Exhibit 6.1
W3OTC INC
INCENTIVE STOCK OPTION PLAN
1. Purpose:
The Incentive Stock Option Plan is established to aid W3OTC, Inc., (the
"Company") to attract, retain and compensate employees, associates, advisors,
consultants and officers and directors of the Company its parent or
subsidiaries, of outstanding ability by enabling and encouraging them to acquire
stock ownership in the Company. This plan is intended to comply with the
provisions of Rule 701 under the Securities Act of 1933. For purposes of the
Plan, a parent corporation and a subsidiary corporation shall be as defined in
sections 425(e) and 425(f) of the Internal Revenue Code of 1954, as amended (the
Code).
2. Administration:
The Plan shall be administered by the Board of Directors (the "Board") and/or by
a duly appointed committee of the Board. Any subsequent references to the Board
shall also mean the committee if it has been appointed. 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. Options may be either Incentive Stock Options (ISOs) as defined in
section 422A of the Code, Nonqualified Stock Options (NQSOs) or Stock
Appreciation Rights (SARs). Warrants issued under the plan shall be treated as
NQSO's. Each type of option granted to an individual Optionee shall be set forth
in a separate option agreement.
3. Eligibility:
(a) The Options may be granted only to employees (including officers and
Directors), associates, advisors and consultants of the Company. The Board
shall, in its sole discretion, determine which persons shall be granted
Options (an "Optionee"). Termination of an Optionee's status as a director
shall be deemed to be termination of the Optionee's employment for purposes
of applying the provisions of the Plan. An Optionee may, if he is otherwise
eligible, be granted additional Options.
(b) Any option granted pursuant to this Plan which is intended to be an
incentive stock option as defined in the IRC shall provide that the number
of shares first becoming exerciseable in any calendar year pursuant to such
Option and all other options granted to the individual pursuant to incentive
stock option plans of the Company shall be limited to that number of Options
with an aggregate Fair Market Value (determined as of the date of grant in
accordance with the provisions of Section 6(a) of this Plan) may not exceed
the sum of $100,000. Options designated as nonqualified stock options shall
not be subject to such limitation.
(c) Optionees owning stock of more than 10% combined voting power of all classes
of stock of the Company (within the meaning of Section 422A(b)(6) of the
Code) shall be eligible for Incentive Stock Options, however, the exercise
price of the ISO granted must be 110% of the fair market value and shall not
be exercisable after five (5) years from the date of grant.
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4. Shares Subject to Option.
The maximum number of shares which may be issued under the Plan in any one year
shall be 150,000 shares of the Company's authorized but unissued common stock
plus the sum of (a) the cumulation of one percent (1%) of the voting shares
outstanding at the beginning of each of the Company's fiscal years subsequent to
the adoption of this Plan; (b) the cumulative total of ten percent (10%) of any
voting stock (common or preferred) issued by the company (excludes stock
equivalents) in connection with the acquisition of another company or business
entity subsequent to the adoption of this Plan; (c) less the number of shares
actually awarded in all prior years under the Plan; all subject to adjustment
as provided in paragraph 6 (f).
The amount of shares subject to the Plan is 150,000 plus one percent (1%) of the
outstanding shares at the beginning of each of the Company's fiscal years plus
ten percent (10%) of any voting stock issued in connection with an acquisition
of another company or business. In the event that any outstanding Option for any
reason expires or is terminated, the shares of Common stock allocable to the
unexercised portion of such Option may again be subjected to Option. The Company
may grant an SAR in tandem with a NQSO, in which case the exercise of either the
option or the SAR reduces the number of shares subject to the other by a like
number of shares.
5. Time for Granting Options.
All options shall be granted, if at all, within ten (10) years from the earlier
of the date the Plan is adopted by the Board or the date the Plan is duly
approved by the stockholders of the Company.
6. Terms, Conditions and Form of Options.
Subject to the provisions of the Plan, the Board shall determine for each Option
(which need not be identical) the number of shares for which the option shall be
granted, the option price of the Option, the exercisability of the Option,
whether the Option is a nonqualified stock option, an incentive stock option or
a stock appreciation right and all the terms and conditions of the option.
Options granted pursuant to this Plan shall be evidenced by written agreements
specifying the number of shares covered thereby, in such forms as the Board
shall from time to time establish, which agreements 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) Option Price. The option price shall be not less than the fair market value,
in the case of an incentive stock option, and not less than fifty percent
(50%) of fair market value, in the case of a non-qualified stock option, of
shares of common stock of the Company on the date the Option is granted,
except in the case of 10% shareholders as set forth in 3(a) above. The Fair
Market Value (FMV) of the common stock shall be the average of the closing
bid and asked prices of the stock as reported by NASDAQ or the average of
the highest bid and lowest offer reported in the OTC market by the OTC
Bulletin Board on the day before the grant date. If not reported by NASDAQ
or OTCBB then the FMV shall be the closing sale price on the stock exchange
on which the stock is traded or on the NASD National Market System on the
day prior to date of grant or other such date which reflects the last
trading date, or if no active market exists then the FMV shall be that price
set by the Board.
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(b) Valuation of Stock Appreciation Rights. The aggregate dollar value of the
cash and/or shares to which an Optionee may be entitled from exercise of an
SAR shall be determined as follows:
(i) Upon the grant of each SAR, the Board shall stipulate the "Base
Value" for each share of common stock covered thereby, which Base
Value may be equal to, greater than or less than the Fair Market
Value of the shares on the date of grant; provided, however, that
the Base Value shall in no event be less than fifty Percent (50%)
of the FMV on the date of grant.
(ii) Upon exercise of an SAR, the "Exercise Value" for each share
covered thereby shall be the lesser of (1) the Fair Market Value
of a share as of the date of exercise, or (2) a certain
percentage, as set forth in the individual Option/SAR agreement,
of the Base Value; and
(iii) Upon exercise of an SAR, the Optionee shall be entitled to
receive a total dollar amount, payable in cash, shares, or a
combination thereof, determined by multiplying the number of
shares being exercised by the amount by which the Exercise Value
exceeds the Base Value of the shares as stated in the SAR. The
determination as to whether the amount due to the Optionee upon
exercise of an SAR is to be paid in cash or shares or in a
percentage ratio of cash and shares, shall be made solely by the
Board. Any payment in shares shall be calculated by dividing the
dollar amount of the amount due in shares by the Exercise Value.
(c) Exercise Period of Options. The Board shall have the power to set the time
or times within which each Option shall be exercisable or the event or
events upon the occurrence of which all or a portion of each Option shall be
exercisable and the term of each Option: provided, however, that no Option
shall be exerciseable after the expiration of (10) years from the date such
Option is granted.
(d) Exercise of Option
(i) Options may be exercised only by written notice to the Company,
stating the number of shares being purchased and accompanied by
payment of the option price for the number of shares being
purchased (1) in cash, (2) by tender to the Company of shares of
common stock of the Company which (a) either have been owned by
the Optionee for more than six (6) months or were not acquired
directly or indirectly from the Company, and (b) have a fair
market value (defined under Option Price above) not less than the
option price, (3) by collateralized promissory note(s) or (4) by
such other consideration as the Board may approve prior to the
time the Option is exercised. At the time an Option is exercised,
in whole or in part, or at any time thereafter as requested by
the Company, the Optionee shall make adequate provision for
federal and state income tax withholding obligations of the
Company, if any which arise upon exercise, in whole or in part,
of the Option.
(ii) An Option is not exercisable until such time as the Plan is duly
approved by the stockholders of the Company.
(iii) In the event of (1) a merger or consolidation in which the
Company is not the surviving corporation, and/or (2) the sale of
all or substantially all of the Company's assets (other than a
sale or transfer to a subsidiary of the Company as defined in
Section 425(f) of the Code), all outstanding Options, not
withstanding the terms of such Options, shall become fully
exercisable prior to consummation of such merger or sale of
assets at such time(s) as the Board shall determine or the
surviving or acquiring corporation shall, as a condition
precedent to consummation of said transaction, assume the
outstanding Options or issue substitute incentive stock options
(as defined in the Code) in place thereof in a manner qualifying
under section 425(a) of the Code.
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(e) Options Non-Transferable. During the lifetime of the Optionee, the Option
shall be exercised only by said Optionee. No option shall be assignable or
transferable by the Optionee, except by will or by the laws of descent and
distribution. Except as to nonqualified options which may be made
transferable at the option of the Board.
(f) Termination of Options. If an Optionee ceases to be an employee of the
Company for any reason except death or disability, any Option, to the extent
unexercised and exercisable by the Optionee on the date on which the
Optionee ceased to be an employee, may be exercised by the Optionee within
three (3) months after the date on which the Optionee ceases to be an
employee, but in any event no later than the date of expiration of the
Option term. If the Optionee's employment with the Company is terminated
because of the death or disability of the Optionee within the meaning of
Section 105(d) (4) of the Code, any Option, to the extent unexercised and
exercisable by the Optionee on the date Optionee ceased to be employed by
the Company, may be exercised by the Optionee (or the Optionee's legal
representative) at any time prior to the expiration of twelve (12) months
for the date the Optionee ceased to be employed, but in any event no later
than the date of expiration of the Option terms. An Optionee's employment
shall be deemed to have terminated on account of death if the Optionee dies
within three (3) months of the Optionee's termination of employment. Except
as provided in this paragraph 6(e), an Option shall terminate and may not be
exercised after the Optionee ceases to be an employee of the Company.
Options granted to non-employees, including directors, and warrants granted
as non-qualified options shall not be terminated according to this
paragraph but shall be exerciseable until expiration of the option.
(g) Effect of Change in Stock Subject to Plan. Appropriate adjustment shall be
made in the number and class of shares of stock subject to this Plan and to
any outstanding Options and in the exercise price of any outstanding Options
in the event of a stock split, reverse stock split or like change in the
capital structure of the Company.
(h) Restriction on Issuance of Shares. The grant of Options and the issuance of
shares shall be subject to compliance with all of the applicable
requirements of the law with respect to such securities, including any
required approval by the Commissioner of Corporations of the State of
California.
(i) Rights as a Stockholder or Employee. No person shall have any rights as a
stockholder with respect to any shares covered by an Option until the date
of the issuance of a stock certificate(s) for the shares for which the
Option has been exercised. No adjustment shall be made for dividends or
distributions or other rights for which the record date is prior to the date
such stock certificate(s) are issued, except as provided in Paragraph 6(g).
Nothing in this Plan or in any Option agreement shall confer upon any
Optionee any right to continue in the employ of the Company or interfere in
any way with any right of the Company to terminate the Optionee's employment
at any time.
(j) Fractional Shares. In no event shall the company be required to issue
fractional shares upon the exercise of the Option.
(k) Option Exercisability. The exercisability (vesting) of any Option granted
under the Plan shall be determined by the Board; provided that at least 20%
of the shares of stock covered by any Option shall become exercisable as of
the end of each full year of the term of the such Option. The right of
exercise shall be cumulative.
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7. Termination or Amendment of Plan. The Board may at any time terminate or
amend the Plan, provided that without approval of stockholders there shall be:
(i) no increase in the total number of shares covered by the Plan (except by
operation of the provisions of subparagraph 6(g) above, and (ii) no change in
the class of persons eligible to receive Options. In any case, no amendment may
adversely affect any then outstanding Options or any unexercised portions
thereof without the consent of Optionee unless such amendment is required to
enable the Option to qualify as an incentive stock option (as defined in the
Code).
8. The above constitutes the Company's Stock Option Plan.
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W3OTC, INC.
INCENTIVE STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
The Board of Directors of W3OTC, Inc., (the "Company") desires to grant to
Optionee the ability to participate in the Incentive Stock Option Plan (the
"Plan"), a copy of which is attached hereto, by granting an option to purchase
shares in the Company as set forth below.
Optionee:
Address:
Date of Grant
Option Shares:
(as may be adjusted as provided for in the Plan).
Exercise Price per Share:
(being the Fair Market Value on the date as provided for in
the Plan).
Option Period:
Exercise of Option (Vesting):
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Manner of Exercise: The Optionee shall give written notice to the Company
(Attachment A) specifying the number of shares to be purchased accompanied by
payment in cash, by certified check, upon approval by the Board, his promissory
note (secured by collateral other than the shares acquired), or other shares of
the Company's Common Stock, for the full purchase price. No share shall be
issued until full payment therefore has been made.
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Employment: Nothing contained in this Option Agreement shall confer upon the
Optionee any right to be continued in the employment of the company or shall
prevent the Company from terminating his employment at any time, with or without
cause. If the Optionee's employment with the Company is terminated for any
reason other than death, this option shall be exercisable only as to those
shares of Common Stock immediately purchasable by him at the date of
termination. In no event shall an option be exercisable after the termination
date of this agreement.
Death: If the Optionee dies while employed by the Company or within three (3)
months after termination of his employment, that portion of this option which
was exercisable by the Optionee at the time of death may be exercised by his
legal representative or beneficiaries for a period of twelve (12) months from
the date of cessation of employment.
Non-Transferability of Option: This option shall not be transferable other than
by will or by the laws of descent and distribution, and may be exercised during
the Optionee's lifetime only by him.
Incorporation of Plan: The Option granted hereby is subject to, and governed by,
the terms and conditions of the Plan, which are hereby incorporated by
reference. This Agreement, including the Plan incorporated by reference herein,
is the entire agreement among the partied hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings.
Securities Laws Requirements: No shares shall be issued upon the exercise of any
option unless and until the Company and the Optionee are determined to be in
compliance with applicable State and Federal securities laws with respect to an
individual exercise. The shares issued under the Plan may be restricted
securities subject to limitations on resale.
General: Notice regarding this agreement shall be in writing and shall be
delivered in person or by registered mail to the Company's address.
The parties have accepted the terms herein and entered into this agreement this
________ day of _______________, ______.
Company:__________________________________
Optionee:_________________________________
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NOTICE OF EXERCISE
(to be signed only upon exercise of the Option)
TO: W3OTC, Inc.
The undersigned hereby irrevocably elects to purchase ________________*
shares of Common Stock, of W3OTC, Inc. (the "Company") pursuant to the
Stock Option Agreement dated ____________________, ______ between the
undersigned and the Company, and herewith encloses $________________ to
pay the purchase price for the shares.
Date:____________________, ______
Signature:________________________________
(Signature must conform in all respects to name of the holder
as specified on the face of the Option)
Address:______________________________________
______________________________________
Tax ID Number:________________________________
*Do not make any adjustment for additional Common Stock, other securities or
property which, pursuant to the adjustment provisions of the Option, may be
deliverable upon exercise.~
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