
Exchange Commission ("Commission") pursuant to the Securities
Exchange Act of 1934, as amended ("Exchange Act"), no director
shall serve as a member of the Committee unless he or she is a
"disinterested person" within the meaning of such Rule
16b-3.
(b) Committee
Action. The Committee shall hold its meetings at such times and
places as it may determine. A majority of its members shall
constitute a quorum, and 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 a majority of the
members shall be fully as effective as if it had been made by a
majority vote of its members at a meeting duly called and held. The
Committee may designate the Secretary of the Company or other
Company employees to assist the Committee in the administration of
the Plan, and may grant authority to such persons to execute award
agreements or other documents on behalf of the Committee and the
Company. Any duly constituted committee of the Board satisfying the
qualifications of this Section 2 may be appointed as the
Committee.
(c) Committee
Expenses. All expenses and liabilities incurred by the Committee in
the administration of the Plan shall be borne by the Company. The
Committee may employ attorneys, consultants, accountants or other
persons.
SECTION 3.
STOCK RESERVED FOR THE PLAN. Subject to adjustment as provided
in
Section
5(d)(xiii) hereof, the aggregate number of shares that may be
optioned, subject to conversion or issued under the Plan is
12,000,000 shares of Common Stock, warrants, options, preferred
stock or any combination thereof. The shares subject to the Plan
shall consist of authorized but unissued shares of Common Stock and
such number of shares shall be and is hereby reserved for sale for
such purpose. Any of such shares which may remain unsold and which
are not subject to issuance upon exercise of outstanding options or
warrants or conversion of outstanding shares of preferred stock at
the termination of the Plan shall cease to be reserved for the
purpose of the Plan, but until termination of the Plan or the
termination of the last of the options or warrants granted under
the Plan, whichever last occurs, the Company shall at all times
reserve a sufficient number of shares to meet the requirements of
the Plan. Should any option or warrant expire or be cancelled prior
to its exercise in full, the shares theretofore subject to such
option or warrant may again be made subject to an option, warrant
or shares of convertible preferred stock under the Plan.
Immediately
upon the grant of any option, warrant, shares of preferred stock or
award, the number of shares of Common Stock that may be issued or
optioned under the Plan will be increased. The number of shares of
such increase shall be an amount such that immediately after such
increase the total number of shares issuable under the Plan and
reserved for issuance upon exercise of outstanding options,
warrants or conversion of shares of preferred stock will equal 15%
of the total number of issued and outstanding shares of Common
Stock of the Company. Such increase in the number of shares subject
to the Plan shall occur without the necessity of any further
corporate action of any kind or character.
SECTION 4.
ELIGIBILITY. The Participants shall include directors, employees,
including officers, of the Company and its divisions and
subsidiaries, and consultants and attorneys who provide bona fide
services to the Company. Participants are eligible to be granted
warrants, options, restricted common or convertible preferred
stock, unrestricted common or convertible preferred stock and other
awards under this Plan and to have their bonuses and/or consulting
fees payable in warrants, restricted common or convertible
preferred stock, unrestricted common or convertible preferred stock
and other awards. A Participant who has been granted an option,
warrant or preferred stock hereunder may be granted an additional
option, warrant options, warrants or preferred stock, if the
Committee shall so determine.
SECTION 5.
GRANT OF OPTIONS OR WARRANTS.
(a) Committee
Discretion. The Committee shall have sole and absolute
discretionary authority (i) to determine, authorize, and designate
those persons pursuant to this Plan who are to receive warrants,
options, restricted common or convertible preferred stock, or
unrestricted common or convertible preferred stock under the Plan,
(ii) to determine the number of shares of Common Stock to be
covered by such grant or such options or warrants and the terms
thereof,
(iii) to
determine the type of Common Stock granted: restricted common or
convertible preferred stock, unrestricted common or convertible
preferred stock or a combination of restricted and unrestricted
common or convertible preferred stock, and (iv) to determine the
type of option or warrant granted: ISO, Nonqualified Option or a
combination of ISO and Nonqualified Options. The Committee shall
thereupon grant options or warrants in accordance with such
determinations as evidenced by a written option or warrant
agreement. Subject to the express provisions of the Plan, the
Committee shall have discretionary authority to prescribe, amend
and rescind rules and regulations relating to the Plan, to
interpret the Plan, to prescribe and amend the terms of the option
or warrant agreements (which need not be identical) and to make all
other determinations deemed necessary or advisable for the
administration of the Plan.
(b) Stockholder
Approval. All ISOs granted under this Plan are subject to, and may
not be exercised before, the approval of this Plan by the
stockholders prior to the first anniversary date of the Board
meeting held to approve the Plan, by the affirmative vote of the
holders of a majority of the outstanding shares of the Company
present, or represented by proxy, and entitled to vote thereat, or
by written consent in accordance with the laws of the State of
Texas, provided that if such approval by the stockholders of the
Company is not forthcoming, all options or warrants and stock
awards previously granted under this Plan other than ISOs shall be
valid in all respects.
(c) Limitation
on Incentive Stock Options and Warrants. The aggregate fair market
value (determined in accordance with Section 5(d)(ii) of this Plan
at the time the option or warrant is granted) of the Common Stock
with respect to which ISOs may be exercisable for the first time by
any Participant during any calendar year under all such plans of
the Company and its Affiliates shall not exceed
$3,000,000.
(d) Terms and
Conditions. Each option or warrant granted under the Plan shall be
evidenced by an agreement, in a form approved by the Committee,
which shall be subject to the following express terms and
conditions and to such other terms and conditions as the Committee
may deem appropriate:
(i) Option or
Warrant Period. The Committee shall promptly notify the Participant
of the option or warrant grant and a written agreement shall
promptly be executed and delivered by and on behalf of the Company
and the Participant, provided that the option or warrant grant
shall expire if a written agreement is not signed by said
Participant (or his agent or attorney) and returned to the Company
within 60 days from date of receipt by the Participant of such
agreement. The date of grant shall be the date the option or
warrant is actually granted by the Committee, even though the
written agreement may be executed and delivered by the Company and
the Participant after that date. Each option or warrant agreement
shall specify the period for which the option or warrant thereunder
is granted (which in no event shall exceed ten years from the date
of grant) and shall provide that the option or warrant shall expire
at the end of such period. If the original term of an option or
warrant is less than ten years from the date of grant, the option
or warrant may be amended prior to its expiration, with the
approval of the Committee and the Participant, to extend the term
so that the term as amended is not more than ten years from the
date of grant. However, in the case of an ISO granted to an
individual who, at the time of grant, owns stock possessing more
than 10 percent of the total combined voting power of all classes
of stock of the Company or its Affiliate ("Ten Percent
Stockholder"), such period shall not exceed five years from the
date of grant.
(ii) Option or
Warrant Price. The purchase price of each share of Common Stock
subject to each option or warrant granted pursuant to the Plan
shall be determined by the Committee at the time the option or
warrant is granted and, in the case of ISOs, shall not be less than
100% of the fair market value of a share of Common Stock on the
date the option or warrant is granted, as determined by the
Committee. In the case of an ISO granted to a Ten Percent
Stockholder, the option or warrant price shall not be less than
110% of the fair market value of a share of Common Stock on the
date the option or warrant is granted. The purchase price of each
share of Common Stock subject to a Nonqualified Option or Warrant
under this Plan shall be determined by the Committee prior to
granting the option or warrant. The Committee shall set the
purchase price for each share subject to a Nonqualified Option or
Warrant at either the fair market value of each share on the date
the option or warrant is granted, or at such other price as the
Committee in its sole discretion shall determine.
At the time a
determination of the fair market value of a share of Common Stock
is required to be made hereunder, the determination of its fair
market value shall be made by the Committee in such manner as it
deems appropriate.
(iii) Exercise
Period. The Committee may provide in the option or warrant
agreement that an option or warrant may be exercised in whole,
immediately, or is to be exercisable in increments. In addition,
the Committee may provide that the exercise of all or part of an
option or warrant is subject to specified performance by the
Participant.
(iv) Procedure
for Exercise. Options or warrants shall be exercised in the manner
specified in the option or warrant agreement. The notice of
exercise shall specify the address to which the certificates for
such shares are to be mailed. A Participant shall be deemed to be a
stockholder with respect to shares covered by an option or warrant
on the date specified in the option or warrant agreement . As
promptly as practicable, the Company shall deliver to the
Participant or other holder of the warrant, certificates for the
number of shares with respect to which such option or warrant has
been so exercised, issued in the holder's name or such other name
as holder directs; provided, however, that such delivery shall be
deemed effected for all purposes when a stock transfer agent of the
Company shall have deposited such certificates with a carrier for
overnight delivery, addressed to the holder at the address
specified pursuant to this
Section
6(d).
(v) Termination
of Employment. If an executive officer to whom an option or warrant
is granted ceases to be employed by the Company for any reason
other than death or disability, any option or warrant which is
exercisable on the date of such termination of employment may be
exercised during a period beginning on such date and ending at the
time set forth in the option or warrant agreement; provided,
however, that if a Participant's employment is terminated because
of the Participant's theft or embezzlement from the Company,
disclosure of trade secrets of the Company or the commission of a
willful, felonious act while in the employment of the Company (such
reasons shall hereinafter be collectively referred to as "for
cause"), then any option or warrant or unexercised portion thereof
granted to said Participant shall expire upon such termination of
employment. Notwithstanding the foregoing, no ISO may be exercised
later than three months after an employee's termination of
employment for any reason other than death or
disability.
(vi) Disability
or Death of Participant. In the event of the determination of
disability or death of a Participant under the Plan while he or she
is employed by the Company, the options or warrants previously
granted to him may be exercised (to the extent he or she would have
been entitled to do so at the date of the determination of
disability or death) at any time and from time to time, within a
period beginning on the date of such determination of disability or
death and ending at the time set forth in the option or warrant
agreement, by the former employee, the guardian of his estate, the
executor or administrator of his estate or by the person or persons
to whom his rights under the option or warrant shall pass by will
or the laws of descent and distribution, but in no event may the
option or warrant be exercised after its expiration under the terms
of the option or warrant agreement. Notwithstanding the foregoing,
no ISO may be exercised later than one year after the determination
of disability or death. A Participant shall be deemed to be
disabled if, in the opinion of a physician selected by the
Committee, he or she is incapable of performing services for the
Company of the kind he or she was performing at the time the
disability occurred by reason of any medically determinable
physical or mental impairment which can be expected to result in
death or to be of long, continued and indefinite duration. The date
of determination of disability for purposes hereof shall be the
date of such determination by such physician.
(vii)
Assignability. An option or warrant shall be assignable or
otherwise transferable, in whole or in part, by a Participant as
provided in the option, warrant or designation of the series of
preferred stock.
(viii)
Incentive Stock Options. Each option or warrant agreement may
contain such terms and provisions as the Committee may determine to
be necessary or desirable in order to qualify an option or warrant
designated as an incentive stock option.
(ix) Restricted
Stock Awards. Awards of restricted stock under this Plan shall be
subject to all the applicable provisions of this Plan, including
the following terms and conditions, and to such other terms and
conditions not inconsistent therewith, as the Committee shall
determine:
(A) Awards of
restricted stock may be in addition to or in lieu of option or
warrant grants. Awards may be conditioned on the attainment of
particular performance goals based on criteria established by the
Committee at the time of each award of restricted stock. During a
period set forth in the agreement (the "Restriction Period"), the
recipient shall not be permitted to sell, transfer, pledge, or
otherwise encumber the shares of restricted stock; except that such
shares may be used, if the agreement permits, to pay the option or
warrant price pursuant to any option or warrant granted under this
Plan, provided an equal number of shares delivered to the
Participant shall carry the same restrictions as the shares so
used. Shares of restricted stock shall become free of all
restrictions if during the Restriction Period, (i) the recipient
dies, (ii) the recipient's directorship, employment, or consultancy
terminates by reason of permanent disability, as determined by the
Committee, (iii) the recipient retires after attaining both 59 1/2
years of age and five years of continuous service with the Company
and/or a division or subsidiary, or (iv) if provided in the
agreement, there is a "change in control" of the Company (as
defined in such agreement). The Committee may require medical
evidence of permanent disability, including medical examinations by
physicians selected by it. Unless and to the extent otherwise
provided in the agreement, shares of restricted stock shall be
forfeited and revert to the Company upon the recipient's
termination of directorship, employment or consultancy during the
Restriction Period for any reason other than death, permanent
disability, as determined by the Committee, retirement after
attaining both 59 1/2 years of age and five years of continuous
service with the Company and/or a subsidiary or division, or, to
the extent provided in the agreement, a "change in control" of the
Company (as defined in such agreement), except to the extent the
Committee, in its sole discretion, finds that such forfeiture might
not be in the best interests of the Company and, therefore, waives
all or part of the application of this provision to the restricted
stock held by such recipient. Certificates for restricted stock
shall be registered in the name of the recipient but shall be
imprinted with the appropriate legend and returned to the Company
by the recipient, together with a stock power endorsed in blank by
the recipient. The recipient shall be entitled to vote shares of
restricted stock and shall be entitled to all dividends paid
thereon, except that dividends paid in Common Stock or other
property shall also be subject to the same restrictions.
(B) Restricted
Stock shall become free of the foregoing restrictions upon
expiration of the applicable Restriction Period and the Company
shall then deliver to the recipient Common Stock certificates
evidencing such stock. Restricted stock and any Common Stock
received upon the expiration of the restriction period shall be
subject to such other transfer restrictions and/or legend
requirements as are specified in the applicable
agreement.
(x) Bonuses and
Past Salaries and Fees Payable in Unrestricted Stock.
(A) In lieu of
cash bonuses otherwise payable under the Company's or applicable
division's or subsidiary's compensation practices to employees and
consultants eligible to participate in this Plan, the Committee, in
its sole discretion, may determine that such bonuses shall be
payable in unrestricted Common Stock or partly in unrestricted
Common Stock and partly in cash. Such bonuses shall be in
consideration of services previously performed and as an incentive
toward future services and shall consist of shares of unrestricted
Common Stock subject to such terms as the Committee may determine
in its sole discretion. The number of shares of unrestricted Common
Stock payable in lieu of a bonus otherwise payable shall be
determined by dividing such bonus amount by the fair market value
of one share of Common Stock on the date the bonus is payable, with
fair market value determined as of such date in accordance with
Section 5(d)(ii).
(B) In lieu of
salaries and fees otherwise payable by the Company to employees,
attorneys and consultants eligible to participate in this Plan that
were incurred for services rendered during, prior or after the year
of 2003, the Committee, in its sole discretion, may determine that
such unpaid salaries and fees shall be payable in unrestricted
Common Stock or partly in unrestricted Common Stock and partly in
cash. Such awards shall be in consideration of services previously
performed and as an incentive toward future services and shall
consist of shares of unrestricted Common Stock subject to such
terms as the Committee may determine in its sole discretion. The
number of shares of unrestricted Common Stock payable in lieu of a
salaries and fees otherwise payable shall be determined by dividing
each calendar month's of unpaid salary or fee amount by the average
trading value of the Common Stock for the calendar month during
which the subject services were provided.
(xi) No Rights
as Stockholder. No Participant shall have any rights as a
stockholder with respect to shares covered by an option or warrant
until the option or warrant is exercised as provided in
clause
(d)
above.
(xii)
Extraordinary Corporate Transactions. The existence of outstanding
options or warrants shall not affect in any way the right or power
of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, exchanges, or
other changes in the Company's capital structure or its business,
or any merger or consolidation of the Company, or
