RelationServe Media, Inc. 2005 Non-Employee Directors Stock Option Plan

 EXHIBIT 10.1 RELATIONSERVE MEDIA, INC. 2005 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN 1. PURPOSE. The RelationServe Media, Inc. 2005 Non-Employee Directors Stock Option Plan (the "Plan") is established effective as of the 23rd day of June 2005, (the "Effective Date") to create additional incentive for the non employee directors of RelationServe Media, Inc., a Nevada corporation, and any successor corporation thereto (collectively referred to as the "Company") to promote the financial success and progress of the Company and any present or future parent and/or subsidiary corporations of the Company. For purposes of the Plan, a parent corporation and a subsidiary corporation shall be as defined in sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended (the "Code"). 2. ADMINISTRATION. The Plan shall be administered by the Board of Directors of the Company (the "Board") and/or by a duly appointed committee of the Board having such powers as shall be specified by the Board. Any subsequent references herein to the Board shall also mean the committee if such committee has been appointed and, unless the powers of the committee have been specifically limited, the committee shall have all of the powers of the Board granted herein, including, without limitation, the power to terminate or amend the Plan at any time subject to the terms of the Plan and any applicable limitations imposed by law. The Board shall have no authority, discretion or power to select the non-employee directors of the Company who will receive options under the Plan, to set the exercise price of the options granted under the Plan, to determine the number of shares of common stock to be granted under option or the time at which such options are to be granted, to establish the duration of option grants, or to alter other terms or conditions specified in the Plan, except in the sense of administering the Plan subject to the provisions of the Plan and except as is provided in Paragraph 7. All questions of interpretation of the Plan or of any options granted under the Plan (an "Option") shall be determined by the Board, and such determinations shall be final and binding upon all persons having an interest in the Plan and/or any Option. Any officer of the Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the officer has apparent authority with respect to such matter, right, obligation, or election. 3. ELIGIBILITY AND TYPE OF OPTION. Options may be granted only to directors of the Company who, at the time of such grant, are not employees of the Company or of any parent or subsidiary corporation of the Company ("Non-Employee Directors"). Options granted to Non-Employee Directors shall be non-qualified stock options; that is, options that are not treated as having been granted under section 422(b) of the Code. A person granted an Option is hereinafter referred to as an "Optionee". 4. SHARES SUBJECT TO OPTION. Options shall be for the purchase of shares of authorized but unissued common stock or treasury shares of common stock of the Company (the "Stock"), subject to adjustment as provided in paragraph 8 below. The maximum number of shares of Stock which may be issued under the Plan shall be two million (2,000,000) shares as follows: (a) One million (1,000,000) shall be reserved for issuance pursuant to Section 6(a)(i) and (b) One million (1,000,000) shall be reserved pursuant to Section 6(a)(ii) and (iii), collectively. In the event that any outstanding Option for any reason expires or is terminated and/or shares of Stock subject to repurchase are repurchased by the Company, the shares allocable to the unexercised portion of such Option, or such repurchased shares, may again be subject to an Option grant. 5. TIME FOR GRANTING OPTIONS. All Options shall be granted, if at all, within five (5) years from the Effective Date. 6. TERMS, CONDITIONS AND FORM OF OPTIONS. Options granted pursuant to the Plan shall be evidenced by written agreements specifying the number of shares of Stock covered thereby (the "Option Agreement"), which written agreement may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions: a. AUTOMATIC GRANT OF OPTIONS. Subject to execution by an Non-Employee Director of an appropriate Option Agreement, Options shall be granted automatically and without further action of the Board (subject to such additional terms and conditions as are set forth herein) as follows:  i. Each Non-Employee Director who is newly-elected or appointed Chairman of the Board on or after the Effective Date shall at the time first elected as Chairman receive an Option to purchase one million (1,000,000) shares of Stock. No Option Agreement shall be issued prior to stockholder approval of this Plan, and if not so approved the award provided hereby shall be of no effect and the Chairman Option shall be cancelled. ii. Each person (other than the Chairman) who is newly elected or appointed as an Non-Employee Director on or after the Effective Date shall be granted an Option on the day of such initial election or appointment (and not upon any future re-election or appointment) to purchase Fifty Thousand (50,000) shares of Stock. iii. Each person who remains an Non-Employee Director for a period of two (2) consecutive years following the date of initial election or appointment shall be granted an Option to purchase fifty thousand (50,000) shares of Stock on the two (2) year anniversary of such Non-Employee Director's initial election or appointment. iv. Notwithstanding the foregoing, any person may elect not to receive an Option to be granted pursuant to this paragraph 6(a) by delivering written notice of such election to the Board no later than the day prior to the date on which such Option would otherwise be granted. A person so declining an Option shall receive no payment or other consideration in lieu of such declined Option. A person who has declined an Option may revoke such election by delivering written notice of such revocation to the Board no later than the day prior to the date on which such Option would be granted pursuant to paragraph 6(a). v. Notwithstanding any other provision of the Plan to the contrary, no Option shall be granted to any individual on a day when he or she is no longer serving as an Non-Employee Director of the Company. b. OPTION EXERCISE PRICE. The purchase price of each share of Stock purchasable under an Option shall be the Fair Market Value (as defined below) of such share of Stock on the date the Option is granted. "Fair Market Value" means the average of the high and low prices of publicly traded shares of Stock, rounded to the nearest cent, on the principal national securities exchange on which shares of Stock are listed (if the shares of Stock are so listed), or on the Nasdaq Stock Market (if the shares of Stock are regularly quoted on the Nasdaq Stock Market), or, if not so listed or regularly quoted, the mean between the closing bid and asked prices of publicly traded shares of Stock in the over-the-counter market, or, if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company, or as determined by the Board in a manner consistent with the provisions of the Code. Anything in this Section 6(b) to the contrary notwithstanding, in no event shall the purchase price of a share of Stock be less than the minimum price permitted under the rules and policies of any national securities exchange on which the shares of Stock are listed. c. EXERCISE PERIOD AND EXERCISABILITY OF OPTIONS. An Option granted pursuant to Section 6(a)(i), 6(a)(ii) or 6(a)(iii) of the Plan shall be exercisable for a term of ten (10) years. Options granted pursuant to Section 6(a)(i) of the Plan shall become exercisable on the six months anniversary of the date of approval of this Plan by the stockholders of the Company. Options granted pursuant to Section 6(a)(ii) or 6(a)(iii) of the Plan shall become exercisable as to fifty (50%) percent on the day which is one (1) year from the date on which the Option was granted and the remaining fifty (50%) percent on the date which is two (2) years from the date the Option was granted. d. TERMINATION OF OPTIONEE. In the event of an Optionee's termination as Chairman or as director for any reason other than as a result of death or disability of the Optionee (in which case of death or disability all Options that have become vested will remain exercisable for the earlier of twelve (12) months or the expiration date of the Options). All Options that have not become vested and exercisable as of the date of such cessation of Service shall be forfeited and to the extent that such Options 2  have become vested and exercisable as of such date, such Options must be exercised, if at all, within ninety (90) days after the Optionee's termination, after which time such Options shall automatically terminate; provided, however, in the event an Optionee ceases being a director because the Optionee's service was terminated by removal or breach of any agreement with the Company, all Options granted hereunder (whether vested or unvested) shall terminate immediately. e. PAYMENT OF OPTION EXERCISE. Payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made in cash, by check or such other instrument as may be acceptable to the Board. f. TRANSFER OF CONTROL. A "Transfer of Control" shall be deemed to have occurred in the event any of the following occurs with respect to the Company: (i) a merger or consolidation in which the Company is not the surviving corporation; (ii) a merger or consolidation in which the Company is the surviving corporation where the stockholders of the Company before such merger or consolidation do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the Company after such merger or consolidation; (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company other than a sale, exchange, or transfer to one or more subsidiary corporations (as defined in paragraph 1 above) of the Company; (iv) the direct or indirect sale or exchange by the stockholders of the Company of all or substantially all of the stock of the Company where the stockholders of the Company before such sale or exchange do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the Company after such sale or exchange; or (v) a liquidation or dissolution of the Company. In the event of a Transfer of Control, any unexercisable or unvested portion of the outstanding Options shall be immediately exercisable and vested in full as of the date ten (10) days prior to the expected date of the Transfer of Control. The exercise or vesting of any Option that was permissible solely by reason of this paragraph 6(f) shall be conditioned upon the consummation of the Transfer of Control. In addition, the surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as the case may be (the "Acquiring Corporation"), may either assume the Company's rights and obligations under outstanding Options or substitute for outstanding Options substantially equivalent options for the Acquiring Corporation's stock. For purposes of this paragraph 6(e), an Option shall be deemed assumed if, following the Transfer of Control, the Option confers the right to acquire in accordance with its terms and conditions, for each share of Stock subject to the Option immediately prior to the Transfer of Control, the consideration (whether stock, cash or other securities or property) to which a holder of a share of Stock on the effective date of the Transfer of Control was entitled. Any Options which are neither assumed nor substituted for by the Acquiring Corporation in connection with the Transfer of Control nor exercised as of the date of the Transfer of Control shall terminate and cease to be outstanding effective as of the date of the Transfer of Control. g. STOCKHOLDER APPROVAL. No Option may be granted pursuant to the Plan prior to obtaining stockholder approval of the Plan. 7. AUTHORITY TO VARY TERMS. The Board shall have the authority from time to time to vary the terms of the Option Agreements either in connection with the grant of an individual Option or in connection with the authorization of a new standard form or forms of Option; provided, however, that the terms and conditions of such revised or amended standard form or forms of stock option agreement shall be in accordance with the terms of the Plan. Such authority shall include, but not be limited to, the authority to grant Options which are immediately exercisable subject to the Company's right to 3  repurchase any unvested shares of Stock acquired by the Optionee on exercise of an Option in the event such Optionee's service as director of the Company is terminated for any reason. 8. EFFECT OF CHANGE IN STOCK SUBJECT TO PLAN. Appropriate adjustments shall be made in the number and class of shares of Stock subject to the Plan, the number of shares to be granted under the Plan and to any outstanding Options and in the Option exercise price of any outstanding Options in the event of a stock dividend, stock split, recapitalization, reverse stock split, combination, reclassification, or like change in the capital structure of the Company. 9. TRANSFERABILITY OF OPTIONS. a. Except as provided in paragraph 9(b), an Option may be exercised during the lifetime of the Optionee only by the Optionee or the Optionee's guardian or legal representative and may not be assigned or transferred in any manner except by will or by the laws of descent and distribution. b. Notwithstanding the foregoing, with the consent of the Board, in its sole discretion, an Optionee may transfer all or a portion of the Option to: (i) an Immediate Family Member (as defined below), (ii) a trust for the exclusive benefit of the Optionee and/or one or more Immediate Family Members, (iii) a partnership in which the Optionee and/or one or more Immediate Family Members are the only partners, or (iv) such other person or entity as the Board may permit (individually, a "Permitted Transferee"). For purposes of this paragraph 9(b) "Immediate Family Members" shall mean the Optionee's spouse, former spouse, children or grandchildren, whether natural or adopted. As a condition to such transfer, each Permitted Transferee to whom the Option or any interest therein is transferred shall agree in writing (in a form satisfactory to the Company) to be bound by all of the terms and conditions of the Option Agreement evidencing such Option and any additional restrictions or conditions as the Company may require. Following the transfer of an Option, the term "Optionee" shall refer to the Permitted Transferee, except that, with respect to any requirements of continued Service or provision for the Company's tax withholding obligations, such term shall refer to the original Optionee. The Company shall have no obligation to notify a Permitted Transferee of any termination of the transferred Option, including an early termination resulting from the termination of Service of the Original Optionee. A Permitted Transferee shall be prohibited from making a subsequent transfer of a transferred Option except to the original Optionee or to another permitted Transferee or as provided in paragraph 9(a). 10. RE-PRICING OF OPTIONS / REPLACEMENT OPTIONS The Company shall not re-price any Options or issue any replacement Options unless the Option re-pricing or Option replacement shall have been approved by the holders of a majority of the outstanding shares of the Company. 11. TERMINATION OR AMENDMENT OF PLAN. a. The Board, including any duly appointed committee of the Board, may terminate or amend the Plan at any time; provided, however, that without the approval of the stockholders of the Company, there shall be no increase in the total number of shares of Stock covered by the Plan (except by operation of the provisions of paragraph 8 above). In any event, no amendment may adversely affect any then outstanding Option, or any unexercised portion thereof, without the consent of the Optionee. b. It is the intention of the Board that the Plan comply strictly with the provisions of Section 409A of the Code and Treasury Regulations and other Internal Revenue Service guidance promulgated thereunder (the "Section 409A Rules") and the Board shall exercise its discretion in granting Options hereunder (and the terms of such Options) accordingly. The Plan and any grant of 4  an Option hereunder may be amended from time to time (without, in the case of an Option, the consent of the Optionee) as may be necessary or appropriate to comply with the Section 409A Rules. Adopted: August 9, 2005 5