Amended and Restated ADS Media Group, Inc. 2006 Stock Option and Incentive Plan

EXHIBIT 10.1

 

Table of Contents

 

 

 

 

Amended and Restated

ADS Media Group, Inc.

2006 Stock Option and Incentive Plan

 

This Amended and Restated Plan is a complete substitute for the 2006 Stock Option and Incentive Plan originally adopted by the Board of Directors of the Company as of June 16, 2006. The only amendment is to revise the maximum number of Stock Awards that may be granted under the Plan to be consistent with the original intent of the Company.

 

The Company adopted the 2006 Stock Option and Incentive Plan in order to provide a means by which selected Employees, Directors of, and Consultants to the Company, or its Affiliates, could receive options to purchase Common Stock of the Company, and other equity interests in the Company. Subject to the approval of the stockholders of the Company, the Company has initiated the 2006 Stock Option and Incentive Plan in the form contained here in order to provide a means by which options, stock bonuses, rights to purchase restricted stock and stock appreciation rights could be received by such individuals.

 

1.     Purposes of this Plan

 

The purpose of the Plan is to provide a means by which selected Employees and Directors of, and Consultants to the Company, or its Affiliates, may be given an opportunity to benefit from increases in value of the stock of the Company through the granting of: (i) Incentive or Nonstatutory Stock Options, (ii) stock bonuses, (iv) rights to purchase restricted stock, and (v)

 

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stock appreciation rights, all as defined below.

 

The Company, by means of the Plan, seeks to retain the services of persons who are now Employees, Directors of, or Consultants to the Company, or its Affiliates, to secure and retain the services of new Employees, Directors and Consultants, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates.

 

The Company intends that the Stock Awards issued under the Plan shall, in the discretion of the Board or any Committee to which responsibility for administration of the Plan has been delegated under Subsection 3(b)(v) be either: (i) Options granted pursuant to Section 6, (ii) Stock Bonuses or Rights to purchase restricted stock granted under Section 7, or (iii) Stock Appreciation Rights granted under Section 8. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and in such form as issued under Section 6, and a separate certificate or certificates will be issued for shares purchased on exercise of each type of Option.

 

2.     Definitions

 

Affiliate means any parent corporation or subsidiary corporation, whether now or hereafter existing, as those terms are defined in Sections 424(e) and 424(f) of the Code.

 

Board means the Board of Directors of the Company.

 

Cause means the occurrence of any of the following: (i) conviction of the Covered Service Provider of any felony involving fraud or act of dishonesty against the Company or Affiliate; (ii) conduct by the Covered Service Provider which, based upon good faith and reasonable factual investigation and determination of the Company (or, if the Covered Service Provider is a named executive officer of the Board as defined in Item 402(a)(3) of Regulation S-K of the Securities and Exchange Commission,), demonstrates gross unfitness to serve; (iii) intentional, material violation by the Covered Service Provider to the Company or Affiliate, provided that in the event that any of the foregoing events is capable of being cured, the Company shall provide written notice to the Covered Service Provider describing the nature of such event and the Covered Service Provider shall thereafter have thirty (30) days to cure such event; or (iv) the violation by a Covered Service Provider of the provisions of any non-competition agreement, confidentiality agreement, or proprietary rights agreement.

 

Change in Control means: (i) a dissolution, liquidation or sale of substantially (fifty percent (50%) or greater) all of the of the assets of the Company; (ii) a merger or consolidation in which the Company is not the surviving corporation; (iii) a reverse merger in which the Company is the surviving corporation; or (iv) over fifty percent (50%) of the Board of Directors are newly appointed within any consecutive twelve (12) month period.

 

Code means the Internal Revenue Code of 1986, 26 U.S.C. 1, et. seq., as amended.

 

Committee means a committee appointed by the Board under Subsection 3(B)(5) of this Plan.

 

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Common Stock means the common stock, par value $0.001 per share of the Company.

 

Company means ADS Media Group, Inc., a Utah corporation.

 

Concurrent Stock Appreciation Right or Concurrent Right means a right granted under Section 8 of the Plan.

 

Consultant means any individual, partnership, limited liability company, corporation, joint stock company, trust, joint venture, association or un-incorporated organization, or other form of business organization, including advisors and service providers, engaged by the Company or an Affiliate to render services and who is compensated for such services. However, Consultant shall not include Directors who are paid only a director's fee by the Company or who are not compensated by the Company for their services as Directors.

 

Constructive Termination means that a Covered Executive voluntarily terminates his or her service after any of the following are undertaken without the Covered Executive's express written consent: (i) the assignment to the Covered Executive of any duties or responsibilities which result in any diminution or adverse change of the Covered Executive's position, responsibility, authority, status, circumstances or scope of service as in effect immediately prior to a Change in Control of the Company, or a change in the Covered Executive's title or office as in effect immediately prior to a Change in Control of the Company, or any removal of the Covered Executive from or any failure to re-elect the Covered Executive to any of such positions, except in connection with the termination of the Covered Executive's service on account of death, disability, retirement, for Cause, or any voluntary termination of service by the Covered Executive, other than Constructive Termination; (ii) a reduction by the Company in the Covered Executive's annual base compensation; (iii) any failure by the Company to continue in effect any benefit plan or arrangement, including incentive plans or plans to receive securities of the Company, in which the Covered Executive is participating or entitled under an employment agreement at the time of a Change in Control of the Company, or the taking of any action by the Company which would adversely affect the Covered Executive's participation in or reduce the Covered Executive's benefits or deprive the Covered Executive of any fringe benefit enjoyed by the Covered Executive at the time of a Change in Control of the Company, provided, however, that the Covered Executive may not incur a Constructive Termination following a Change in Control of the Company if the Company offers a range of benefit plans and programs which, taken as a whole, are comparable to the benefit plans and programs available to the Covered Executive immediately preceding a Change in Control; (iv) a relocation of the Covered Executive or relocation of the Company's offices to a location more than twenty five(25) miles from the location at which the Covered Executive performed his or her duties prior to a Change in Control of the Company, except for required travel by the Covered Executive on the Company's or any Affiliate's business to an extent substantially consistent with the Covered Executive's business travel obligations at the time of a Change in Control of the Company;(v) any breach by the Company of any provision of this Plan; or,(vi) any failure by the Company to obtain an assumption of this Plan by any successor or assign of the Company.

 

Continuous Status as an Employee, Director, or Consultant means the employment of an

 

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Employee or relationship as a Director of or Consultant to the Company is not interrupted or terminated. The Board, in its sole discretion, may determine whether Continuous Status as an Employee, Director or Consultant shall be considered interrupted in the case of: (i) any leave of absence approved by the Board, including sick leave, military leave, or any other personal leave; or (ii) transfers between locations of the Company or between the Company, Affiliates or their successors.

 

Covered Executive means the Company's chief executive officer the other compensated officers of the Company for whom total compensation is required to be reported to the Company stockholders under the Exchange Act, as determined for the purposes of Section 162(m) of the Code.

 

Covered Service Provider means Employees of the Company or an Affiliate, members of the Board of Directors of the Company or an Affiliate, and Consultants providing services to the Company or an Affiliate, as of the occurrence of a transaction or event constituting a Change in Control.

 

Covered Termination means either an involuntary termination without Cause or a Constructive Termination.

 

Director means a member of the Board.

 

Non-Employee Director shall have the meaning contained in SEC Rule 16b3-3(b)(3)(i)..

 

Employee means any person, including Officers and Directors, employed by the Company or any Affiliate of the Company. Neither service as a Director nor payment of a directors’ fee by the Company shall be sufficient to constitute "employment" by the Company.

 

Exchange Act means the Securities Exchange Act of 1934, as amended.

 

Fair Market Value means, as of any date, the value of the Common Stock of the Company determined as follows:

 

1.            If the common stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market (NASDAQ), the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in common stock) on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Board deems reliable;

 

2.            If the Common Stock is quoted on the Nasdaq National Market (but not on the National Market System thereof) or is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a share of common stock shall be the mean between the bid and asked prices for the common stock on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the

 

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Board deems reliable;

 

3.            In the absence of an established market for the common stock, the Fair Market Value shall be determined in good faith by the Board.

 

Incentive Stock Option means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

 

Independent Stock Appreciation Right means a right granted pursuant to Section 8 of the Plan.

 

Nonstatutory Stock Option means any option to purchase Common Stock under this Plan that does not qualify as an Incentive Stock Option (including any option to purchase Common Stock originally designated as or intended to qualify as an Incentive Stock Option).

 

Officer means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

 

Option means a stock option granted pursuant to the Plan.

 

Option Agreement means a written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan.

 

Optionee means any Employee, Director, or Consultant who holds an outstanding Option.

 

Outside Director means a Director who (i) is not a current employee of the Company or an "affiliated corporation" (within the meaning of the treasury regulations, adopted by the Treasury in respect of the Code), (ii) is not a former employee of the Company or an "affiliated corporation" receiving compensation for prior services (other than benefits under a tax qualified pension plan), (iii) was not an officer of the Company or an "affiliated corporation" at any time, (iv) and is not currently receiving direct or indirect remuneration from the Company or an "affiliated corporation" for services in any capacity other than as a Director, or (v) is otherwise considered an "outside director" for purposes of Section 162(m) of the Code.

 

Plan means this ADS Media Group, Inc., 2006 Stock Option and Incentive Plan, as hereby amended and restated.

 

Rule 16b-3 means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, and in effect when discretion is being exercised with respect to the Plan.

 

Securities Act means the Securities Act of 1933 (or any successor), as amended from time to time.

 

Stock Appreciation Right means any of the various types of rights that may be granted under Section 8 of the Plan.

 

 

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Stock Award means any right granted under the Plan, including any Option, any stock bonus, any right to purchase restricted stock, and any Stock Appreciation Right.

 

Stock Award Agreement means a written agreement between the Company and a holder of a Stock Award, evidencing the terms and conditions of an individual Stock Award, and includes an Option Agreement, a stock bonus or restricted stock purchase agreement. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan.

 

Tandem Stock Appreciation Right or Tandem Right means a right granted under Section 8 of the Plan.

 

3.     Administration

 

A.             The Board shall administer the Plan unless and until the Board delegates administration to a Committee, as provided in Subsection 3(B)(5).

 

B.             The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

 

1.            To determine from time to time which of the persons eligible under the Plan shall be granted Stock Awards; when and how each Stock Award shall be granted; the types and combinations of Stock Awards; the provisions of each Stock Award granted (which need not be identical), including the time or times when a person shall be permitted to receive stock pursuant to a Stock Award; whether a person shall be permitted to receive stock upon exercise of an Independent Stock Appreciation Right; and the number of shares with respect to which a Stock Award shall be granted to each such person;

 

2.            To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission, or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective;

 

 

4.            Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company; and

 

5.            The Board may delegate administration of the Plan to a Committee composed of not less than one (1) member, all of the members of which Committee shall be Non-Employee Directors. If the Board delegates administration to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers possessed by the Board (and references in this Plan to the Board shall include the Committee). However, this delegation by the Board is subject to such resolutions, adopted from time to time by the Board, that are consistent with the provisions of the Plan. The Board may abolish the Committee at any time and revest the administration of the Plan in the Board. The Committee’s administration may

 

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include the authority to grant Stock Awards to eligible persons who at the time of the Award:

 

 

b.             Are either (i) not Covered Executives and not expected to be Covered Employees at the time of recognition of income resulting from such Stock Award, or (ii) not persons with respect to whom the Company wishes to avoid the application of Section 162(m) of the Code.

 

C.             Any requirement that an administrator of the Plan be a Non-Employee Director shall not apply if the Board or the Committee expressly declares that such requirement shall not apply. Any Non-Employee Director shall otherwise comply with the requirements of Rule 16b-3.

 

4.     Shares Subject To the Plan

 

A.             Subject to the provisions of Section 13 relating to adjustments upon changes in stock, the aggregate stock that may be issued pursuant to Stock Awards shall not exceed 21,788,992 shares, provided, that the Company has agreed not to issue Stock Awards in excess of 40% of the Company’s Common Stock outstanding immediately after the final closing of the securities offering made pursuant to the Amended and Restated Common Stock and Warrant Purchase Agreement originally entered by the Company on June 16, 2006 without the consent of the Purchasers in that offering. If any Stock Award shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised in full, the stock not acquired under such Stock Award shall revert to and again become available for issuance under the Plan. Shares subject to Stock Appreciation Rights exercised in accordance with Section 8 of the Plan shall not be available for subsequent issuance under the Plan.

 

B.             The stock subject to the Plan may be unissued Common Stock or reacquired Common Stock, bought on the market or otherwise.

 

5.     Eligibility

 

A.             Stock Awards may be granted only to Employees, Directors, or Consultants as designated by the Board, or Committee, provided however that only Employees of the Company or an Affiliate may be granted Incentive Stock Options and Stock Appreciation Rights.

 

B.             A Director shall in no event be eligible for the benefits of the Plan unless, at the time discretion is exercised in the selection of the Director as a person to whom Stock Awards may be granted, or in the determination of the number of shares of Common Stock which may be covered by Stock Awards granted to the Director:(i) the Board has delegated its discretionary authority over the Plan to a Committee which consists solely of Non-Employee Directors; or (ii) the Plan otherwise complies with the requirements of Rule 16b-3. The Board shall otherwise comply with the requirements of Rule 16b-3. This subsection 5(b) shall not apply if the Board or Committee expressly declares that it shall not apply.

 

 

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Incentive Stock Options shall be granted to any Optionee if:

 

1.            The Common Stock covered by any Incentive Stock Options (and any incentive stock options granted under any other plans of the Company or its Affiliate) has an aggregate Fair Market Value in excess of $100,000.00;

 

2.            In any calendar year, such exercise constitutes a first-time exercise by that individual; and

 

3.             at the time of grant, the grantee owns or is deemed to own (under Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates. However, if the exercise price of such Incentive Stock Option is at least one hundred ten per cent (110%) of the Fair Market Value of such stock at the date of grant and the Incentive Stock Option is not exercisable after the expiration of five (5) years from the date of grant, such grantee shall be eligible for the grant of the Incentive Stock Option.

 

For this purpose, the Fair Market Value of the Shares shall be determined as of the dates on which the Incentive Stock Options are granted. It is intended that the limitation on Incentive Stock Options provided in this Subsection 5.C be the maximum limitation on Stock Options that may be considered Incentive Stock Options pursuant to the Code.

 

6.     Option Provisions

 

Each Optionee shall enter into an Option Agreement with the Company setting forth the terms and conditions for the Options granted. In the event that any Option designated as an Incentive Stock Option does not qualify as an Incentive Stock Option, either because of its provisions, the failure of the stockholders of the Company to authorize the issuance of Incentive Stock Options, the time or manner of its exercise or otherwise, such Option, or portion thereof which does not qualify, shall be deemed to constitute a Nonstatutory Stock Option. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option Agreement or otherwise) the substance of each of the following provisions:

 

A.             Term: No Option shall be exercisable after the expiration of ten (10) years from the date granted.

 

B.             Price: The exercise price of each Option shall be not less than one hundred percent (100%) of the Fair Market Value of the stock subject to the Option