Document:

ELITE FX

  

 ELITE FX, INC. 

 INCENTIVE STOCK PLAN 

 1. Purpose. The Elite FX, Inc. Incentive Stock Plan (the "Plan"), being
 assumed and adopted by Elite FX, Inc., a Florida corporation, is intended to
 provide incentives which will attract and retain highly competent persons at
 all levels as employees of Elite FX, Inc. and its subsidiaries (the "Company"),
 as well as independent contractors providing consulting or advisory services to
 the Company, by providing them opportunities to acquire the Company's common
 stock ("Common Shares") or to receive monetary payments based on the value of
 such shares pursuant to the Awards described in Paragraph 4 below. 

 
 2. Administration. 

 
 (a) The Plan will be administered by a Compensation Committee (the
 "Committee") appointed by the Board of Directors (the "Board") of the Company
 from among its members; provided, however, that, as long as Common Shares are
 registered under the Securities Exchange Act of 1933 (the "Act"), members of
 the Committee must qualify as "non-employee directors" within the meaning of
 Securities and Exchange Commission Regulation ss. 240.16b-3. Once appointed,
 the Committee shall continue to serve until otherwise directed by the Board.
 From time to time the Board may increase the size of the Committee and appoint
 additional members thereof, remove members (with or without cause), and appoint
 new members in substitution therefor, and fill vacancies however caused;
 provided, however, that at no time shall a Committee of less than two members
 of the Board administer the Plan. The Committee is authorized, subject to the
 provisions of the Plan, to establish such rules and regulations as it deems
 necessary for the proper administration of the Plan and to make such
 determinations and interpretations and to take such action in connection with
 the Plan and any Awards (as hereinafter defined) granted hereunder as it deems
 necessary or advisable. All determinations and interpretations made by the
 Board and Committee shall be binding and conclusive on all participants and
 their legal representatives. No member of the Board, no member of the Committee
 and no employee of the Company shall be liable for any act or failure to act
 hereunder, by any other member or employee or by any agent to whom duties in
 connection with the administration of this Plan have been delegated or, except
 in circumstances involving such person's bad faith, gross negligence or fraud,
 for any act or failure to act by the member or employee. 

 (b) Pursuant to its administrative duties described in Section 2(a) above
 and notwithstanding anything to the contrary contained herein, the Compensation
 Committee may, by a resolution adopted at a meeting of the Compensation
 Committee duly convened and called or by a unanimous written consent in lieu of
 a meeting, delegate to the persons or persons who serve as Chief Executive
 Officer of the Company the authority to determine the identities of employees
 who are not officers or directors of the Company who shall receive Stock
 Options under the Plan and the terms, conditions, limitations and restrictions
 upon which such Stock Options shall be granted; provided, however, that the per
 share exercise price of any Stock Option awarded by the Chief Executive Officer
 of the Company pursuant to any delegation of authority permitted hereunder
 shall not be less than the Fair Market Value (as hereinafter defined) of the
 

 

 

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 Common Shares on the date the Stock Option is granted. The terms and
 conditions of, and any limitation or restriction on, any such delegation shall
 be at the sole discretion of the Compensation Committee and shall be set forth
 in the resolution of the Compensation Committee establishing such delegation.
 Any delegation pursuant to this Section 2(b) may be revoked by the Compensation
 Committee at any time. 

 
 3. Participants. Participants will consist of such employees or
 prospective employees (conditioned upon, and effective not earlier than his
 becoming an employee) of the Company, and independent contractors (including
 persons other than individuals) providing consulting or advisory services to
 the Company, as the Committee in its sole discretion determines to be
 responsible for the success and future growth and profitability of the Company
 and whom the Committee may designate from time to time to receive Awards under
 the Plan. Designation of a participant in any year shall not require the
 Committee to designate such person to receive an Award in any other year or,
 once designated, to receive the same type or amount of Awards as granted to the
 participant in any year. The Committee shall consider such factors as it deems
 pertinent in selecting participants and in determining the type and amount of
 their respective Awards. 

 
 4. Types of Awards. Awards under the Plan may be granted in any one or a
 combination of (a) Stock Options, (b) Stock Appreciation Rights, (c) Stock
 Awards, (d) Performance Shares, and (e) Performance Units, all as described
 below (collectively "Awards"). 

 
 5. Shares Reserved under the Plan. Subject to the following provisions
 of this Section 5, there is hereby reserved for issuance under the Plan an
 aggregate of 600,000 Common Shares, which may be authorized but unissued
 shares. Any shares subject to Stock Options or Stock Appreciation Rights or
 issued under such options or rights or as Stock Awards may thereafter be
 subject to new options, rights or awards under this Plan if there is a lapse,
 expiration or termination of any such options or rights prior to issuance of
 the shares or the payment of the equivalent or if shares are issued under such
 options or rights or as such awards and thereafter are reacquired by the
 Company pursuant to rights reserved by the Company upon issuance thereof. 

 
 6. Stock Options. Stock Options will consist of awards from the Company,
 in the form of agreements, which will enable the holder to purchase a specific
 number of Common Shares, at set terms and at a fixed purchase price. Stock
 Options may be "incentive stock options" ("Incentive Stock Options") within the
 meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
 "Code") or Stock Options which do not constitute Incentive Stock Options
 ("Nonqualified Stock Options"). The Committee will have the authority to grant
 to any participant one or more Incentive Stock Options, Nonqualified Stock
 Options, or both types of Stock Options (in each case with or without Stock
 Appreciation Rights). Each Stock Option shall be subject to such terms and
 conditions consistent with the Plan as the Committee may impose from time to
 time, subject to the following limitations: 

 (a) Exercise Price. Each Stock Option granted hereunder shall have
 such per-share exercise price as the Committee may determine at the date of
 grant provided, however, that the per-share exercise price for Incentive Stock
 Options shall not be less than 100% of the Fair Market Value (as hereinafter
 defined) of the Common Shares on the date the option is granted. 

 

 

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 (b) Payment of Exercise Price. The option exercise price may be paid
 by cash, or upon approval from the Committee in its sole discretion,
 broker-assisted cashless exercise, net-share exercise, delivery of Common
 Shares of the Company then owned by the participant, or by promissory note,
 with additional approval from the Board or the CEO. Notwithstanding any
 contrary provision, the Committee may require that payment by any method other
 than cash may be made only if such payment does not result in a charge to
 earnings for financial accounting purposes as determined by the Committee.
 Net-cash exercises are not permitted under the Plan.

 A broker-assisted cashless exercise involves the simultaneous exercise by an
 employee of a share option and sale of sufficient Common Shares through a
 broker to cover the payment and any necessary withholding. Broker-assisted
 cashless exercise is typically only available if the Common Shares are readily
 tradeable on a national securities exchange or other market system at the time
 of option exercise. Payment in a broker-assisted exercise is made by delivering
 a properly executed exercise notice to the Company together with a copy of
 irrevocable instructions to a broker to deliver promptly to the Company the
 amount of sale or loan proceeds to pay the exercise price. To facilitate the
 foregoing, the Company may enter into agreements for coordinated procedures
 with one or more brokerage firms. In a net-share exercise, the Company holds
 back from the Common Shares to be issued upon exercise of an option that number
 of Commons Shares having a value (based on the previous business day's closing
 price) equal to the minimum amount required to satisfy the exercise price and
 any necessary withholding, unless the Company determines that such taxes must
 be in cash by the holder. 

 (c) Exercise Period. Stock Options granted under the Plan will be
 exercisable at such times and subject to such terms and conditions as shall be
 determined by the Committee. In addition, Nonqualified Stock Options shall not
 be exercisable later than fifteen (15) years after the date they are granted
 and Incentive Stock Options shall not be exercisable later than ten (10) years
 after the date they are granted. All Stock Options shall terminate at such
 earlier times and upon such conditions or circumstances as the Committee shall
 in its discretion set forth in such option at the date of grant. 

 (d) Limitations on Incentive Stock Options. Incentive Stock Options
 may be granted only to participants who are employees of the Company or one of
 its subsidiaries (within the meaning of Section 424(f) of the Code) at the date
 of grant. The aggregate Fair Market Value (determined as of the time the option
 is granted) of the Common Shares with respect to which Incentive Stock Options
 are exercisable for the first time by a participant during any calendar year
 (under all option plans of the Company) shall not exceed $100,000. Incentive
 Stock Options may not be granted to any participant who, at the time of grant,
 owns stock possessing (after the application of the attribution rules of
 Section 424(d) of the Code) more than 10% of the total combined voting power of
 all classes of stock of the Company, unless the option price is fixed at not
 less than 110% of the Fair Market Value of the Common Shares on the date of
 grant and the exercise of such option is prohibited by its terms after the
 expiration of five years from the date of grant of such option. 

 

 

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 (e) Re-designation as Nonqualified Stock Options. Options designated
 as Incentive Stock Options that fail to continue to meet the requirements of
 Section 422 of the Code shall be re-designated as Nonqualified Stock Options
 for Federal income tax purposes automatically without further action by the
 Committee on the date of such failure to continue to meet the requirements of
 Section 422 of the Code. 

 (f) Limitation of Rights in Shares. The recipient of a Stock Option
 shall not be deemed for any purpose to be a shareholder of the Company with
 respect to any of the shares subject thereto except to the extent that the
 Stock Option shall have been exercised and, in addition, a certificate shall
 have been issued and delivered to the participant. 

 
 7. Stock Appreciation Rights. The Committee may, in its discretion,
 grant Stock Appreciation Rights to the holders of any Stock Options granted
 hereunder. In addition, Stock Appreciation Rights may be granted independently
 of and without relation to Stock Options. Each Stock Appreciation Right shall
 be subject to such terms and conditions consistent with the Plan as the
 Committee shall impose from time to time, including the following: 

 (a) A Stock Appreciation Right relating to a Nonqualified Stock Option may
 be made part of such option at the time of its grant or at any time thereafter
 up to six months prior to its expiration, and a Stock Appreciation Right
 relating to an Incentive Stock Option may be made part of such option only at
 the time of its grant. 

 (b) Each Stock Appreciation Right will entitle the holder to elect in lieu
 of exercising the Stock Option to receive the appreciation in the Fair Market
 Value of the shares subject thereto up to the date the right is exercised. In
 the case of a right issued in relation to a Stock Option, such appreciation
 shall be measured from not less than the option price and in the case of a
 right issued independently of any Stock Option, such appreciation shall be
 measured from not less than 85% of the Fair Market Value of the Common Shares
 on the date the right is granted. Payment of such appreciation shall be made in
 cash or in Common Shares, or a combination thereof, as set forth in the Award,
 but no Stock Appreciation Right shall entitle the holder to receive, upon
 exercise thereof, more than the number of Common Shares (or cash of equal
 value) with respect to which the right is granted. 

 (c) Each Stock Appreciation Right will be exercisable at the times and to
 the extent set forth therein, but no Stock Appreciation Right may be
 exercisable earlier than six months after the date it was granted or later than
 the earlier of (i) the term of the related Stock Option, if any, and (ii)
 fifteen years after it was granted. Exercise of a Stock Appreciation Right
 shall reduce the number of shares issuable under the Plan (and the related
 Stock Option, if any) by the number of shares with respect to which the right
 is exercised. 

 
 8. Stock Awards. Stock Awards will consist of Common Shares transferred
 to participants without other payment therefor or payment at less than Fair
 Market Value as additional compensation for services to the Company. Stock
 Awards shall be subject to such terms and conditions as the Committee
 determines appropriate, including, without limitation, restrictions on the sale
 or other disposition of such shares and rights of the Company to reacquire such
 shares for no consideration upon termination of the 

 

 

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 participant's employment or other contractual arrangement within specified
 periods. The Committee may require the participant to deliver a duly signed
 stock power, endorsed in blank, relating to the Common Shares covered by such
 an Award. The Committee may also require that the stock certificates evidencing
 such shares be held in custody until the restrictions thereon shall have
 lapsed. The participant shall have, with respect to the Common Shares subject
 to a Stock Award, all of the rights of a holder of Common Shares of the
 Company, including the right to receive dividends and to vote the shares. 

 
 9. Performance Shares. 

 
 (a) Performance Shares may be awarded either alone or in addition to other
 Awards granted under this Plan and shall consist of the right to receive Common
 Shares or cash of an equivalent value at the end of a specified Performance
 Period (defined below). The Committee shall determine the participants to whom
 and the time or times at which Performance Shares shall be awarded, the number
 of Performance Shares to be awarded to any person, the duration of the period
 (the "Performance Period") during which, and the conditions under which,
 receipt of the Common Shares will be deferred, and the other terms and
 conditions of the Award in addition to those set forth in this Section 9. The
 Committee may condition the grant of Performance Shares upon the attainment of
 specified performance goals or such other factors or criteria as the Committee
 shall determine. 

 (b) Performance Shares awarded pursuant to this Section 9 shall be subject
 to the following terms and conditions: 

 (i) Unless otherwise determined by the Committee at the time of the grant
   of the Award, amounts equal to any dividends declared during the Performance
   Period with respect to the number of Common Shares covered by a Performance
   Share Award will not be paid to the participant. 

   (ii) Subject to the provisions of the Performance Share Award and this
   Plan, at the expiration of the Performance Period, share certificates and/or
   cash of an equivalent value (as the Committee may determine) shall be
   delivered to the participant, or his, her or its legal representative, in a
   number equal to the vested shares covered by the Performance Share Award. 

   (iii) Subject to the applicable provisions of the Performance Share Award
   and this Plan, upon termination of a participant's employment or contractual
   relationship with the Company for any reason during the Performance Period
   for a given Performance Share Award, the Performance Shares in question will
   vest or be forfeited in accordance with the terms and conditions established
   by the Committee. 

  
 
 
 10. Performance Units. 

 
 (a) Performance Units may be awarded either alone or in addition to other
 Awards granted under this Plan and shall consist of the right to receive a
 fixed dollar amount, payable in cash or Common Shares or a combination of both.
 The Committee shall determine the participants to whom and the time or times at
 which Performance Units 

 

 

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 shall be awarded, the duration of Performance Units to be awarded to any
 person, the duration of the period (the "Performance Cycle") during which, and
 the conditions under which, a participant's right to Performance Units will be
 vested, the ability of participants to defer the receipt of payment of such
 Performance Units, and the other terms and conditions of the Award in addition
 to those set forth in this Section 10. The Committee may condition the vesting
 of Performance Units upon the attainment of specified performance goals or such
 other factors or criteria as the Committee shall determine. 

 (b) The Performance Units awarded pursuant to this Section 10 shall be
 subject to the following terms and conditions: 

 (i) At the expiration of the Performance Cycle, the Committee shall
   determine the extent to which the performance goals have been achieved, and
   the percentage of the Performance Units of each participant that have vested.
   

   (ii) Subject to the applicable provisions of the Performance Unit Award
   and this Plan, at the expiration of the Performance Cycle, cash and/or share
   certificates of an equivalent value (as the Committee may determine) shall be
   delivered to the participant, or his, her or its legal representative, in
   payment of the vested Performance Units covered by the Performance Unit
   Award. 

   (iii) Subject to the applicable provisions of the Performance Unit Award
   and this Plan, upon termination of a participant's employment or contractual
   relationship with the Company for any reason during the Performance Cycle for
   a given Performance Unit Award, the Performance Units in question will vest
   or be forfeited in accordance with the terms and conditions established by
   the Committee. 

  
 
 
 11. Adjustment Provisions. 

 
 (a) If the Company shall at any time change the number of issued Common
 Shares without new consideration to the Company (such as by stock dividend,
 stock split, recapitalization, reorganization, exchange of shares, liquidation,
 combination or other change in corporate structure affecting the Common Shares
 other than as contemplated under Section 5 hereof) or make a distribution of
 cash or property which has a substantial impact on the value of issued Common
 Shares, the total number of shares available for Awards under this Plan shall
 be appropriately adjusted and the number of shares covered by each outstanding
 Award and the reference price or Fair Market Value for each outstanding Award
 shall be adjusted so that the net value of such Award shall not be changed. 

 (b) In the case of any sale of assets, merger, consolidation, combination or
 other corporate reorganization or restructuring of the Company with or into
 another corporation which results in the outstanding Common Shares being
 converted into or exchanged for different securities, cash or other property,
 or any combination thereof (an "Acquisition"), subject to the provisions of
 this Plan and any limitation applicable to the Award: 

 
  
 (i) any participant to whom a Stock Option has been granted shall have the
 right thereafter and during the term of the Stock Option to receive upon
 exercise 

  

 

 

 

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   thereof the Acquisition Consideration (as defined below) receivable upon
   the Acquisition by a holder of the number of Common Shares which might have
   been obtained upon exercise of the Stock Option or portion thereof, as the
   case may be, immediately prior to the Acquisition; 

   (ii) any participant to whom a Stock Appreciation Right has been granted
   shall have the right thereafter and during the term of such right to receive
   upon exercise thereof the difference on the exercise date between the
   aggregate Fair Market Value of the Acquisition Consideration receivable upon
   such acquisition by a holder of the number of Common Shares which are covered
   by such right and the aggregate reference price of such right; and 

   (iii) any participant to whom Performance Shares or Performance Units have
   been awarded shall have the right thereafter and during the term of the
   Award, upon fulfillment of the terms of the Award, to receive on the date or
   dates set forth in the Award, the Acquisition Consideration receivable upon
   the Acquisition by a holder of the number of Common Shares which are covered
   by the Award. 

  
 
 The term "Acquisition Consideration" shall mean the kind and amount of
 securities, cash or other property or any combination thereof receivable in
 respect of one Common Share upon consummation of an Acquisition. 

 (c) Notwithstanding any other provision of this Plan, the Committee may
 authorize the issuance, continuation or assumption of Awards or provide for
 other equitable adjustments after changes in the Common Shares resulting from
 any other merger, consolidation, sale of assets, acquisition of property or
 stock, recapitalization, reorganization or similar occurrence upon such terms
 and conditions as it may deem equitable and appropriate. 

 (d) In the event that another corporation or business entity is being
 acquired by the Company, and the Company assumes outstanding stock options
 and/or stock appreciation rights and/or the obligation to make future grants of
 options or rights to employees or other persons affiliated with the acquired
 entity, the aggregate number of Common Shares available for Awards under this
 Plan shall be increased accordingly. 

 
 12. Non-transferability. 

 
 (a) Each Award granted under the Plan to a participant shall not be
 transferable by such participant otherwise than as required by law or by will
 or the laws of descent and distribution, and shall be exercisable, in the case
 of an individual, only by him during his lifetime. In the event of the death of
 a participant while the participant is rendering services to the Company, each
 Stock Option or Stock Appreciation Right theretofore granted to him shall be
 exercisable during such period after his death as the Committee shall in its
 discretion set forth in such option or right at the date of grant (but not
 beyond the stated duration of the option or right) and then only: 

 
  
 (i) By the executor or administrator of the estate of the deceased
 participant or the person or persons to whom the deceased participant's rights
 under the Stock 

  

 

 

 

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   Option or Stock Appreciation Right shall pass by will or the laws of
   descent and distribution; and 

   (ii) To the extent that the deceased participant was entitled to do so at
   the date of his death. 

  
 
 (b) Notwithstanding Section 12(a), in the discretion of the Committee,
 Awards granted hereunder may be transferred to members of the participant's
 immediate family (which for purposes of this Plan shall be limited to the
 participant's children, grandchildren and spouse), or to one or more trusts for
 the benefit of such immediate family members or partnerships in which such
 immediate family members and/or trusts are the only partners, but only if the
 Award expressly so provides. In the case of a participant who is not an
 individual, transferability shall be determined by the Committee in its sole
 and absolute discretion. 

 
 13. Other Provisions. Awards under the Plan may also be subject to such
 other provisions (whether or not applicable to any other Awards under the Plan)
 as the Committee determines appropriate, including without limitation,
 provisions for the installment purchase of Common Shares under Stock Options,
 provisions for the installment exercise of Stock Appreciation Rights,
 provisions to assist the participant in financing the acquisition of Common
 Shares, provisions for the forfeiture of, or restrictions on resale or other
 disposition of, Shares acquired under any form of Award, provisions for the
 acceleration of the right to exercise or vesting of Awards in the event of a
 change of control of the Company or other reasons, provisions for the payment
 of the value of Awards to participants in the event of a change of control of
 the Company or other reasons, or provisions to comply with Federal and state
 securities laws, or setting forth understandings or conditions as to the
 participant's employment or contractual relationship in addition to those
 specifically provided for under the Plan. 

 
 14. Fair Market Value. For purposes of this Plan and any Awards
 hereunder, Fair Market Value of Common Shares shall be the mean between the
 highest and lowest sale prices for the Company's Common Shares as reported on
 the Nasdaq National Market (or such other consolidated transaction reporting
 system on which such Common Shares are primarily traded) on the date
 immediately preceding the date of grant (or on the next preceding trading date
 if Common Shares were not traded on the date immediately preceding the date of
 grant); provided, however, that until the Company's Common Shares are readily
 tradeable on a national securities exchange or market system, or if the
 Company's Common Shares are not at the applicable time readily tradeable on a
 national securities exchange or other market system, Fair Market Value shall
 mean the amount determined in good faith by the Committee as the fair market
 value of the Common Shares of the Company. 

 
 15. Withholding. All payments or distributions made pursuant to the Plan
 shall be net of any amounts required to be withheld pursuant to applicable
 federal, state and local tax withholding requirements. If the Company proposes
 or is required to distribute Common Shares pursuant to the Plan, it may require
 the recipient to remit to it an amount sufficient to satisfy such tax
 withholding requirements prior to the delivery of any certificates for such
 Common Shares. The Committee may, in its discretion and subject to such rules
 as it may adopt, permit an optionee or Award or right holder to pay all or a
 portion of the 

 

 

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 federal, state and local withholding taxes arising in connection with (a)
 the exercise of a Nonqualified Stock Option or a Stock Appreciation Right, (b)
 the receipt or vesting of Stock Awards, or (c) the receipt of Common Shares
 upon the expiration of the Performance Period or the Performance Cycle,
 respectively, with respect to any Performance Shares or Performance Units, by
 electing to have the Company withhold Common Shares having a Fair Market Value
 equal to the amount to be withheld. 

 
 16. Tenure. A participant's right, if any, to continue to serve the
 Company as an officer, employee, independent contractor, or otherwise, shall
 not be enlarged or otherwise affected by such person's designation as a
 participant under the Plan, nor shall this Plan in any way interfere with the
 right of the Company, subject to the terms of any separate employment agreement
 to the contrary, at any time to terminate such employment or to increase or
 decrease the compensation of the participant from the rate in existence at the
 time of the grant of an Award. 

 
 17. Effective Date, Amendment and Termination. The Plan shall become
 effective on the date it is approved by the holders of a majority of the shares
 of Common Shares then outstanding. The Plan shall terminate (10) ten years
 later, subject to earlier termination by the Board; provided, however, that the
 terms and conditions applicable to any Award granted prior to such date may
 thereafter be amended or modified by mutual agreement between the Company and
 the participant or such other persons as may then have an interest therein.
 Also, by mutual agreement between the Company and a participant hereunder,
 under this Plan or under any other present or future plan of the Company,
 Awards may be granted to such participant in substitution and exchange for, and
 in cancellation of, any Awards previously granted such participant under this
 Plan, or any other present or future plan of the Company. The Board may amend
 the Plan from time to time or terminate the Plan at any time. However, no
 action authorized by this Section 17 shall reduce the amount of any existing
 Award or change the terms and conditions thereof without the participant's
 consent. The approval of the Company's shareholders will be required for any
 amendment to the Plan which (i) would change the class of persons eligible for
 the grant of Stock Options as specified in Section 3 or otherwise materially
 modify the requirements as to eligibility for participation in the Plan, or
 (ii) would increase the maximum number of shares subject to Stock Options, as
 specified in Section 5 (unless made pursuant to the provisions of Section 11)
 or (iii) is required to be approved by the shareholders pursuant to the Code,
 Section 16 of the Act or by any stock market or exchange on which the Common
 Shares are listed. With respect to persons subject to Section 16 of the Act,
 transactions under the Plan are intended to comply with all applicable
 conditions of Rule 16b-3 or its successors under the Act. To the extent any
 provision of the Plan or action by the Committee fails to so comply, it shall
 be deemed null and void, to the extent permitted by law and deemed advisable by
 the Committee. Moreover, in the event the Plan does not include a provision
 required by Rule 16b-3 to be stated therein, such provision (other than one
 relating to eligibility requirements, or the price and amount of Awards) shall
 be deemed automatically to be incorporated by reference into the Plan insofar
 as participants subject to Section 16 of the Act are concerned. 

 
 18. Governing Law. This Plan and actions taken in connection herewith
 shall be governed and construed in accordance with the laws of the State of
 Florida (regardless of 

 

 

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 the law that might otherwise govern under applicable Florida principles of
 conflict of laws). 

 The foregoing Plan (consisting of 10 pages, including this page) was duly
 adopted and approved by the Board of Directors on January 19, 2007 and approved
 by the shareholders of the Corporation on January 19, 2007.

  

 _____s://Jan Norelid//_________________

 Jan Norelid, Secretary

 

 

 

 

 

 

10Exhibit 10.1

EXHIBIT 10.1

 

Horn Stock Grant Agreement

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.

CELSIUS HOLDINGS, INC.

STOCK GRANT AGREEMENT

 

This ___ day of January, 2007, Celsius Holdings, Inc. (the
 "Company") hereby grants to Gregory T. Horn (hereafter, "you" or "Grantee")
 shares of the Company's common stock (the "Shares"), pursuant to the terms and
 conditions of this Stock Grant Agreement (the "Grant"). 

 

 By signing below, you agree to accept the terms and
 conditions and hereby accept and make the respective representations and
 covenants contained in this Agreement regarding the transfer to you of the
 Shares represented by this Grant.

 

ARTICLE 1

Stock Grant

Section 1.1 Shares. The initial number of shares subject to the Grant
is set at 1,391,500 (the "Shares"). 

Section 1.2 Adjustment to the Grant. The number of Shares specified in
Section 1.1 shall be increased such that the value of the Shares subject to the
Grant will be equal to $250,000.00, based on the volume weighted average price (VWAP)
in the first ten (10) days of trading of Celsius Holdings, Inc. common stock
following the closing of the merger between Elite FX, Inc. and Celsius Holdings,
Inc. (or its wholly-owned subsidiary).

ARTICLE 2

Consideration

This Grant is being made in consideration of: (i) your
covenants and representations herein; (ii) your agreement to effectuate the
termination of Specialty Nutrition Group, Inc.'s consulting agreement with Elite
FX, Inc. dated June 2006, as amended on August 18, 2006; and (iii) your complete
and un-revocable assignment of all right, title and interest in the "Celsius"
trademark to Elite FX, Inc. and/or its successors.

 

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ARTICLE 3

Description of Securities

Section 3.1. Merger and Post-Merger Capitalization.
This Grant is being made in conjunction with the merger between the Company (or
its wholly-owned subsidiary) and Elite FX, Inc. (the "Merger") Upon consummation
of the Merger, Company's authorized capital stock will consist of 400 million
shares of common and preferred stock par value $0.001. Prior to this Grant,
there will be 96,212,246 shares of the Company's common stock issued and
outstanding (not including the Shares granted hereby) and 10,647,025 shares
issuable pursuant to options and warrants granted to the Company's employees,
directors and others.

Section 3.2. Dilution and Adjustments. 

        a) Private
Offering Dilution. Immediately following the Merger, the Company plans to
issue up to 25,000,000 additional shares of the Company's common stock in one or
more private offerings which will result in material dilution of all of the
Company's shareholders. You represent that you are aware of the terms of the
Merger, the planned private offering and the anticipated dilution. 

        b) Investa
Warrant and Penalty Warrant Dilution. In conjunction with the Merger, the
Company has issued a warrant representing 3,557,812 shares of the Company's
common stock to Investa Capital Partners, Inc. at an exercise price of $0.140535
per share with an expiration date approximately one (1) year from the closing of
the Merger (the "Investa Warrant"). Under certain circumstances, the Company may
force the exercise of the Investa Warrant, in the nature of a "put". The Company
may also be required to issue warrants at an exercise price of $0.140535 per
share in the event that the Company fails to obtain an effective registration
statement for certain shares within two-hundred seventy (270) days from the
closing of the Merger (the "Penalty Warrant"). A Penalty Warrant is due for each
30 period thereafter that the Company fails to obtain an effective registration
statement until the shares may be sold without a registration statement. The
amount of shares for each Penalty Warrant shall, if any, shall be equal to one
half of one percent (0.5%) of the shares eligible for inclusion in the
registration statement. The maximum amount of Penalty Warrant shares is not
expected to exceed 24,289 shares in any 30 day period. You represent that you
are aware of the terms of the Investa Warrant and Penalty Warrants and the
anticipated dilution. 

        c) Future
Financing and Options Dilution. It is anticipated that the Company will
engage in future financing for operations, acquisitions or expansion and issue
capital stock or stock options pursuant to one or more stock plans in an effort
to provide additional incentive to attract, retain and motivate highly qualified
and competent persons who are key to the Company, including key employees,
consultants, independent contractors, officers and directors. You acknowledge
that capital stock issued in future financings or as stock grants or stock
options will dilute the Shares granted pursuant to this Agreement.

        d) Adjustment.
Except as provided below, upon exercise of this Grant, you shall be entitled to
receive a pro-rata adjustments to your shares in the same manner as other
shareholders resulting from the declaration of a stock dividend or through any
recapitalization resulting in a stock split.

 i) Except as otherwise expressly provided herein, the
 issuance by the Company of shares of its capital stock of any class, or
 securities convertible into or exchangeable for shares of its capital stock of
 any class, either in connection with a direct or underwritten sale or upon the
 exercise of rights or warrants to subscribe therefore or purchase such Shares,
 or upon conversion of shares of obligations of the Company convertible into
 such shares or other securities, shall not affect, and no adjustment by reason
 thereof shall be made with respect to the number Shares granted hereby.

 

 ii) Without limiting the generality of the foregoing,
 nothing herein shall affect in any manner the right or power of the Company to
 make, authorize or consummate (a) any or all adjustments, reclassifications,
 recapitalizations, reorganizations or other changes in the Company's capital
 structure or its business; (b) any merger or consolidation of the Company or to
 which the Company is a party; (c) any issuance by the Company of debt
 securities, or preferred or preference stock that would rank senior to or above
 the Shares subject to outstanding Options; (d) any purchase or issuance by the
 Company of Shares or other classes of 

2

 

 common stock or common equity securities; (e) the
 dissolution or liquidation of the Company; (f) any sale, transfer, encumbrance,
 pledge or assignment of all or any part of the assets or business of the
 Company; or (g) any other corporate act or proceeding, whether of a similar
 character or otherwise.

Section 3.3. No Preemptive Rights. The holders of the
Company's common stock have no preemptive or subscription rights and have no
rights to convert their common stock into any other security.

Section 3.3. Voting Rights. 

Upon exercise of this Grant, you shall be entitled to one
vote per share on all matters to be voted on by shareholders. With respect to
electing the Company's directors, the holders of Common Stock do not have
cumulative voting rights.

Section 3.4. Dividends and Distributions. 

a) Dividends. Upon exercise of this Grant, you shall
be entitled to receive a pro-rata portion of dividends paid by the Company,
based on the entire amount of Shares granted hereunder. 

b) Distributions on Liquidation. Upon exercise of this
Grant, your right to participate in distributions upon liquidation will be
limited to a pro-rata distribution based on the number of shares that are no
longer subject to the Company's Cancellation Rights.

ARTICLE 4

Exercise of Grant

Section 4.1. Method Of Exercise. To exercise the Grant
made hereunder, you must sign and deliver this Stock Grant Agreement to the
Company's president, Steve Haley, at Celsius Holdings, Inc., 140 NE 4th Avenue,
Suite C, Delray Beach, FL 33483 with a copy to the Company's attorney, Neil
Baritz, Esq. at: 1075 Broken Sound Parkway, NW, Suite 102, Boca Raton, Florida
33487.

Section 4.2. Taxes. You are solely responsible for all
taxes associated with this Grant. You must make arrangements to pay any
withholding or other taxes that may be due as a result of the exercise of this
Grant or the sale of Shares acquired upon exercise of this Grant.

THE COMPANY MAKES NO REPRESENTATION AS TO THE TAX
IMPLICATIONS OF EXERCISING THIS GRANT OR THE SUBSEQUENT SALE OR TRANSFER OF THE
SHARES GRANTED HEREBY. 

ARTICLE 5

Transfer

Section 5.1. Restrictions On Transfer or Assignment Of
Shares.

a) By signing this Stock Grant Agreement, you agree not to
sell or transfer any Shares acquired hereunder at a time when applicable laws,
regulations or Company or underwriter trading policies prohibit sale or
transfer.

b) You hereby represent and agree that you are acquiring the
Shares granted hereunder for investment, and not with a view to the sale or
distribution thereof, and shall make such other similar representations as are
deemed necessary or appropriate by the Company and its counsel.

Section 5.2. Legends. All certificates representing the Shares issued
upon exercise of this Grant shall, where applicable, have endorsed thereon the
following legends, unless counsel for the Company is of the opinion as to any
such security that such legend is unnecessary:

3

 

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
 TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH
 THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE INITIAL HOLDER
 HEREOF. SUCH AGREEMENT PROVIDES FOR CERTAIN TRANSFER RESTRICTIONS. THE
 SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH
 AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."

 "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
 QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
 OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED
 PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF
 THE COMPANY IS PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
 REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS ARE NOT
 REQUIRED."

 

ARTICLE 6

Other Terms and Conditions

Section 6.1. No Employment or Retention Rights.
Nothing in this Agreement shall grant you the right to be employed by the
Company or any of its subsidiaries or affiliates. 

Section 6.2 Governing Law, Venue & Attorneys Fees. All
questions regarding the validity and interpretation of this Stock Grant
Agreement shall be governed by and construed and enforced in all respects in
accordance with the laws of the State of Florida. Venue for any action arising
in any manner out of the Grant, Grantee's exercise, this Stock Grant Agreement,
or any of the terms contained herein shall be the Federal and or State courts
located in Palm Beach County, Florida, regardless of where this Stock Grant
Agreement is to be performed. In the event either party engages legal counsel to
enforce any provision contained in this Stock Grant Agreement, the prevailing
party shall be entitled to all reasonable attorneys fees, investigative
expenses, costs, and court costs, whether or not a suit is actually filed, but
including all levels of appeal.

Section 6.3. Notices. Any notice given under this
Stock Grant Agreement to either party shall be made in writing. Notices shall be
deemed given when delivered by hand or when mailed by registered or certified
mail, return receipt requested, postage prepaid, to the following address,
unless another address is provided by such party in writing:

If to the Company: Celsius Holdings, Inc.

140 NE 4th Avenue, Suite C

    Delray Beach, FL 33483 

    Attn: Steve Haley, President

    

   
  
 

with a copy to: Neil Baritz, Esq.

1075 Broken Sound Parkway, NW, Suite 102

    oca Raton, Florida 33487

    

   
  
 

If to the Grantee: Gregory T. Horn

 
  
   
    2971 N.E. 27th Avenue

    Lighthouse Point, FL 33064

   

  

 

Section 6.4 Binding Agreement/Successors. 

        a) Company's
Successors and Assigns. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding in all respects
upon the Company's successors and assigns.

4

 

        b) Grantee's
Successors. Except as prohibited hereunder, this Agreement shall inure to
the benefit of your personal representatives, legatees, and heirs. 

Section 6.5. Waivers. The waiver by either party of a
breach of any provision of this Stock Grant Agreement shall not operate or be
construed as a waiver of any subsequent breach.

Section 6.6. Entire Agreement.

        a) No Other
Agreements. This instrument contains the entire agreement of the parties
with respect to the subject matter hereof. The parties have not made any
agreements or representations, oral or otherwise, express or implied, pertaining
to the subject matter of this Agreement other than those specifically included
herein.

        b) Prior
Agreements. This Agreement supersedes any prior agreements pertaining to or
connected with the grant of stock or stock options to Grantee. All such prior
agreements are terminated and are of no force or effect whatsoever.

Section 6.7. Amendment of Agreement. No change or
modification of this Stock Grant Agreement shall be valid unless it is in
writing and signed by the party against whom the change or modification is
sought to be enforced.

Section 6.8. Severability of Provisions. If any
provision of this Stock Grant Agreement is invalidated or held unenforceable,
the invalidity or unenforceability of that provision or provisions shall be
deemed modified or severed only to the minimum extent necessary to make said
provision(s) valid and enforceable while maintaining the intent of said
provision(s). No such modification shall affect the validity or enforceability
of any other provision of this Stock Grant Agreement.

Section 6.9. Governing Law, Venue & Attorneys Fees.
All questions regarding the validity and interpretation of this Agreement shall
be governed by and construed and enforced in all respects in accordance with the
laws of the State of Florida. Venue for any action arising in any manner out of
the Grant or this Agreement, or any of the terms contained herein shall be the
Federal and or State courts located in Palm Beach County, Florida, regardless of
where this Agreement is to be performed. In the event either party engages legal
counsel to enforce any provision contained in this Agreement, the prevailing
party shall be entitled to all reasonable attorneys fees, investigative
expenses, costs, and court costs, whether or not a suit is actually filed, but
including all levels of appeal.

IN WITNESS WHEREOF, the parties have executed this Stock
Grant Agreement as of the day and year first written above.

 
  
   
    
     
      
       
        
         
          
           
            GRANTEE:

              /s/ Gregory Horn

           

          

         

        

       

      

     

    

   

  

 

Gregory T. Horn

             

            CELSIUS HOLDINGS, INC.

            /s/ Stephen C. Haley

            By: 

                   Stephen C. Haley, President

           
          
         
        
       
      
     
    
   
  
 

5

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