Document:

Exhibit 4.01

 

APOLLO RESOURCES
INTERNATIONAL, INC.

FIRST AMENDED 2005 STOCK OPTION AND AWARD PLAN

 

APOLLO RESOURCES INTERNATIONAL, INC. (formerly Powerball International,
Inc.), a Utah corporation (the “Company”), hereby adopts this First Amended
2005 Stock Option and Award Plan (the “Plan”), effective as of the 14th day of
April 2005, under which options to acquire stock of the Company or bonus stock
may be granted from time to time to employees, including of officers and
directors of the Company and/or its subsidiaries. In addition, at the
discretion of the board of directors or other administrator of this Plan,
options to acquire stock of the Company or bonus stock may from time to time be
granted under this Plan to other individuals who contribute to the success of
the Company or its subsidiaries but who are not employees of the Company, all
on the terms and conditions set forth herein.

 

1.                                       Purpose
of the Plan. The Plan is intended to aid the Company in maintaining and
developing a management team, attracting qualified officers and employees
capable of assisting in the future success of the Company, and rewarding those
individuals who have contributed to the success of the Company. It is designed
to aid the Company in retaining the services of executives and employees and in
attracting new personnel when needed for future operations and growth and to
provide such personnel with an incentive to remain employees of the Company, to
use their best efforts to promote the success of the Company’s business, and to
provide them with an opportunity to obtain or increase a proprietary interest
in the Company. It is also designed to permit the Company to reward those
individuals who are not employees of the Company but who are perceived by
management as having contributed to the success of the Company or who are
important to the continued business and operations of the Company. The above
aims will be effectuated through the granting of options (“Options”) to
purchase shares of common stock of the Company, par value $0.001 per share (the
“Stock”), or the granting of awards of bonus stock (“Stock Awards”), all
subject to the terms and conditions of this Plan. It is intended that the
Options issued pursuant to this Plan include, when designated as such at the
time of grant, options which qualify as Incentive Stock Options (“Incentive
Options”) within the meaning of section 422 of the Internal Revenue Code of
1986, as amended (the “Code”), or any amendment or successor provision of like
tenor. If the Company has a class of securities registered under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), it is intended that
Options or Stock Awards granted pursuant to this Plan qualify for the exemption
provided for in Rule 16b-3 (“Rule 16b-3”) promulgated under the Exchange Act or
any amendment or successor rule of like tenor when granted in accordance with
the provisions of such rule.

 

2.                                       Shareholder
Approval. The Plan shall become effective immediately on adoption by the
board of directors of the Company (the “Board”) and awards under the Plan can
be made at that time or at any subsequent time. The Plan shall be submitted to
the Company’s shareholders in the manner set forth below:

 

(a)                                  Within
twelve months after the Plan has been adopted by the Board, the Plan shall be
submitted for approval by those shareholders of the Company who are entitled to
vote on such matters at a duly held shareholders’ meeting or approved by the
unanimous written consent of the holders of the issued and outstanding Stock of
the Company. If the Plan is presented at a shareholders’ meeting, it shall be
approved by the affirmative vote of the holders of a majority of the issued and
outstanding Stock in attendance, in person or by proxy, at such meeting.
Notwithstanding the foregoing, the Plan may be approved by the shareholders in
any other manner not inconsistent with the Company’s articles of incorporation
and bylaws, the applicable provisions of state corporate laws, and the
applicable provisions of the Code and regulations adopted thereunder.

 

(b)                                 In
the event the Plan is so approved, the secretary of the Company shall, as soon
as practicable following the date of final approval, prepare and attach to this
Plan certified copies of all relevant resolutions adopted by the shareholders
and the Board.

 

(c)                                  Failure
to obtain shareholder approval on or before the date that is twelve months
subsequent to the adoption of this Plan by the Board shall not affect awards
previously granted under the Plan; provided
that, none of the Options issued under this Plan will qualify as
Incentive Options.

 

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3.                                       Administration
of the Plan. Administration of the Plan shall be determined by the Board.
Subject to compliance with applicable provisions of the governing law, the
Board may delegate administration of the Plan or specific administrative duties
with respect to the Plan, on such terms and to such committees of the Board as
it deems proper. Any Option or Stock Award approved by the Board shall be
approved by a majority vote of those members of the Board in attendance at a
meeting at which a quorum is present. Any Option or Stock Award approved by a
committee designated by the Board shall be approved as specified by the Board
at the time of delegation. The interpretation and construction of the terms of
the Plan by the Board or a duly authorized committee shall be final and binding
on all participants in the Plan absent a showing of demonstrable error. No
member of the Board or duly authorized committee shall be liable for any action
taken or determination made in good faith with respect to the Plan.

 

The Board’s or duly authorized committee’s
determination under the Plan (including without limitation determinations of
the persons to receive Options or Stock Awards, the form, amount, and timing of
such Options or Stock Awards, the terms and provisions of such Options or Stock
Awards, and the agreements evidencing same) need not be uniform and may be made
by the Board or duly authorized committee selectively among persons who
receive, or are eligible to receive, Options or Stock Awards under the Plan,
whether or not such persons are similarly situated.

 

4.                                       Shares
of Stock Subject to the Plan. A total of 5,000,000 shares of Stock may be
subject to, or issued pursuant to, Options or Stock Awards granted under the
terms of this Plan. Any shares subject to an Option or Stock Award under the
Plan, which Option or Stock Award for any reason expires or is forfeited
terminated, or surrendered unexercised as to such shares, shall be added back
to the total number of shares reserved for issuance under the terms of this
Plan. If any right to acquire Stock granted under the Plan is exercised by the
delivery of shares of Stock or the relinquishment of rights to shares of Stock,
only the net shares of Stock issued (the shares of Stock issued less the shares
of Stock surrendered) shall count against the total number of shares reserved
for issuance under the terms of this Plan. 
The number of shares of Stock subject to the Plan is subject to
adjustment as set forth in Section 16 hereof.

 

5.                                       Reservation
of Stock on Granting of Option. At the time of granting any Option under
the terms of this Plan, there will be reserved for issuance on the exercise of
the Option the number of shares of Stock of the Company subject to such Option.
The Company may reserve either authorized but unissued shares or issued shares
that have been reacquired by the Company.

 

6.                                       Eligibility.
Options or Stock Awards under the Plan may be granted to employees, including
officers and directors, of the Company or its subsidiaries, as may be existing
from time to time, and to other individuals who are not employees of the
Company as may be deemed in the best interest of the Company by the Board or a
duly authorized committee. Such Options or Stock Awards shall be in the
amounts, and shall have the rights and be subject to the restrictions, as may
be determined by the Board or a duly authorized committee at the time of grant,
all as may be within the general provisions of this Plan.

 

7.                                       Term
of Options and Certain Limitations on Right to Exercise.

 

(a)                                  Each
Option shall have the term established by the Board or duly authorized
committee at the time the Option is granted but in no event may an Option have
a term in excess of five years.

 

(b)                                 The
term of the Option, once it is granted, may be reduced only as provided for in
this Plan or under the written provisions of the Option.

 

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(c)                                  Unless
otherwise specifically provided by the written provisions of the Option, no
holder or his or her legal representative, legatee, or distributee will be, or
shall be deemed to be, a holder of any shares subject to an Option unless and
until the holder exercises his or her right to acquire all or a portion of the
Stock subject to the Option and delivers the required consideration to the
Company in accordance with the terms of this Plan and the Option and then only
to the extent of the number of shares of Stock acquired. Except as specifically
provided in this Plan or as otherwise specifically provided by the written
provisions of the Option, no adjustment to the exercise price or the number of
shares of Stock subject to the Option shall be made for dividends or other
rights for which the record date is prior to the date the Stock subject to the
Option is acquired by the holder.

 

(d)                                 Options
under the Plan shall vest and become exercisable at such time or times and on
such terms as the Board or a duly authorized committee may determine at the time
of the grant of the Option.

 

(e)                                  Options
granted under the Plan shall contain such other provisions, including, without
limitation, further restrictions on the vesting and exercise of the Option, as
the Board or a duly authorized committee shall deem advisable.

 

(f)                                    In
no event may an Option be exercised after the expiration of its term.

 

(g)                                 Unless
otherwise specifically provided by the written provisions of an Option granted
pursuant to this Plan, upon receipt of:

 

(i) any request that the exercise of the Option or the
resale of any shares of Stock issued or to be issued on exercise of such Option
will be registered under the Securities Act; or

 

(ii) any notice of exercise of such Option pursuant to
its terms, in lieu of any obligation to effect any registration with respect to
the Options or shares of Common Stock issuable on such Option or in lieu of
delivering shares of Common Stock on the exercise of the Option;

 

the Company may, within five business days of receipt
of such request to register or notice of exercise, purchase, in whole or in
part, such Options from the Optionee at an amount in cash equal to the
difference between the then current fair market value (as defined below) of the
Common Stock on the day of such repurchase and the exercise price in effect on
such day.

 

In order to exercise such right, the Company must
provide written notice to the optionee at least five days prior to the date
that the Company proposes to repurchase such Options. For purposes of this
section. the fair market value of the Common Stock shall be determined by the
Board or a duly authorized committee based on the closing price for the Stock
as quoted on a registered national securities exchange or, if not listed on a
national exchange, the Nasdaq Stock Market (“Nasdaq”), on the trading day
immediately preceding the date that the Company’s provides notice of its intent
to repurchase the Options, or, if not listed on such an exchange or included on
Nasdaq, the closing price for the Stock as determined by the Board or a duly
authorized committee through any other reliable means of determination
available on the close of business on the trading day last preceding the date
of providing the notice.

 

8.                                       Exercise
Price. The exercise price of each Option issued under the Plan shall be
determined by the Board or a duly authorized committee on the date of grant.

 

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9.                                       Payment
of Exercise Price. The exercise of any Option shall be contingent on
receipt by the Company of cash, certified bank check to its order, or other
consideration acceptable to the Company; provided
that, at the discretion of the Board or a duly authorized committee,
the written provisions of the Option may provide that payment can be made in
whole or in part in shares of Stock of the Company that have been owned by the
optionee for more than six months or by the surrender of Options to acquire
Stock from the Company that have been held for more than six months, which
Stock or Options shall be valued at their then fair market value as determined
by the Board or a duly authorized committee. Any consideration approved by the
Board or a duly authorized committee that calls for the payment of the exercise
price over a period of more than one year shall provide for interest, which
shall not be included as part of the exercise price, that is equal to or
exceeds the imputed interest provided for in section 483 of the Code or any
amendment or successor section of like tenor.

 

10.                                 Withholding.
If the grant of a Stock Award or the grant or exercise of an Option pursuant to
this Plan, or any other event in connection with any such grant or exercise,
creates an obligation to withhold income and employment taxes pursuant to the
Code or applicable state or local laws, such obligation may, at the discretion
of the Board or a duly authorized committee at the time of the grant of the
Option or Stock Award and to the extent permitted by the terms of the Option or
Stock Award and the then governing provisions of the Code and the Exchange Act,
be satisfied (i) by the holder of the Option or Stock Award delivering to the
Company an amount of cash equal to such withholding obligation; (ii) by the
Company withholding from any compensation or other amount owing to the holder
of the Option or Stock Award the amount (in cash, Stock, or other property as
the Company may determine) of the withholding obligation; (iii) by the Company
withholding shares of Stock subject to the Option or Stock Award with a fair
market value equal to such obligation; or (iv) by the holder of the Option or
Stock Award either delivering shares of Stock that have been owned by the
holder for more than six months or canceling Options or other rights to acquire
Stock from the Company that have been held for more than six months with a fair
market value equal to such requirements. In all events, delivery of shares of
Stock issuable on exercise of the Option or on grant of the Stock Award shall
be conditioned upon and subject to the satisfaction or making provision for the
satisfaction of the withholding obligation of the Company resulting from the
grant or exercise of the Option, grant of the Stock Award, or any other event.
The Company shall be further authorized to take such other action as may be
necessary, in the opinion of the Company, to satisfy all obligations for the
payment of such taxes.

 

11.                                 Incentive
Options - Additional Provisions. In addition to the other restrictions and
provisions of this Plan, any Option granted hereunder that is intended to be an
Incentive Option shall meet the following further requirements:

 

(a)                                  The
exercise price of an Incentive Option shall not be less than the fair market
value of the Stock on the date of grant of the Incentive Option as determined
by the Board or a duly authorized committee based on the closing price for the
Stock as quoted on a registered national securities exchange or, if not listed
on a national exchange or Nasdaq, over the five-day trading period immediately
prior to the date of grant of such Incentive Option, or, if not listed on such
an exchange or included on Nasdaq, the closing price for the Stock as
determined by the Board or a duly authorized committee through any other
reliable means of determination available on the close of business on the
trading day last preceding the date of grant of such Incentive Option and
permitted by the applicable provisions of the Code.

 

(b)                                 No
Incentive Option may be granted under the Plan to any individual that owns
(either of record or beneficially) Stock possessing more than 10% of the
combined voting power of the Company or any parent or subsidiary corporation
unless both the exercise price is at least 110% of the fair market value of the
Stock on the date the Option is granted and the Incentive Option by its terms
is not exercisable more than five years after the date it is granted.

 

(c)                                  Incentive
Options may be granted only to employees of the Company or its subsidiaries and
only in connection with that employee’s employment by the Company or the
subsidiary. Notwithstanding the above, directors and other individuals who have
contributed to the success of the Company or its subsidiaries may be granted
Incentive Options under the Plan, subject to, and to the extent permitted by,
applicable provisions of the Code and regulations promulgated thereunder, as
they may be amended from time to time.

 

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(d)                                 The
aggregate fair market value (determined as of the date the Incentive Option is
granted) of the shares of Stock with respect to which Incentive Options are
exercisable for the first time by any individual during any calendar year under
the Plan (and all other plans of the Company and its subsidiaries) may not
exceed $100,000.

 

(e)                                  No
Incentive Option shall be transferable other than by will or the laws of
descent and distribution and shall be exercisable, during the lifetime of the
optionee, only by the optionee to whom the Incentive Option is granted.

 

(f)                                    No
individual acquiring shares of Stock pursuant to any Incentive Option granted
under this Plan shall sell, transfer, or otherwise convey the Stock until after
the date that is both two years after the date the Incentive Option was granted
and one year after the date the Stock was acquired pursuant to the exercise of
the Incentive Option. If any individual makes a disqualifying disposition, he
or she shall notify the Company within 30 days of such transaction.

 

(g)                                 No
Incentive Option may be exercised unless the holder was, within three months of
such exercise, and had been since the date the Incentive Option was granted, an
eligible employee of the Company as specified in the applicable provisions of
the Code, unless the employment was terminated as a result of the death or
disability (as defined in the Code and the regulations promulgated thereunder
as they may be amended from time to time) of the employee or the employee dies
within three months of the termination. In the event of termination as a result
of disability, the holder shall have a one year period following termination in
which to exercise the Incentive Option. In the event of death of the holder,
the Incentive Option must be exercised within six months after the issuance of
letters testamentary or administration or the appointment of an administrator,
executor, or personal representative, but not later than one year after the
date of termination of employment. An authorized absence or leave approved by
the Board or a duly authorized committee for a period of 90 days or less shall
not be considered an interruption of employment for any purpose under the Plan.

 

(h)                                 All
Incentive Options shall be deemed to contain such other limitations and
restrictions as are necessary to conform the Incentive Option to the
requirements for “incentive stock options” as defined in section 422 of the
Code, or any amendment or successor statute of like tenor.

 

All of the foregoing restrictions and limitations are based on the
governing provisions of the Code as of the date of adoption of this Plan. If at
any time the Code is amended to permit the qualification of an Option as an
incentive stock option without one or more of the foregoing restrictions or
limitations or the terms of such restrictions or limitations are modified, the
Board or a duly authorized committee may grant Incentive Options, and may
modify outstanding Incentive Options in accordance with such changes, all to
the extent that such action by the Board or duly authorized committee does not
disqualify the Options from treatment as incentive stock options under the
provisions of the Code as may be amended from time to time.

 

12.                                 Awards
to Directors and Officers. To the extent the Company has a class of
securities registered under the Exchange Act, Options or Stock Awards granted
under the Plan to directors and officers (as used in Rule 16b-3 promulgated
under the Exchange Act or any amendment or successor rule of like tenor)
intended to qualify for the exemption from section 16(b) of the Exchange Act
provided in Rule 16b-3 shall, in addition to being subject to the other
restrictions and limitations set forth in this Plan, be made as follows:

 

(a)                                  A
transaction whereby there is a grant of an Option or Stock Award pursuant to
this Plan must satisfy one of the following:

 

(i)                                     The
transaction must be approved by the Board or a duly authorized committee
composed solely of two or more non-employee directors of the Company (as
defined in Rule 16b-3);

 

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(ii)                                  The
transaction must be approved or ratified, in compliance with section 14 of the
Exchange Act, by either: the affirmative vote of the holders of a majority of
the securities of the Company present or represented and entitled to vote at a
meeting of the shareholders of the Company held in accordance with the
applicable laws of the state of incorporation of the Company; or, if allowed by
applicable state law, the written consent of the holders of a majority, or such
greater percentage as may be required by applicable laws of the state of
incorporation of the Company, of the securities of the Company entitled to
vote. If the transaction is ratified by the shareholders, such ratification
must occur no later than the date of the next annual meeting of shareholders;
or

 

(iii)                               The
Stock acquired must be held by the officer or director for a period of six months
subsequent to the date of the grant; provided
that, if the transaction involves a derivative security (as defined
in section 16 of the Exchange Act), this condition shall be satisfied if at
least six months elapse from the date of acquisition of the derivative security
to the date of disposition of the derivative security (other than on exercise
or conversion) or its underlying equity security.

 

(b)                                 Any
transaction involving the disposition to the Company of its securities in
connection with Options or Stock Awards granted pursuant to this Plan shall:

 

(i)                                     be
approved by the Board or a duly authorized committee composed solely of two or
more non-employee directors; or

 

(ii)                                  be
approved or ratified, in compliance with section 14 of the Exchange Act, by
either: the affirmative vote of the holders of a majority of the securities of
the Company present, or represented, and entitled to vote at a meeting duly
held in accordance with the applicable laws of the state of incorporation of
the Company or, if allowed by applicable state law, the written consent of the
holders of a majority, or such greater percentage as may be required by
applicable laws of the state of incorporation of the Company, of the securities
of the Company entitled to vote; provided
that, such ratification occurs no later than the date of the next
annual meeting of shareholders.

 

All of the foregoing restrictions and limitations are based on the
governing provisions of the Exchange Act and the rules and regulations
promulgated thereunder as of the date of adoption of this Plan. If at any time
the governing provisions are amended to permit an Option to be granted or
exercised or Stock Award to be granted pursuant to Rule 16b-3 or any amendment
or successor rule of like tenor without one or more of the foregoing
restrictions or limitations, or the terms of such restrictions or limitations
are modified, the Board or a duly authorized committee may award Options or
Stock Awards to directors and of dicers, and may modify outstanding Options or
Stock Awards, in accordance with such changes, all to the extent that such
action by the Board or a duly authorized committee does not disqualify the
Options or Stock Awards from exemption under the provisions of Rule 16b-3 or
any amendment or successor rule of similar tenor.

 

13.                                 Stock
Awards. The Board or a duly authorized committee may grant Stock Awards to
individuals eligible to participate in this Plan, in the amount, and subject to
the provisions determined by the Board or a duly authorized committee. The
Board or a duly authorized committee shall notify in writing each person
selected to receive a Stock Award hereunder as soon as practicable after he or
she has been so selected and shall inform such person of the number of shares
he or she is entitled to receive, the approximate date on which such shares
will be issued, and the Forfeiture Restrictions applicable to such shares. (For
purposes hereof, the term “Forfeiture Restrictions” shall mean any prohibitions
against sale or other transfer of shares of Stock granted under the Plan and
the obligation of the holder to forfeit his or her ownership of or right to
such shares and to surrender such shares to the Company on the occurrence of
certain conditions.) The Board or a duly authorized committee may, at its
discretion, require the payment in cash to the Company by the award recipient
of the par value of the Stock. The shares of Stock issued pursuant to a Stock
Award shall not be sold, exchanged, transferred, pledged, hypothecated, or
otherwise disposed of during such period or periods of time which the Board or
a duly authorized committee shall establish at the time of the grant of the
Stock Award. If a Stock Award is made to an employee of the Company or its
subsidiaries, the employee shall be obligated for no consideration other than
the amount, if any, of the par value paid in cash for such shares, to forfeit
and surrender such shares as he or shall have received under the Plan which are
then subject to

 

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Forfeiture Restrictions
to the Company if he or she is no longer an employee of the Company or its
subsidiaries for any reason; provided that, in
the event of termination of the employee’s employment by reason of death or
total and permanent disability, the Board or duly authorized committee, in its
sole discretion, may cancel the Forfeiture Restrictions. Certificates
representing shares subject to Forfeiture Restrictions shall be appropriately
legend as determined by the Board or a duly authorized committee to reflect the
Forfeiture Restrictions, and the Forfeiture Restrictions shall be binding on
any transferee of the shares.

 

14.                                 Assignment.
At the time of grant of an Option or Stock Award, the Board or duly authorized
Committee, in its sole discretion, may impose restrictions on the
transferability of such Option or Stock Award and provide that such Option
shall not be transferable other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code and that, except as permitted by the foregoing, such Options or Stock
Awards, granted under the Plan and the rights and privileges thereby conferred
shall not be transferred, assigned, pledged, or hypothecated in any way
(whether by operation of law or otherwise), and shall not be subject to
execution, attachment, or similar process. On any attempt to transfer, assign,
pledge, hypothecate, or otherwise dispose of the Option or Stock Award, or of
any right or privilege conferred thereby, contrary to the provisions thereof,
or on the levy of any attachment or similar process on such rights and
privileges, the Option or Stock Award and such rights and privileges shall
immediately become null and void.

 

15.                                 Additional
Terms and Provisions of Awards. The Board or duly authorized committee
shall have the right to impose additional limitations on individual awards
under the Plan. For example, and without limiting the authority of the Board or
a duly authorized committee, an individual award may be conditioned on
continued employment for a specified period or may be voided based on the award
holder’s gross negligence in the performance of his or her duties, substantial
failure to meet written standards established by the Company for the
performance of his or her duties, criminal misconduct, or willful or gross
misconduct in the performance of his or her duties. In addition, the Board or a
duly authorized committee may establish additional rights in the holders of
individual awards at the time of grant. For example, and without limiting the
authority of the Board or a duly authorized committee, an individual award may
include the right to immediate payment of the value inherent in the award on
the occurrence of certain events such as a change in control of the Company,
all on the terms and conditions set forth in the award at the time of grant.
The Board or a duly authorized committee may. at the time of the grant of the
Option or Stock Award, establish any other terms, restrictions, or provisions
on the exercise of an Option or the holding of Stock subject to the Stock Award
as it deems appropriate. All such terms, restrictions, and provisions must be
set forth in writing at the time of grant in order to be effective.

 

16.                                 Dilution
or Other Adjustment. In the event that the number of shares of Stock of the
Company from time to time issued and outstanding is increased pursuant to a
stock split or a stock dividend, the number of shares of Stock then covered by
each outstanding Option granted hereunder shall be increased proportionately,
with no increase in the total purchase price of the shares then so covered, and
the number of shares of Stock subject to the Plan shall be increased by the
same proportion. Shares awarded under the terms of a Stock Award shall be entitled
to the same rights as other issued and outstanding shares of Stock, whether or
not then subject to Forfeiture Restrictions, although any additional shares of
Stock issued to the holder of a Stock Award shall be subject to the same
Forfeiture Restrictions as the Stock Award. In the event that the number of
shares of Stock of the Company from time to time issued and outstanding is
reduced by a combination or consolidation of shares, the number of shares of
Stock then covered by each outstanding Option granted hereunder shall be
reduced proportionately, with no reduction in the total purchase price of the
shares then so covered, and the number of shares of Stock subject to the Plan
shall be reduced by the same proportion. Shares awarded under a Stock Award
shall be treated as other issued and outstanding shares of Stock, whether or
not then subject to Forfeiture Restrictions. In the event that the Company
should transfer assets to another corporation and distribute the stock of such
other corporation without the surrender of Stock of the Company, and if such
distribution is not taxable as a dividend and no gain or loss is recognized by
reason of section 355 of the Code or any amendment or successor statute of like
tenor, then the total purchase price of the Stock then covered by each
outstanding Option shall be reduced by an amount that bears the same ratio to
the total purchase price then in effect as the market value of the stock
distributed in respect of a share of the Stock of the Company, immediately following
the distribution, bears to the aggregate of the market value at such time of a
share of the Stock of the Company plus the stock distributed in respect
thereof. Shares issued under a Stock Award shall be treated as issued and
outstanding whether or not subject to Forfeiture Restrictions, although any
stock of the other corporation to be distributed with respect to the shares
awarded under the Stock Award shall be subject to the Forfeiture Restrictions

 

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then applicable to such
shares and may be held by the Company or otherwise subject to restrictions on
transfer until the expiration of the Forfeiture Restrictions. In the event that
the Company distributes the stock of a subsidiary to its shareholders, makes a
distribution of a major portion of its assets, or otherwise distributes a
significant portion of the value of its issued and outstanding Stock to its
shareholders, the number of shares then subject to each outstanding Option and
the Plan, or the exercise price of each outstanding Option, may be adjusted in
the reasonable discretion of the Board or a duly authorized committee. Shares
awarded under a Stock Award shall be treated as issued and outstanding, whether
or not subject to Forfeiture Restrictions, although any Stock, assets, or other
rights distributed shall be subject to the Forfeiture Restrictions governing
the shares awarded under the Stock Award and, at the discretion of the Board or
a duly authorized committee, may be held by the Company or otherwise subject to
restrictions on transfer by the Company until the expiration of such Forfeiture
Restrictions. All such adjustments shall be made by the Board or duly
authorized committee, whose determination upon the same, absent demonstrable
error, shall be final and binding on all participants under the Plan. No
fractional shares shall be issued, and any fractional shares resulting from the
computations pursuant to this section shall be eliminated from the respective
Option or Stock Award. No adjustment shall be made for cash dividends, for the
issuance of additional shares of Stock for consideration approved by the Board,
or for the issuance to stockholders of rights to subscribe for additional Stock
or other securities.

 

17.                                 Options
or Stock Awards to Foreign Nationals. The Board or a duly authorized
committee may, in order to fulfill the purposes of this Plan and without
amending the Plan, grant Options or Stock Awards to foreign nationals or
individuals residing in foreign countries that contain provisions,
restrictions, and limitations different from those set forth in this Plan and
the Options or Stock Awards made to United States residents in order to
recognize differences among the countries in law, tax policy, and custom. Such
grants shall be made in an attempt to provide such individuals with essentially
the same benefits as contemplated by a grant to United States residents under
the terms of this Plan.

 

18.                                 Listing
and Registration of Shares. Unless otherwise expressly provided on the granting
of an award under this Plan, the Company shall have no obligation to register
any securities issued pursuant to this Plan or issuable on the exercise of
Options granted hereunder. Each award shall be subject to the requirement that
if at any time the Board or a duly authorized committee shall determine, in its
sole discretion, that it is necessary or desirable to list, register, or
qualify the shares covered thereby on any securities exchange or under any
state or federal law, or obtain the consent or approval of any governmental
agency or regulatory body as a condition of, or in connection with, the
granting of such award or the issuance or purchase of shares thereunder, such
award may not be made or exercised in whole or in part unless and until such listing.
registration, consent, or approval shall have been effected or obtained free of
any conditions not acceptable to the Board or a duly authorized committee.

 

19.                                 Expiration
and Termination of the Plan. The Plan may be abandoned or terminated at any
time by the Board or a duly authorized committee except with respect to any
Options or Stock Awards then outstanding under the Plan. The Plan shall
otherwise terminate on the earlier of the date that is: (i) ten years after the
date the Plan is adopted by the Board; or (ii) ten years after the date the
Plan is approved by the shareholders of the Company.

 

20.                                 Form
of Awards. Awards granted under the Plan shall be represented by a written
agreement which shall be executed by the Company and which shall contain such
terms and conditions as may be determined by the Board or a duly authorized
committee and permitted under the terms of this Plan. Option agreements
evidencing Incentive Options shall contain such terms and conditions, among
others, as may be necessary in the opinion of the Board or a duly authorized
committee to qualify them as incentive stock options under section 422 of the
Code or any amendment or successor statute of like tenor.

 

21.                                 No
Right of Employment. Nothing contained in this Plan or any Option or Stock
Award shall be construed as conferring on a director, officer, or employee any
right to continue or remain as a director, officer, or employee of the Company
or its subsidiaries.

 

8

 

22.                                 Leaves
of Absence. The Board or duly authorized committee shall be entitled to
make such rules, regulations, and determinations as the Board or duly
authorized committee deems appropriate under the Plan in respect of any leave
of absence taken by the recipient of any Option or Stock Award. Without
limiting the generality of the foregoing, the Board or duly authorized
committee shall be entitled to determine (a) whether or not any such leave of
absence shall constitute a termination of employment within the meaning of the
Plan, and (b) the impact, if any, of any such leave of absence on any Option or
Stock Award under the Plan theretofore made to any recipient who takes such
leave of absence.

 

23.                                 Amendment
of the Plan. The Board or a duly authorized committee may modify and amend
the Plan in any respect; provided, however, that to the extent such amendment
or modification would cause the Plan to no longer comply with the applicable
provisions of the Code with respect to Incentive Options, such amendment or
modification shall also be approved by the shareholders of the Company. Subject
to the foregoing and, if the Company is subject to the provisions of 16(b) of
the Exchange Act, the limitations of Rule 16b-3 promulgated under the Exchange
Act or any amendment or successor rule of like tenor, the Plan shall be deemed
to be automatically amended as is necessary (i) with respect to the issuance of
Incentive Options, to maintain the Plan in compliance with the provisions of
section 422 of the Code, and regulations promulgated thereunder from time to
time, or any amendment or successor statute thereto, and (ii) with respect to
Options or Stock Awards granted to officers and directors of the Company, to
maintain the awards made under the Plan in compliance with the provisions of
Rule 16b-3 promulgated under the Exchange Act or any amendment or successor
rule of like tenor.

 

	
  DATE: April 14, 2005

  	
  ATTEST:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher Chambers

  	
   

  
	
   

  	
   

  	
   Christopher
  Chambers, Secretary

  

 

9

 

SECRETARY’S CERTIFICATE

 

The undersigned, the duly constituted and elected
secretary of APOLLO RESOURCES INTERNATIONAL, INC., hereby certifies that a duly
constituted meeting of the shareholders held on April 14, 2005, pursuant to
notice and at which a quorum was present in accordance with the requirements of
law and the Company’s articles of incorporation and bylaws, the foregoing
APOLLO RESOURCES INTERNATIONAL, INC. 2005 Stock Option and Award Plan was
approved by the affirmative vote of the holders of a majority of the shares of
Common Stock in attendance, in person or by proxy, at such meeting.

 

DATED this 14th day of April, 2005.

 

 

	
   

  	
  By

  	
  /s/ Christopher Chambers

  	
   

  
	
   

  	
  Christopher
  Chambers, Secretary

  

 

10EXHIBIT 10.1

 

EMPLOYMENT AGREEMENT

 

This
is an Employment Agreement (Agreement) between ZOMAX INCORPORATED, a Minnesota corporation, (hereinafter “Zomax”),
and Anthony Angelini (hereinafter “Executive”).

 

Section 1

 

DEFINITIONS

 

1.                                      Definitions.

 

The
following capitalized terms used in this Agreement shall be defined as follows:

 

Agreement
shall mean this Agreement between Zomax and Executive.

 

Base
Salary shall mean the annual base salary payable to Executive
pursuant to Section 3.1 hereof, and “monthly Base Salary” shall mean the
Base Salary divided by twelve (12).

 

Board
shall mean the Board of Directors of Zomax.

 

Cause
shall mean termination of the Executive’s employment with Zomax by the Board
because of (1) gross misconduct, dishonesty or disloyalty which results in
material harm to Zomax; (2) willful and material breach of this Agreement by
Executive (other than Executive’s failure to perform his duties hereunder
resulting from incapacity due to physical or mental illness) which has not been
corrected by Executive within two weeks of receipt of notice from Zomax of the
occurrence of such event; (3) conviction or entry of a plea of guilty or nolo
contendere to any felony or to any misdemeanor involving fraud,
misrepresentation or theft; or (4) the failure of Executive to comply in all
material respects with policies and procedures adopted by the Board of
Directors and committees of the Board of Directors relating to and including,
but not limited to, governance, securities trading, corporate disclosure practices
and executive annual training and education. 
Zomax acknowledges that it has been the subject of a civil investigation
for the past several years, that Executive served as an officer of Zomax during
the period covered by the investigation and that Executive’s actions during
this period do not constitute cause as defined herein. No act, or failure to
act, by Executive shall be considered “willful” unless committed without good
faith and without a reasonable belief that the act or omission was in Zomax’s
best interest.

 

A Change of Control shall be deemed to have occurred if (1)
any “person” (as such term is used in Section 13(d) and 14(d) of the
Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of Zomax representing
30% or more of the combined voting power (with respect to the election of
directors) of Zomax’s then outstanding securities; (2) at any time after the
execution of this Agreement, individuals who as of the date of the execution of
this Agreement constitute the

 

 

Board (and any new
director whose election to the Board or nomination for election to the Board by
Zomax’s stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office) cease for any reason to constitute a majority
of the Board; (3) the consummation of a merger or consolidation of Zomax with
or into any other corporation, other than a merger or consolidation
which would result in the holders of the voting securities of Zomax outstanding
immediately prior thereto continuing to continue to hold (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 70% of the combined voting power (with respect to the election
of directors) of the securities of Zomax or of such surviving entity
outstanding immediately after such merger or consolidation; or (4) the
consummation of a plan of complete liquidation of Zomax or of an agreement for
the sale or disposition by Zomax of all or substantially all of Zomax’s
business or assets.

 

Change of
Control Payments shall mean any payment (including any
benefit or transfer of property) in the nature of compensation to or for the
benefit of Executive under any arrangement which is partially or entirely
contingent on a Change of Control, or is deemed to be contingent on a Change of
Control for purposes of Section 280G of the Code.  As used in this definition, the term “arrangement”
includes any agreement between Executive and Zomax and any and all of Zomax’s
salary, bonus, incentive, compensation or benefit plans, programs or
arrangements, and shall include this Agreement.

 

Code
shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

Company
shall mean Zomax Incorporated, a Minnesota corporation, any subsidiaries
thereof, and any successors or assigns, including any Successor.

 

Company
Product means any product, product line or service (including
any component thereof or research to develop information useful in connection
with a product or service) that is being designed, developed, manufactured,
marketed or sold by Zomax at the time of the termination of Executive’s
employment with Zomax or with respect to which Zomax has acquired, prior to
termination of Executive’s employment, Confidential Information which it
intends to use in the design, development, manufacture, marketing or sale of a
product or service.

 

Competitive
Product means any product, product line or service (including
any component thereof or research to develop information useful in connection
with a product or service) that is being designed, developed, manufactured,
marketed or sold by anyone other than Zomax and is of the same general type,
performs similar functions, or is used for the same purposes as a Company
Product.

 

Confidential
Information means any information or compilation of
information that Executive learns or develops during the course of his
employment with Zomax that derives independent economic value from not being
generally known, or readily ascertainable by proper means, by other persons who
can obtain economic value from its disclosure or use.  It includes but is not limited to trade
secrets, inventions, discoveries, and may relate to such matters as research
and development, manufacturing processes, management systems and techniques and
sales and marketing plans and information.

 

2

 

Good
Reason shall mean (1) a substantial reduction in the nature
or status of Executive’s responsibilities hereunder, including if Executive
should no longer serve as the Chief Executive Officer, or report to the board
of directors, of Zomax or an ultimate parent entity; (2) a reduction by the
Company in the Executive’s Base Salary or target bonus opportunity except a
reduction may be permitted if the Company reduces the base salaries or target
bonus opportunities of its senior executives generally provided that such
reduction shall not exceed the average percentage reduction of all senior
executives of this Agreement; (3) the failure to comply with the Section 3.3
of this Agreement; (4) a requirement to relocate outside of the San Francisco
Bay Area; (5) failure by Zomax to allow Executive to participate to the full
extent in all plans, programs or benefits in accordance with this Agreement;
(6) failure by Zomax to nominate and endorse Executive for reelection to the
Board during the Term; and (7) failure by a successor to assume all of the
terms and conditions of this Agreement. 
Notwithstanding the foregoing, “Good Reason” shall be deemed to occur
only if such event enumerated in (1), (2), (3), (4) or (5) above has not been
corrected by Zomax within two weeks of receipt of notice from Executive of the
occurrence of such event, which notice shall specifically describe such event.

 

Inventions
means any inventions, discoveries, improvements, ideas or works of authorship
(whether patentable or not and including those which may be subject to
copyright protection) generated, conceived, authored or reduced to practice by
Executive alone or in conjunction with others, during or after working hours,
while an employee of Zomax, and that:

 

(i)                                     are
derived in whole or in part from, or use, incorporate or represent any
improvement to any Invention or trade secret of Zomax; or

 

(ii)                                  result
from any work Executive performs for Zomax; or

 

(iii)                               use any of Zomax’s
equipment, supplies, facilities or trade secret information; or

 

(iv)                              otherwise
relate to Zomax’s products or Zomax’s present or reasonably foreseeable future
research or development.

 

Term
shall mean the term of Executive’s employment under Section 2.3 below.

 

Person
shall mean an individual, partnership, corporation, estate or trust or other
entity.

 

Successor shall be any entity acquiring
substantially all of the assets of Zomax or a corporation into which Zomax is
merged or with which it is consolidated.

 

3

 

Section 2

 

EMPLOYMENT AND TERMS OF AGREEMENT

 

2.1                               Employment.
 Zomax hereby agrees to continue to
employ Executive, and Executive hereby agrees to continue his employment as
President and Chief Executive Officer of Zomax, subject to the terms and
conditions of this Agreement and shall report directly to the Board.  At all relevant times during the Term, Zomax
agrees to nominate Executive for election to the Board.  Executive understands and agrees that he will
immediately resign from the Board (and from any other Zomax directorships or
offices) upon termination of his employment for any reason.

 

2.2                               Duties.

 

a.                                       During
the term of his employment pursuant to this Agreement, Executive shall serve
Zomax faithfully and to the best of his ability and shall devote substantially
all his business and professional time, energy, and diligence to the
performance of the duties of such office and he shall perform such service and
duties in connection with the business and affairs of Zomax (i) as are
customarily incident to such office and (ii) as may reasonably be assigned or
delegated to him by the Board and/or its director designee.  Executive may engage in appropriate civic,
charitable or religious activities and devote a reasonable amount of time to
private investments or, with the consent of Zomax’s Board of Directors which
shall not be withheld unreasonably, serve on up to two (2) boards of directors
of other entities, in each case, as long as such activities and service do not
interfere or conflict with Executive’s duties and responsibilities to Zomax and
its affiliates.

 

b.                                      Subject
to the terms of this Agreement, Executive agrees to be subject to Zomax’s
control, rules, regulations, policies and programs.

 

2.3                               Term
of Employment.

 

a.                                       The
term of this Agreement shall be effective as of the date hereof and shall
extend until terminated as expressly provided herein.

 

b.                                      Unless
extended by mutual consent or as provided in Section 2.3(c) below, this
Agreement shall terminate one year from the date hereof (the “Initial Term”).

 

c.                                       On
and after the Initial Term, this Agreement shall be deemed extended from year
to year (“Extension Year”) unless, no later than three (3) months prior to the
end of the Initial Term or applicable Extension Year (as the case may be),
Zomax or the Executive shall have notified the other party in writing that it
or he does not elect to extend the Initial Term or applicable Extension Year
(as the case may be) past its then expiration date.

 

Section 3

 

COMPENSATION, BENEFITS AND OTHER ENTITLEMENTS

 

3.1                               Base
Salary.  As compensation for his
services to Zomax and as compensation for his confidentiality and noncompetition
agreements provided in Sections 7 and 9 of this

 

4

 

Agreement, Executive
shall be paid a bi-weekly salary of $17,307.69. 
The Base Salary may be increased or reduced; provided, however, that
any reduction shall be permitted only if the Company reduces the base salary of
its senior executives generally and such reduction shall not exceed the
average percentage reduction for all senior executives.  The base annual salary shall be inclusive of
all applicable income, Social Security, and other taxes and charges that are
required by law to be withheld by Zomax or that are requested to be withheld by
Executive.

 

3.2                               Bonus.  In addition to the base salary payable to
Executive pursuant to Section 3.1 above, Executive will be eligible to
receive an annual bonus for each year of service under this Agreement.  During the Term, the bonus shall be targeted
at no less than 70% of Base Salary, unless the Company reduces the target bonus
of its senior executives generally and such reduction does not exceed
the average percentage reduction for all senior executives.  The criteria for payout of Executive’s bonus
and his target bonus opportunity for a particular year shall, subject to the
preceding sentence, be determined solely within the discretion of the Board or
Compensation Committee of Zomax and shall be communicated to Executive no later
than March 1 of each year.  The
bonus earned by Executive, if any, will be paid to Executive no later than March 1
of the following year.

 

3.3                               Long-Term
Incentives.  In addition to the base salary and bonus
payable to Executive pursuant to Sections 3.1 and 3.2, Executive will be
eligible to receive annual equity based awards for each year of service under
this Agreement.  The Compensation
Committee in its sole discretion will determine whether to grant to Executive
any equity based awards in a particular year and the size of such awards.  The terms and conditions of such awards shall
be no less favorable than awards granted to other senior executives.  In making these determinations, the
Compensation Committee will take into account the Company’s and Executive’s
performances.

 

3.4                               Benefits.  Executive shall be eligible to participate in
or receive benefits under all senior executive and employee benefit plans,
health plans, or arrangements, if any, made available from time to time by
Zomax to its senior executive employees as set forth in an employee manual or
otherwise, including but not limited to deferred compensation, supplemental
retirement and Section 401(k) plans, disability, life and other insurance
plans and programs, all hospitalization and health and welfare plans and
programs, and stock options, restricted share, incentive or other bonus
plans.  Subject to Sections 3.2 and 3.3,
Zomax retains the right to amend, modify or terminate any of its benefits or
benefit plans during the term of Executive’s employment.

 

3.5                               Miscellaneous
Benefits.  Zomax shall provide
Executive the following additional benefits:

 

a.                                       Reimbursement
of all ordinary and necessary expenses incurred by Executive for Zomax
business, and

 

b.                                      As
of the effective date of this Agreement, Executive had approximately 87 days of
accrued vacation benefits, valued at approximately $ 150,000, pursuant to the

 

5

 

Company’s current
vacation policy, and such benefits will continue to accrue under the terms of
the Company’s current vacation policy until the Company effects a new vacation
policy which is currently in process.  When
the new vacation policy is implemented, Executive’s accrued vacation benefits
will be frozen.  Thereafter, Executive
agrees to be bound by the terms and conditions of the new policy.  The accrued vacation days as frozen may be utilized
by Executive from time to time at his reasonable discretion.  On the termination of this Agreement or his
employment for any reason, Executive will be paid in cash in an amount equal to
the value of the vacation days remaining in the frozen account.  This amount will be paid in full within five
(5) days of the effective date of the termination of his employment or this
Agreement for any reason.

 

Section 4

 

TERMINATION OF EMPLOYMENT

 

4.1                               Termination.  Notwithstanding any other provision of this
Agreement to the contrary or appearing to be to the contrary, Executive’s
employment shall terminate as follows:

 

a.                                       By
mutual written agreement of the parties.

 

b.                                      Upon
Executive’s death.

 

c.                                       Zomax
shall have the right to terminate Executive’s employment upon Executive’s
inability to perform the essential functions of his position due to physical or
mental disability as determined in the good faith judgment of the Board of
Directors, provided such inability continues for a period of ninety (90)
consecutive days, one hundred twenty (120) non-consecutive days in any twelve
(12) month period, or longer period as may be required by applicable law.

 

d.                                      Subject
to Sections 4.1(c) and 4.1(f), upon ninety (90) days’ written notice to
Executive by Zomax.

 

e.                                       Subject
to Sections 4.1(g) and 4.1(h), upon ninety (90) days’ written notice by
Executive to Zomax.

 

f.                                         Zomax
shall have the right to terminate Executive’s employment immediately for “Cause”
as defined in Section 1 above.

 

g.                                      Executive
shall have the right to resign from his employment immediately for “Good Reason”
as defined in Section 1 above.

 

h.                                      Executive
shall have the right to resign from his employment immediately for any reason
at any time during the one (1) year period after a Change of Control.

 

6

 

4.2                               Payment
Upon Termination of Employment for Cause or Resignation Without Good Reason.

 

a.                                       If
Executive’s employment is terminated by Zomax for Cause or if Executive resigns
from his employment hereunder other than for Good Reason, then Executive shall
only be entitled to receive the “Accrued Benefits.”  For purposes of this Agreement, the “Accrued
Benefits” shall mean any accrued and unpaid Base Salary through the termination
date, any other benefits under any plan or program in accordance with the terms
of such plan or program (including any vesting requirements) and benefits
provided in accordance with customary practices of Zomax at Executive’s expense
(e.g., hospitalization and medical insurance).

 

b.                                      The
date of termination of Executive’s employment by Zomax under the circumstances
described in this Section 4.2 shall be effective immediately upon receipt
by Executive of written notice of termination. 
The date of resignation by Executive under the circumstances described
in this Section 4.2 shall be ninety (90) days after receipt by Zomax of
written notice of resignation.

 

4.3                               Payment
Upon Termination of Employment Without Cause, Resignation for Good Reason,
Termination or Resignation Following Change of Control and Failure to Extend
Employment Agreement.

 

a.                                       If
Executive’s employment is terminated Without Cause, Executive resigns from his
employment hereunder for Good Reason, Executive is terminated or resigns from
his employment hereunder for any reason within one (1) year after a Change of
Control, or Zomax or its successor fails to extend this Agreement at the end of
the Initial Term or any Extension Year, Executive shall be entitled to the
Accrued Benefits and to receive the following:

 

(i)                                     Executive
shall receive, within thirty (30) days after any such termination without cause
or resignation for good reason or without an extension by Zomax at the end of
the Initial Term of this agreement or any Extension Year, a lump sum payment in
an amount equal to 1.7 times his Base Salary in effect on the effective date of
such termination or resignation or as of the end of the Initial Term or
Extension Year.  Zomax shall be entitled
to deduct or withhold all taxes and charges which may be required to be deducted
or withheld therefrom.  It is understood
by the parties that in the event of a Change of Control, Executive will be
entitled to receive the above-described lump sum payment from Zomax or its
successor within thirty (30) days after: 
(i) a Change of Control if Executive declines to begin working for
successor; (ii) Executive is terminated by successor for any reason within one
(1) year after a Change of Control; or (iii) Executive resigns from his
employment by successor for any reason.

 

(ii)                                  With
respect to any outstanding stock options, SARs, restricted stock awards,
performance share awards or other equity-based awards granted to

 

7

 

Executive,
all restrictions shall lapse immediately and such awards shall fully vest, all
outstanding options and SARs will become exercisable immediately, and all
performance share objectives shall be deemed to have been meet.

 

(iii)                               Executive and his family
shall be entitled to continued participation in hospital and medical plans and
programs of Zomax at Zomax’s expense for a twelve (12) month period following
such termination, resignation or end of the Initial Term or Extension Year
subject to early termination of participation upon Executive becoming entitled
to comparable benefits on subsequent employment.

 

(iv)                              Executive
shall be entitled to payment in full, upon the effective date of Termination or
Resignation for Good Reason, or the failure to extend Executive’s employment at
the end of the Initial Year or Extension Year, of all unpaid vacation
allowances.

 

b.                                      The
date of termination of Executive’s employment by Zomax Without Cause shall be
ninety (90) days after receipt by Executive of written notice of
termination.  The date of termination or
resignation by Executive for any reason within one (1) year after a Change of
Control or Resignation for Good Reason shall be effective immediately upon
receipt by Zomax of written notice of resignation or the date of receipt by
Executive of the termination notice.  The
date of termination of Executive’s employment for failure to extend his
employment shall be the date on which the Initial Term or Extension Year
terminates.

 

c.                                       Anything in the Agreement to the contrary
notwithstanding, if any payment or benefit of any type to or for the benefit of
Executive by Zomax, by any of its affiliates, by any person who acquires
ownership or effective control or ownership of a substantial portion of Zomax’s
assets (within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended, and the regulations thereunder (the “Code”)) or by any
affiliate of such person, whether paid or payable or distributed or
distributable pursuant to the terms of the Agreement or otherwise (the “Payments”),
would, but for this sentence, be subject to the excise tax imposed by Section 4999
of the Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest or penalties, are collectively
referred to as the “Excise Tax”), then such Payment(s) shall be equal to the
Greater Amount.  The “Greater Amount”
shall be either (1) the largest portion of the Payment(s) that would result in
no portion of the Payment(s) being subject to the Excise Tax or (2) the
Payment(s) in full, whichever amount after taking into account all applicable
federal, state and local taxes and the Excise Tax (all computed at the highest
applicable marginal rate), results in the Executive’s receipt, on an after-tax
basis, of the greatest amount of the Payment(s).  If a reduction in payments or benefits is
necessary so that the Payment(s) equals the Greater Amount, reduction shall
occur in the following order unless Executive elects in writing a different
order:  reduction of cash payments;
reduction of non-cash payments.

 

8

 

4.4.                            Payment
Upon Termination of Employment by Disability or Death.

 

a.                                       In
the event of termination of Executive’s employment pursuant to Section 4.1(b)
or 4.1(c), the Executive and/or his family (or Executive’s estate, as the case
may be), shall be entitled to the Accrued Benefits and the following:

 

(i)                                     Executive
shall receive, within thirty (30) days after any such termination, resignation,
or without an extension by Zomax at the end of the Initial Term of this
agreement or any Extension Year, a lump sum payment in an amount equal to 1.7
times his Base Salary in effect on the effective date of such termination or
resignation or as of the end of the Initial Term or Extension Year.  Zomax shall be entitled to deduct or withhold
all taxes and charges which Zomax may be required to deduct or withhold
therefrom.

 

(ii)                                  With
respect to any outstanding stock options, SARs, restricted stock awards,
performance share awards or other equity-based awards granted to Executive, all
restrictions shall lapse immediately and such awards shall fully vest, all
outstanding options and SARs will become exercisable immediately, and all
performance share objectives shall be deemed to have been meet.

 

(iii)                               Executive and/or his
family shall be entitled to continue participation in hospital and medical
plans and programs of Zomax at Zomax’s expense for an eighteen (18) month
period.  Thereafter, Zomax shall pay to
Executive and/or his family the sum of $6,000 per year to be prorated for a
partial year, during the period of disability or, if later, until Executive
reaches age 62 or would have reached age 62 if he had survived; provided, that
the first payment shall be payable on the day following the expiration of such
eighteen (18) month period and any subsequent payments shall be payable on each
anniversary of such day.

 

(iv)                              Executive
(or, in the event of his death, Executive’s estate or his designated
beneficiary) shall be entitled to receive benefits under any other Company plan
or program (to the extent Executive is vested) in accordance with the terms of
such plan or program.  Should Executive’s
employment terminate pursuant to Section 4.1(c), he shall be entitled to
continued contributions under Zomax’s qualified profit sharing plan 401(k) to
the extent permitted in said Plan.

 

(v)                                 Executive
shall be entitled to payment in full, upon the effective date of termination,
for Good Reason, retirement or the end of the Initial Year or Extension Year,
of all unpaid vacation allowances.

 

9

 

b.                                      The
date of termination of Executive’s employment under the circumstances described
in this Section 4.4 shall be the date Executive’s employment is terminated
pursuant to Section 4.1(c) or the date of Executive’s death, as the case
may be.

 

5.                                      Legal
Fees and Expenses.  Zomax shall pay for all legal fees and
expenses incurred by Executive up to $18,000 in connection with the
negotiation, preparation, review, execution and interpretation of this
Agreement and other related documents (including any amendment of this
Agreement).

 

Prior
to a Change of Control, if Executive is successful in seeking to obtain or
enforce any right or benefit provided by this Agreement from or against Zomax
in a proceeding before a court of competent jurisdiction or before an arbitrator
or arbitration panel, Zomax shall reimburse Executive for all reasonable legal
fees and expenses incurred by Executive in the pursuit of any employment right
or benefit.

 

If
after a Change of Control, Executive is successful in seeking to obtain or enforce
any right or benefit provided by this Agreement from or against a “Successor”
of Zomax before a court of competent jurisdiction or before an arbitrator or
arbitrator panel, Successor shall advance Executive for all reasonable legal
fees and expenses incurred by Executive in the pursuit of any employment right
or benefit.

 

6.                                      Assignment
of Inventions.  Executive agrees to
promptly disclose to Zomax in writing all Inventions; and all such Inventions
shall be the exclusive property of Zomax and are hereby assigned by Executive
to Zomax.  Further, Employee will, at
Zomax’s expense, give Zomax all assistance it reasonably requires to perfect,
protect, and use its rights to Inventions. 
In particular, but without limitation, Executive will sign all documents,
do all things, and supply all information that Zomax may deem necessary or
desirable to:

 

(i)                                     transfer
or record the transfer of his entire right, title and interest in Inventions;
and

 

(ii)                                  enable
Zomax to obtain patent, copyright or trademark protection for Inventions
anywhere in the world.

 

The
obligations of this Section 6 shall continue beyond the termination of
employment with respect to Inventions conceived or made by Executive during the
period of his employment and shall be binding upon assigns, executors,
administrators and other legal representatives. 
For purposes of this Agreement, any Invention relating to the business
of Zomax on which Executive files a patent application within six (6) months
after termination of employment with Zomax shall be presumed to cover
Inventions conceived by Executive during the term of his employment, subject to
proof to the contrary by good faith, written and duly corroborated records
establishing that such Invention was conceived and made following termination of
employment.

 

NOTICE:  Pursuant to Minnesota Statutes § 181.78,
Executive is hereby notified that this Section 6 does not apply to any
invention for which no equipment, supplies, facility, or trade

 

10

 

secret information of
Zomax was used and which was developed entirely on Executive’s own time, and
(1) which does not relate (a) directly to the business of Zomax or (b) to Zomax’s
actual or demonstrably anticipated research or development, or (2) which does not
result from any work performed by the employee for Zomax.

 

7.                                      Confidential
Information.  Executive agrees not to
directly or indirectly use or disclose Confidential Information for the benefit
of anyone other than Zomax, either during or after employment, for as long as
the information retains the characteristics of Confidential Information
described in Section 1 above.

 

8.                                      Return
of Documents and Property.  All
documents and tangible items provided to Executive by Zomax, or possessed by or
created by Executive for use in connection with his employment, are the
property of Zomax and shall be promptly returned to Zomax on termination of
employment together with all copies, recordings, abstracts, notes or
reproductions of any kind made from or about the documents and tangible items
or the information they contain.

 

9.                                      Noncompetition.  In consideration of Executive’s rights under
this Agreement, Executive agrees that, from and after the Effective Date and
continuing until the one-year anniversary of termination or cessation of
Executive’s employment with Zomax, Executive will not, alone or in any capacity
with another legal entity:

 

(i)                                     directly
or indirectly, own any interest in, control, be employed by or associated in a
material manner with, or render services to (including but not limited to
services in research), any person or entity (or subsidiary, subdivision,
division, or joint venture of such entity) in connection with the design,
development, manufacture, marketing, or sale of a Competitive Product that is
sold or intended for distribution or sale in any geographic area in which Zomax
actively markets, or in which, to the Executive’s knowledge acquired through
his employment with Zomax, Zomax intends to actively market, a Company Product
of the same general type or function;

 

(ii)                                  directly
or indirectly, solicit any of Zomax’s then current employees for the purpose of
hiring them or inducing them to leave their employment with Zomax;

 

(iii)                               directly or indirectly,
solicit, attempt to solicit, interfere, or attempt to interfere with Zomax’s
relationship with its then current customers or potential customers (of which
Executive has knowledge acquired through his employment with Zomax), on behalf
of himself or any other person or entity engaged in the design, development,
manufacture, marketing, or sale of a Competitive Product; or

 

11

 

(iv)                              directly
or indirectly design, develop, manufacture, market, or sell any Competitive
Product that is sold or intended for distribution or sale in any geographic
area in which Zomax actively markets, or in which, to the Executive’s knowledge
acquired through his employment with Zomax, Zomax intends to actively market, a
Company Product of the same general type or function.

 

In
the event that Executive receives a payment from Zomax pursuant to Section 4.3
above, the reference to the “one-year anniversary” in the first sentence of
this Section shall be changed to the “eighteen-month anniversary”.

 

Notwithstanding
the foregoing in no event shall ownership of less than four percent (4%) of the
outstanding publicly-traded equity or debt securities of any issuer or less
than four percent (4%) of the outstanding interests in a private equity fund,
mutual fund or other pooled investment account, in each case, in which the
Executive does not actively participate in the management thereof, be
prohibited by this Section 9.

 

10.                               Breach
of Noncompetition Provisions of this Agreement.  In addition to any other relief or remedies
afforded by law or in equity, if Executive breaches Section 9 of this
Agreement, Executive agrees that Zomax shall be entitled, as a matter of right,
to injunctive relief in any court of competent jurisdiction.  Executive recognizes and hereby admits that
irreparable damage will result to Zomax if he violates or threatens to violate
the terms of Section 9 of this Agreement. 
This Section 10 shall not preclude the granting of any other
appropriate relief including, without limitation, money damages against
Executive for breach of Section 9 of this Agreement.

 

11.                               Indemnification.  The Company shall indemnify Executive, for
such expenses and liabilities, in such manner, under such circumstances, and to
such extent, as permitted by Minnesota Statutes, Section 302A.521, as now
enacted or hereafter amended.  The right
to indemnification includes the right to be paid by Zomax the expenses incurred
in defending any proceeding in advance of its final disposition.

 

Zomax agrees to
provide to the Executive director’s and officer’s liability insurance coverage
that provides the maximum coverage provided to its other officers and directors
in respect of any liabilities that might arise out of his service as a director
and officer of Zomax.  The parties
recognize and agree that determination as to the amount of such insurance that
is reasonable shall reflect not only the need to protect the Executive against
liability, but also the cost and availability of such insurance.

 

After termination
of employment, the Executive will be available to give testimony and assistance
in connection with any future litigation or arbitration proceedings arising
from activities of Zomax during the period of his employment.  Such testimony and assistance will be scheduled
at times and locations convenient for the Executive and not inconsistent with
his health and the responsibilities that he then may have in connection with
subsequent employment or other rendering of services.  Zomax shall reimburse him for all reasonable
out-of-pocket travel

 

12

 

and other expenses,
including legal fees, incurred by him in connection with his testimony and
assistance pursuant to this Section 11. 
Such fees and reimbursements shall be paid promptly after the Executive’s
submission to Zomax of statements in such reasonable detail as to enable Zomax
to make such payment.

 

12.                               Effect
of Other Obligations.  It is intended
that the obligation of the parties to perform the terms of this Agreement is
unconditional and does not depend on the performance or non-performance of any
terms, duties or obligations not specifically recited in this Agreement.

 

13.                               Binding
Agreement.  This Agreement shall be
binding upon, and inure to the benefit of Zomax, its successors and assigns,
but without the prior written consent of Executive, this Agreement may not be
assigned other than in connection with a merger or sale of substantially all
the assets of Zomax or similar transaction. 
The rights of the Executive hereunder to payments and benefits shall inure
to the benefit of, and be enforceable by, the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

 

14.                               Severability.  If the final determination of a court of
competent jurisdiction declares, after the expiration of the time within which
judicial review (if permitted) of such determination may be perfected, that any
term of provision hereof is invalid or unenforceable, (a) the remaining terms
and provisions hereof shall be unimpaired, and (b) the invalid or unenforceable
term or provision shall be deemed replaced by a term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.

 

15.                               Amendment;
Waiver.  This Agreement may not be
modified, amended or waived in any manner except by an instrument in writing
signed by both parties hereto.  The
waiver by either party of compliance with any provision of this Agreement by
the other party shall not operate or be construed as a waiver of any other
provision of this Agreement, or of any subsequent breach by such party of a
provision of this Agreement.

 

16.                               Governing
Law.  All matters affecting this
Agreement, including the validity thereof, are to be governed by, interpreted
and construed in accordance with the laws of the State of Minnesota without
regard to the conflict of laws principles thereof.

 

17.                               Notices.  Any notice hereunder by either party to the
other shall be given in writing by personal delivery or certified mail, return
receipt requested.  If addressed to
Executive, the notice shall be delivered or mailed to Executive at the address
most recently communicated in writing by Executive to Zomax, or if addressed to
Zomax, the notice shall be delivered or mailed to Zomax at its executive
offices to the attention of the Board of Directors of Zomax.  A notice shall be deemed given, if by
personal delivery, on the date of such delivery or, if by certified mail, on
the date shown on the applicable return receipt.

 

18.                               Supersedes
Previous Agreements.  This Agreement
supersedes all prior or contemporaneous negotiations, commitments, agreements
and writings with respect to the

 

13

 

subject matter hereof, all
such other negotiations, commitments, agreements and writings will have no
further force or effect, and the parties to any such other negotiation,
commitment, agreement or writing will have no further rights or obligations
thereunder.

 

19.                               Headings;
Construction.  The headings of
Sections and paragraphs herein are included solely for convenience of reference
and shall not control the meaning or interpretation of any of the provisions of
this Agreement.  This Agreement shall be
construed without regard to any presumption or other rule requiring
construction hereof against the party causing this Agreement to be drafted.

 

20.                               Benefit.  Subject to Section 13, nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.

 

21.                               Release.  Executive understands and agrees that he will
be entitled to no severance payments under Section 4.3 and 4.4 above
unless he executes and does not rescind a release agreement in the form
mutually agreed to be Zomax and Executive and that will provide for a mutual
and comprehensive release of claims by each party against the other party,
except for any of Executive’s contractual claims (including, without limitation
under this Agreement and any equity-based award agreements) or claims for
accrued benefits in favor of Executive.

 

22.                               No Mitigation.  Executive shall not be required to
mitigate the amount of any payment or benefit hereunder, nor shall any payment
or benefit be reduced by any earnings or benefits that Executive may receive
from another source.

 

IN
WITNESS WHEREOF, Zomax has caused this Agreement to be signed by its Chairman
of the Compensation Committee pursuant to the authority of its Board, and
Executive has executed this Agreement, effective as of April 14, 2005.

 

	
   

  	
  ZOMAX
  INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
       /s/
  Janice Ozello Wilcox

  	
   

  
	
   

  	
   

  	
  Chairman,
  Compensation Committee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
             /s/
  Anthony Angelini

  	
   

  
	
   

  	
  Anthony Angelini

  
						

 

14

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