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Exhibit 10.1    
    


 
 

VISTULA COMMUNICATIONS SERVICES, INC.    
    
    2004 Stock Incentive Plan    
    


        1.    Purpose.    The purpose of this plan (the "Plan") is to secure for Vistula
Communications Services, Inc., a Delaware corporation (the "Company"), and its shareholders the benefits arising from capital stock ownership by employees, officers and directors of, and
consultants or advisors to, the Company and its parent and subsidiary corporations who are expected to contribute to the Company's future growth and success. Under the Plan recipients may be awarded
both (i) Options (as defined in Section 2.1) to purchase the Company's common stock, $.001 par value per share ("Common Stock"), and (ii) shares of the Company's Common Stock
("Restricted Stock Awards"). Except where the context otherwise requires, the term "Company" shall include all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f)
of the Internal Revenue Code of 1986, as amended or replaced from time to time (the "Code"). Those provisions of the Plan which make express reference to Section 422 of the Code shall apply
only to Incentive Stock Options (as that term is defined in the Plan). 


        2.    Types of Awards and Administration.    



        2.1    Options.    Options granted pursuant to the Plan ("Options") shall be authorized by
action of the Board of Directors of the Company and may be either incentive stock options ("Incentive Stock Options") meeting the requirements of Section 422 of the Code or
non-statutory Options which are not intended to meet the requirements of Section 422 of the Code. All Options when granted are intended to be non-statutory Options,
unless the applicable Option Agreement (as defined in Section 5.1) explicitly states that the Option is intended to be an Incentive Stock Option. If an Option is intended to be an Incentive
Stock Option, and if for any reason such Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option (or portion thereof)
shall be regarded as a non-statutory Option appropriately granted under the Plan provided that such Option (or portion thereof) otherwise
meets the Plan's requirements relating to non-statutory Options. The vesting of Options may be conditioned upon the completion of a specified period of employment with the Company and/or
such other conditions or events as the Board may determine. The Board may also provide that Options are immediately exercisable subject to certain repurchase rights in the Company dependent upon the
continued employment of the optionee and/or such other conditions or event as the Board may determine. 


        2.2    Restricted Stock Awards.    The Board in its discretion may grant Restricted Stock
Awards, entitling the recipient to acquire, for a purchase price determined by the Board, shares of Common Stock subject to such restrictions and conditions as the Board may determine at the time of
grant ("Restricted Stock"), including continued employment and/or achievement of pre-established performance goals and objectives. 


        2.3    Administration.    The Plan shall be administered by the Board of Directors of the
Company, whose construction and interpretation of the terms and provisions of the Plan shall be final and conclusive. The Board of Directors may in its sole discretion issue Restricted Stock and grant
Options to purchase shares of Common Stock, and issue shares upon exercise of such Options as provided in the Plan. The Board shall have authority, subject to the express provisions of the Plan, to
construe the respective Restricted Stock Agreements (as defined in Section 5.2), Option Agreements and the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective Restricted Stock Agreements and Option Agreements, and to make all other determinations in the judgment of the Board of Directors necessary or
desirable for the administration of the Plan. The Board of Directors may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Restricted Stock Agreement or
Option Agreement in the manner and to the extent it shall deem 








 




expedient
to carry the Plan into effect and it shall be the sole and final judge of such expediency. No director or person acting pursuant to authority delegated by the Board of Directors shall be
liable for any action or determination under the Plan made in good faith. The Board of Directors may, to the full extent permitted by or consistent with applicable laws or regulations (including,
without limitation, applicable state law), delegate any or all of its powers under the Plan to a committee (the "Committee") appointed by the Board of Directors, and if the Committee is so appointed
all references to the Board of Directors in the Plan shall mean and relate to such Committee. 




        3.    Eligibility.    Options may be granted, and Restricted Stock may be issued, to persons
who are, at the time of such grant or issuance, employees, officers or directors of, or consultants or advisors to, the Company; provided, that the
class of persons to whom Incentive Stock Options may be granted shall be limited to employees of the Company. 


        4.    Stock Subject to Plan.    Subject to adjustment as provided in Section 14 below,
the maximum number of shares of Common Stock of the Company which may be issued under the Plan is 6,000,000 shares. If an Option shall expire or terminate for any reason without having been exercised
in full, the unpurchased shares subject to such Option shall again be available for subsequent Option grants or Restricted Stock Awards under the Plan. If shares of Restricted Stock shall be forfeited
to, or otherwise repurchased by, the Company pursuant to a Restricted Stock Agreement, such purchased shares shall again be available for subsequent Option grants or Restricted Stock Awards under the
Plan. If shares issued are tendered to the Company in payment of the exercise price of an Option, such tendered shares shall again be available for subsequent Option grants or Restricted Stock Awards
under the Plan. 


        5.    Forms of Restricted Stock Agreements and Option Agreements.    



        5.1    Option Agreement.    As a condition to the grant of an Option, each recipient of an
Option shall execute an option agreement ("Option Agreement") in such form not inconsistent with the Plan as may be approved by the Board of Directors. Such Option Agreements may differ among
recipients. 


        5.2    Restricted Stock Agreement.    As a condition to the issuance of Restricted Stock, each
recipient thereof shall execute an agreement ("Restricted Stock Agreement") in such form not inconsistent with the Plan as may be approved by the Board of Directors. Such Restricted Stock Agreements
may differ among recipients and need not be entitled "Restricted Stock Agreements." 


        5.3    "Lock-Up" Agreement.    Unless the Board of Directors specifies otherwise,
each Restricted Stock Agreement and Option Agreement shall provide that upon the request of the Company or the managing underwriter(s), the holder of any Option or the purchaser of any Restricted
Stock shall, in connection with any registration of securities of the Company under the United States Securities Act of 1933, as amended from time to time (the "Act"), agree in writing that for a
period of time (not to exceed 180 days) from the effective date of the registration statement under the Act for such offering, the holder or purchaser will not sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of any shares of the Company's Common Stock owned or controlled by him or her. 




        6.    Purchase Price.    



        6.1    General.    The purchase price per share of Restricted Stock and per share of stock
deliverable upon the exercise of an Option shall be determined by the Board of Directors, provided, however, that in the case of an Incentive Stock
Option, the exercise price shall not be less than 100% of the fair market value of such stock, as determined by the Board of Directors, at the time of grant of such Option, or less than 110% of such
fair market value in the case of Options described in Section 11.2. 



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        6.2    Payment of Purchase Price.    Option Agreements may provide for the payment of the
exercise price by delivery of cash or a check to the order of the Company in an amount equal to the exercise price of such Options, or, to the extent provided in the applicable Option Agreement, by
one of the following methods: 



        (i)    by
delivery to the Company of shares of Common Stock of the Company that either have been purchased by the optionee on the open market, or have been beneficially owned
by the optionee for a period of at least six months and are not then subject to restriction under any Company plan ("mature shares"); such surrendered shares shall have a fair market value equal in
amount to the exercise price of the Options being exercised; 


        (ii)   a
personal recourse note issued by the optionee to the Company in a principal amount equal to such aggregate exercise price and with such other terms, including
interest rate and maturity, as the Company may determine in its discretion; provided, however, that the interest rate borne by such note shall not be
less than the lowest applicable federal rate, as defined in Section 1274(d) of the Code; 


        (iii)  if
the class of Common Stock is registered under the Securities Exchange Act of 1934 at such time, subject to rules as may be established by the Board, by delivery to
the Company of a properly executed exercise notice along with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the
purchase price; 


        (iv)  by
reducing the number of Option shares otherwise issuable to the optionee upon exercise of the Option by a number of shares of Common Stock having a fair market value
equal to such aggregate exercise price; provided, however, that the optionee otherwise holds an equal number of mature shares; or 


        (v)   by
any combination of such methods of payment. 





        The
fair market value of any shares of the Company's Common Stock or other non-cash consideration which may be delivered upon exercise of an Option shall be determined by the
Board of Directors. Restricted Stock Agreements may provide for the payment of any purchase price in any manner approved by the Board of Directors at the time of authorizing the issuance thereof. 


        7.    Option Period.    Each Option and all rights thereunder shall expire on such date as
shall be set forth in the applicable Option Agreement, provided that, in the case of an Incentive Stock Option, such date shall not be later than
10 years after the date on which the Option is granted (or five years in the case of Options described in Section 11.2), and, in the case of non-statutory Options, not later
than 10 years after the date on which the Option is granted, and, in either case, shall be subject to earlier termination as provided in the Plan. 


        8.    Exercise of Options.    Each Option shall be exercisable either in full or in
installments at such time or times and during such period as shall be set forth in the applicable Option Agreement, subject to the provisions of the Plan. 



        9.    Nontransferability of Options.    Except as the Board may provide with respect to a
non-statutory Option, no Option shall be assignable or transferable by the person to whom it is granted, either voluntarily or by operation of law, except by will or the laws of descent
and distribution. During the life of an optionee, an Option held by him or her shall be exercisable only by the optionee (including any permitted transferee in the case of a non-statutory
Option). 


        10.    Effect of Termination.    No Incentive Stock Option may be exercised unless, at the
time of such exercise, the optionee is, and has continuously since the date of grant of his or her Incentive Stock 


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Option
been, employed by the Company, except that, unless the applicable Option Agreement expressly provides otherwise: 



        10.1 the
Incentive Stock Option may be exercised within the period of sixty days (or within such lesser period as may be specified in the applicable Option Agreement) after
the date the optionee's employment with the Company terminates other than for death, disability or termination for cause; 


        10.2 if
the optionee dies while in the employ of the Company, the Incentive Stock Option may be exercised by the person to whom it is transferred by will or the laws of
descent and distribution within the period of one year after the date of death (or within such lesser period as may be specified in the applicable Option Agreement); 


        10.3 if
the optionee becomes disabled (within the meaning of Section 22(e)(3) of the Code or any successor provision thereto) while in the employ of the Company, the
Incentive Stock Option may be exercised within the period of one year after the date the optionee ceases to be such an employee because of such disability (or within such lesser period as may be
specified in the applicable Option Agreement); and 


        10.4 if
the optionee's employment with the Company is terminated by the Company for cause, the Incentive Stock Option shall terminate immediately. Unless the applicable
Option Agreement expressly provides otherwise, the term "cause" shall mean (a) any material breach by the optionee of any agreement to which the optionee and the Company are both parties,
(b) any act (other than retirement) or omission to act by the optionee which may have a material and adverse effect on the Company's business or on the optionee's ability to perform services
for the Company, including, without limitation, the commission of any crime (other than minor traffic violations), or (c) any material misconduct or material neglect of duties by the optionee
in connection with the business or affairs of the Company or any Parent, Subsidiary or affiliate of the Company; 




provided, however, that in no event may any Incentive Stock Option be exercised after the expiration date of the Incentive Stock Option. For all
purposes of the Plan and any Incentive Stock Option granted hereunder, "employment" shall be defined in accordance with the provisions of Section 1.421-7(h) of the Income Tax
Regulations (or any successor regulations). 


        A
non-statutory Option granted to an employee shall be subject to the foregoing provisions of this Section 10 as if it were an Incentive Stock Option, but a
non-statutory Option may also be exercised so long as the optionee maintains a relationship with the Company as a director, consultant or adviser, unless the Option Agreement provides
otherwise. 


        11.    Incentive Stock Options.    Options which are intended to be Incentive Stock Options
shall be subject to the following additional terms and conditions: 



        11.1    Express Designation.    All Incentive Stock Options shall, at the time of grant, be
specifically designated as such in the Option Agreement covering such Incentive Stock Options. 


        11.2    10% Shareholder.    If any employee to whom an Incentive Stock Option is to be granted
is, at the time of the grant of such Option, the owner of stock possessing more than 10% of the total combined voting power of all classes of stock of the Company (after taking into account the
attribution of stock ownership rules of Section 424(d) of the Code), then the following special provisions shall be applicable to the Incentive Stock Option granted to such individual: 



        11.2.1     the
purchase price per share of the Common Stock subject to such Incentive Stock Option shall not be less than 110% of the fair market value of one
share of Common Stock at the time of grant; and 


        11.2.2     the
option exercise period shall not exceed five years from the date of grant. 




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        11.3    Dollar Limitation.    For so long as the Code shall so provide, Options granted to any
employee under the Plan (and any other incentive stock option plans of the Company) which are intended to constitute Incentive Stock Options shall not constitute Incentive Stock Options to the extent
that such Options, in the aggregate, become exercisable for the first time in any one calendar year for shares of Common Stock with an aggregate fair market value (determined as of the respective date
or dates of grant) of more than $100,000. 




        12.    Additional Provisions.    



        12.1    Additional Provisions.    The Board of Directors may, in its sole discretion, include
additional provisions in Restricted Stock Agreements and Option Agreements, including, without limitation, restrictions on transfer, rights of the Company to repurchase shares of Restricted Stock or
shares of Common Stock acquired upon exercise of Options, commitments to pay cash bonuses, to make, arrange for or guaranty loans or to transfer other property to optionees upon exercise of Options,
or such other provisions as shall be determined by the Board of Directors; provided that such additional provisions shall not be inconsistent with any
other term or condition of the Plan and such additional provisions shall not be such as to cause any Incentive Stock Option to fail to qualify as an Incentive Stock Option within the meaning of
Section 422 of the Code. 


        12.2    Acceleration, Extension, Etc.    The Board of Directors may, in its sole discretion,
(i) accelerate the date or dates on which all or any particular Option or Options may be exercised or (ii) extend the dates during which all, or any particular, Option or Options may be
exercised. 




        13.    Rights as a Shareholder.    The holder of an Option shall have no rights as a
shareholder with respect to any shares covered by the Option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) until
the date of issue of a stock certificate to him or her for such shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate
is issued. 


        14.    Adjustment Provisions for Recapitalizations and Related Transactions.    



        14.1    General.    If, through or as a result of any merger, consolidation, sale of all or
substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, (i) the
outstanding shares of Common Stock are increased, decreased or exchanged for a different number or kind of shares or other securities of the Company, or (ii) additional shares or new or
different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock or other securities, an appropriate and
proportionate adjustment may be made in (x) the maximum number and kind of shares reserved for issuance under the Plan, (y) the number and kind of shares or other securities subject to
any then outstanding Options, and (z) the price for each share subject to any then outstanding Options, without changing the aggregate purchase price as to which such Options remain
exercisable. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 14 if such adjustment would cause the Plan to fail to comply with Section 422 of the
Code. 


        14.2    Board Authority to Make Adjustments.    Any adjustments under this Section 14
will be made by the Board of Directors, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. No fractional shares will be
issued under the Plan on account of any such adjustments. 




        15.    Merger, Consolidation, Asset Sale, Liquidation, etc.    



        15.1    General.    In the event of a consolidation or merger or sale of all or substantially
all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of any other corporation or business entity, or in the event of a 



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liquidation
of the Company, the Board of Directors of the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of
the following actions, as to some or all outstanding Options (and need not take the same action as to each such Option): (i) provide that such Options shall be assumed, or equivalent Options
shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), provided that any such Options substituted for Incentive
Stock Options shall meet the requirements of Section 424(a) of the Code, (ii) upon written notice to the optionees, provide that all unexercised Options will terminate immediately prior
to the consummation of such transaction unless exercised by the optionee (to the extent otherwise then exercisable) within a specified period following the date of such notice, (iii) in the
event of a merger under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the merger (the "Merger
Price"), make or provide for a cash payment to the optionees equal to the difference between (A) the Merger Price times the number of shares of Common Stock subject to such outstanding Options
(to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of all such outstanding Options, in exchange for the termination of such
Options, and (iv) provide that all or any outstanding Options shall become exercisable in full immediately prior to such event. 


        15.2    Substitute Options.    The Company may grant Options in substitution for Options held
by employees of another corporation who become employees of the Company, or a subsidiary of the Company, as the result of a merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as a result of the acquisition by the Company, or one of its subsidiaries, of property or stock of the employing corporation. The Company may direct that substitute
Options be granted on such terms and conditions as the Board of Directors considers appropriate in the circumstances. 


        15.3    Restricted Stock.    In the event of a business combination or other transaction of
the type detailed in Section 15.1, any securities, cash or other property received in exchange for shares of Restricted Stock shall continue to be governed by the provisions of any Restricted
Stock Agreement pursuant to which they were issued, including any provision regarding vesting, and such securities, cash, or other property may be held in escrow on such terms as the Board of
Directors may direct, to insure compliance with the terms of any such Restricted Stock Agreement. 




        16.    No Special Employment Rights.    Nothing contained in the Plan or in any Option
Agreement or Restricted Stock Agreement shall confer upon any optionee or recipient of a Restricted Stock Award any right with respect to the continuation of his or her employment by the Company or
interfere in any way with the right of the Company at any time to terminate such employment or to increase or decrease the compensation of the optionee. 



        17.    Other Employee Benefits.    The amount of any compensation deemed to be received by an
employee as a result of the issuance of shares of Restricted Stock or the grant or exercise of an Option or the sale of shares received upon such award or exercise will not constitute compensation
with respect to which any other employee benefits of such employee are determined, including, without limitation, benefits under any bonus, pension, profit-sharing, life insurance or salary
continuation plan, except as otherwise specifically provided in such other plan or as otherwise specifically determined by the Board of Directors. 



        18.    Amendment and Termination of the Plan.    



        18.1 The
Board of Directors may at any time, and from time to time, modify or amend the Plan in any respect or terminate the Plan. If shareholder approval is not obtained
within twelve months after any amendment increasing the number of shares authorized under the Plan or changing the class of persons eligible to receive Incentive Stock Options under the Plan, no 



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Options
granted pursuant to such amendments shall be deemed to be Incentive Stock Options and no Incentive Stock Options shall be issued pursuant to such amendments thereafter. 


        18.2 The
termination or any modification or amendment of the Plan shall not, without the consent of an optionee, affect his or her rights under an Option previously granted
to him or her. With the consent of the recipient of Restricted Stock or optionee affected, the Board of Directors may amend outstanding Restricted Stock Agreements or Option Agreements in a manner not
inconsistent with the Plan. The Board of Directors shall have the right to amend or modify the terms and provisions of the Plan and of any outstanding Incentive Stock Options to the extent necessary
to qualify any or all such Options for such favorable federal income tax treatment (including deferral of taxation upon exercise) as may be afforded incentive stock options under Section 422 of
the Code. 




        19.    Withholding.    The Company shall have the right to deduct from payments of any kind
otherwise due to the optionee or recipient of Restricted Stock, any federal, state or local taxes of any kind required by law to be withheld with respect to issuance of any shares of Restricted Stock
or shares issued upon exercise of Options. In addition, prior to delivery of any Common Stock pursuant to the terms of this Plan, the Company has the right to require that the optionee or recipient of
Restricted Stock remit to the Company an amount sufficient to satisfy any tax withholding obligation. 


        Subject
to the prior approval of the Company, which may be withheld by the Company in its sole discretion, the obligor may elect to satisfy such minimum withholding obligations, in whole
or in part, (i) by causing the Company to withhold shares of Common Stock otherwise issuable, or (ii) by delivering to the Company a sufficient number of mature shares of Common Stock of
the Company. The shares so delivered or withheld shall have a fair market value equal to such withholding obligation. The fair market value of the shares used to satisfy such withholding obligation
shall be determined by the Company as of the date that the amount of tax to be withheld is to be determined. 


        20.    Effective Date and Duration of the Plan.    



        20.1    Effective Date.    The Plan shall become effective when adopted by the Board of
Directors. If such shareholder approval is not obtained within twelve months after the date of the Board's adoption of the Plan, no Options previously granted under the Plan shall be deemed to be
Incentive Stock Options and no Incentive Stock Options shall be granted thereafter. Amendments to the Plan not requiring shareholder approval shall become effective when adopted by the Board of
Directors. Amendments requiring shareholder approval shall become effective when adopted by the Board of Directors, but if shareholder approval is not obtained with twelve months of the Board's
adoption of such amendment, any Incentive Stock Options granted pursuant to such amendment shall be deemed to be non-statutory Options. Subject to this limitation, Options may be granted
under the Plan at any time after the effective date and before the date fixed for termination of the Plan. 



        20.2    Termination.    Unless sooner terminated in accordance with Section 15 or by
the Board of Directors, the Plan shall terminate upon the close of business on the day next preceding the tenth anniversary of the date of its adoption by the Board of Directors. 


        21.    Provision for Foreign Participants.    The Board of Directors may, without amending the
Plan, modify the terms of Option Agreements or Restricted Stock Agreements to differ from those specified in the Plan with respect to participants who are foreign nationals or employed outside the
United States to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters. 


        22.    Requirements of Law.    The Company shall not be required to sell or issue any shares
under any Option if the issuance of such shares shall constitute a violation by the optionee, by the Restricted Stock Award recipient, or by the Company of any provisions of any law or regulation of 



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any
governmental authority. In addition, in connection with the Act, the Company shall not be required to issue any shares upon exercise of any Option unless the Company has received evidence
satisfactory to it to the effect that the holder of such Option will not transfer such shares except pursuant to a registration statement in effect under the Act or unless an opinion of counsel
satisfactory to the Company has been received by the Company to the effect that such registration is not required in connection with any such transfer. Any determination in this connection by the
Board shall be final, binding and conclusive. In the event the shares issuable on exercise of an Option are not registered under the Act or under the securities laws of each relevant state or other
jurisdiction, the Company may imprint on the certificate(s) appropriate legends that counsel for the Company considers necessary or advisable to comply with the Act or any such state or other
securities law. The Company may register, but in no event shall be obligated to register, any securities covered by the Plan pursuant to the Act; and in the event any shares are so registered the
Company may remove any legend on certificates representing such shares. The Company shall not be obligated to take any affirmative action in order to cause the exercise of an Option or the issuance of
shares pursuant thereto to comply with any law or regulation of any governmental authority. 


        23.    Governing Law.    This Plan, each Option and each Restricted Stock Award shall be
governed by the laws of the State of Delaware, without regard to its principles of conflicts of law. 



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Exhibit 10.1


VISTULA COMMUNICATIONS SERVICES, INC. 2004 Stock Incentive Plan