<PAGE>
SCHEDULE 14C INFORMATION STATEMENT
Information Statement Pursuant to Section 14(c) of the Securities Exchange
Act of 1934
File No. 2-93477-D
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14c-5(d)(2))
[X] Definitive Information Statement
I-STORM, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
a- Common Stock, par value $.01 per share
2) Aggregate number of securities to which transaction applies:
All securities of each such class issued or authorized for issuance.
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
<PAGE>
I-STORM, INC.
INFORMATION STATEMENT
January 27, 2000
INTRODUCTION
This Information Statement is furnished in connection with the prior
action taken on December 13, 1999 by the holders of a majority of shares of
Common Stock entitled to vote on certain corporate matters relating to I-Storm,
Inc., a Nevada corporation (the "Company"). This information statement is
furnished in compliance with Section 14(c) of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
The Company's Board of Directors also took unanimous affirmative action
with respect to the proposal discussed herein (the "Proposal") and recommended
that a stockholder consent be circulated in favor of the Proposal. As of
December 13, 1999 (the "Consent Date"), there were authorized 25,000,000 shares
of Common Stock, par value $.01 per share, and 5,457,304 shares of Common Stock
issued and outstanding. On the Consent Date, the holders ("Consenting
Stockholders") of 2,855,235 shares, or approximately 57.7% of the total
outstanding shares of Common Stock of the Company, consented in writing to the
Proposal and such vote was sufficient to take the proposed action. The Board of
Directors is not soliciting any proxies or consents from any other stockholders
in connection with the Proposal. This Information Statement is being mailed to
stockholders on or about January 27, 2000 to all stockholders of record as of
December 1, 1999.
The principal executive offices of the Company are located at 2440 West
El Camino Real, Suite 520, Mountain View, California 94040, and its telephone
number is (650) 962-5420.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
* * * * * *
DISSENTERS' RIGHTS OF APPRAISAL
No action was taken by the Board of Directors or the Consenting
Stockholders for which the laws of the State of Nevada, the Certificate of
Incorporation or the By-Laws of the Company provide a right of a stockholder to
dissent and obtain appraisal of or payment for such stockholder's shares.
<PAGE>
INTEREST OF OFFICERS AND DIRECTORS
IN MATTERS TO BE ACTED UPON
Calbert Lai and Matthew Howard have been directors of the Company
during the fiscal year ended December 31, 1999. Each has been reappointed a
director of the Company pursuant to the Shareholder Consent.
Certain directors and officers of the Company have been granted stock
options to purchase Common Stock of the Company, pursuant to the 1998
Supplemental Incentive Stock Option and Non-Statutory Plan ("1998-B Plan). Those
officers and directors are: Matthew Howard, Gordon Leong, Irfan Salim and
Richard Lin.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
I-Storm, Inc. ("I-Storm" or the "Company") was formerly named "Digital
Power Holding Company." The following table sets forth certain information with
respect to the beneficial ownership of the Company's outstanding Common Stock
owned as of December 1, 1999 by: (i) beneficial owners of more than 5% of the
Company's Common Stock; (ii) each executive officer and director of the Company;
and (iii) all executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK PERCENTAGE OF
BENEFICIAL OWNER(1) BENEFICIALLY OWNED BENEFICIAL OWNERSHIP
- ------------------- ------------------ --------------------
<S> <C> <C>
Calbert Lai 347,642(2) 6.0%
Stephen Venuti 322,642(3) 5.5%
Thomas A. Schultz 125,000(4) 2.1%
Benchmark Equity Group, Inc. 557,800(5) 9.5%
I-Storm Acquisition, Inc. 700,000(6) 11.9%
Frank M. DeLape 557,800(7) 9.5%
Trident III, L.L.C. 420,000(8) 7.2%
JSM Holding, Inc. 1,000,000(9) 17.1%
Richard Snyder 0 0%
Timothy Cohrs 0 0%
Matthew Howard 0 0%
All Officers and Directors as a Group 2,353,084
</TABLE>
- ------------------------
(1) Beneficial ownership is determined in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934, as amended, and is generally
determined by voting powers and/or investment powers with respect to
securities. Unless otherwise noted, all of such shares of Common Stock
listed above are owned of record by each individual named as beneficial
owner and such individual has sole voting and dispositive power with
respect to the shares of Common Stock owned by each of them. Such person
or entity's percentage of ownership is determined by assuming that any
options or convertible securities held by such person or entity which are
exercisable within 60 days from the date hereof have been exercised or
converted as the case may be.
2
<PAGE>
(2) Includes 50,000 vested options to purchase common stock exerciseable at
$0.50 per share.
(3) Includes 25,000 vested options to purchase common stock exerciseable at
$0.50 per share.
(4) Does not include 200,000 shares of Common Stock held by Kayne
International Corporation, a Cayman Islands corporation, and 175,000
shares of Common Stock held by LaPlaza Capital, Inc. ("La Plaza"), a
Cayman Islands corporation that were designated by Mr. Schultz in August
1998 to each of Kayne and La Plaza, respectively.
(5) Mr. DeLape, a director of the Company, is the President and controlling
shareholder of Benchmark Equity Group, Inc ("Benchmark").
(6) Includes 600,000 shares held in a voting trust for the benefit of the
shareholders of I-Storm Acquisition Corp., which is a wholly-owned
subsidiary of Lighthouse Capital Insurance Company ("Lighthouse"), a
Cayman Island unlimited licensed insurance company Includes 100,000
shares of Common Stock issuable under options exercisable at any time
until May 6, 1999 at an exercise price of $2.00 per share. I-Storm
Acquisition Corp. purchased these options from existing shareholders of
the Company as follows: options to purchase 40,000 shares from David
Merrill/dba Chiracahua Company; options to purchase 40,000 shares from
Melinda Johnson; and options to purchase 20,000 shares from Leonard
Burningham. Frank M. DeLape and his children are remote contingent
beneficiaries of a variable universal life insurance contract issued by
Lighthouse. Mr. DeLape disclaims beneficial ownership of such shares and
does not have voting or dispositive power with respect to such shares.
(7) Includes 557,800 shares of Common Stock held by Benchmark. Mr.Delape, a
director of the Company is the President and controlling stockholder of
Benchmark. Does not include 700,000 shares of Common Stock beneficially
held by Lighthouse. Mr. DeLape disclaims beneficial ownership of such
shares held by Lighthouse and does not have voting or dispositive power
with respect to such shares.
(8) Does not include 600,000 shares of non-voting Common Stock held by
Trident III, L.L.C.
(9) John Matthews, a director of the Company, is the controlling stockholder
of JSM Holdings, Inc.
3
<PAGE>
THE PROPOSAL:
TO APPROVE THE FOLLOWING BOARD OF DIRECTORS
-------------------------------------------
To approve the following Board of Directors to serve the earlier of either a one
year term or until the next annual meeting of the shareholders:
CALBERT LAI Co-founder and President of the Company since 1986, Mr. Lai has
developed and expanded LVL's core business and product lines, and has directed
the Company's strategic marketing and consulting business for highly
recognizable brand names in the technology industry, such as IBM, Netscape,
Hewlett-Packard, Sun Microsystems, Cisco Systems, Mitsubishi Electronics
America, Acer Group, Fujitsu PC Corporation, 3COM/PalmPilot, NEC, Philips Mobile
Computer Group and Egghead.Com. A recognized expert in the marketing of
technology products to consumers and end users, Mr. Lai was responsible for the
launch into U.S. retail channels of the Acer PC, in 1993, and the promotion of
markets for the PalmPilot(TM), in 1996.
MATTHEW HOWARD Mr. Howard is a thirty-year veteran in executive management for
major U.S. retailers. Mr. Howard has served as Senior Vice President of both
Marketing and Merchandising for Sears, as President of COMPUTER City, a
subsidiary of Tandy Corporation, and as a Senior Vice President of Montgomery
Ward.
WARREN FLICK For over twenty five years, Warren Flick has enjoyed a
distinguished senior executive management career for major domestic corporations
with a focus on general merchandise retailing. From January 1996 to December
1997, Mr. Flick served as the President and Chief Operating Officer of U. S.
K-Mart Stores. Mr. Flick served as Chairman and Chief Executive Officer of Sears
Mexico, a subsidiary of Sears Roebuck & Co from January 1994 through December
1995, and had also been other engaged in Senior Management positions at Sears
Mexico from 1988 to 1994. Prior to these engagements, Prior to this time, Mr.
Flick served in Senior executive management positions at Montgomery Ward, from
1984 to 1998, and as an Executive Vice President to Harper Industries from 1980
to 1984. He has recently served on the Board of Directors of Stride Rite
Corporation, One Price Clothing Corporation and e-Save Corporation.
TOMMY BENNETT Tommy Bennett is the Senior Vice President of Business
Development at Computer Associates International, Inc, ("CA") a leading business
software company, delivering the end-to-end infrastructure to enable eBusiness
through innovative technology, services and education. CA has 17,500 employees
worldwide and with revenue annual revenue of $6.5 billion. Mr. Bennett joined CA
in 1988 as the Development Center Manager for the Dallas Texas development and
support facility. In 1993, Mr. Bennett was relocated to Long Island, New York to
CA's worldwide headquarters where he took the position of Vice President of
Strategic Alliances. In this position he negotiated many development
relationship agreements with CA's strategic hardware and software partners. In
1994, Mr. Bennett was promoted to Senior Vice President of Business Development
and has negotiated many of CA's mergers and acquisitions around the world.
4
<PAGE>
JOSEPH HOFFMAN Joe Hoffman has practiced commercial litigation and civil law
since 1983. He is a partner with Weinberg, Hoffman, Casey & Ropers in San
Francisco, where he has directed significant multimillion dollar class action
litigations. Mr. Hoffman has a Bachelor's degree in business from Babson
College, a Master's Degree in International Management from the American
Graduate School of International Management (Thunderbird) in Arizona, and a Law
Degree from the University of San Francisco. Mr. Hoffman also worked throughout
the world for the Schering-Plough Corporation in the International Audit
Department from 1977-1980.
THE PROPOSAL:
APPROVAL OF THE 1998 SUPPLEMENTAL INCENTIVE STOCK OPTION AND
------------------------------------------------------------
NON-STATUTORY OPTION PLAN
-------------------------
The Board of Directors believes that in order for the Company and its
subsidiaries to attract and retain the services of executive and other key
employees, it is necessary for the Company to have the ability and flexibility
to provide a compensation package which compares favorably with those offered by
other companies. Accordingly, the Board of Directors adopted the 1998
Supplemental Incentive Stock Option and Non-Statutory Option Plan on July 27,
1999 subject to shareholder approval ("the 1998-B Plan"). The number of shares
of Common Stock issuable pursuant to the 1998-B Plan will be One Million Five
Hundred Thousand (1,500,000) shares A copy of the 1998-B Plan is included as
Appendix A to this Information Statement. Common Shareholder Consent was
obtained on December 13, 1999 from shareholders holding 2,855,235, or 57.7% of
the total number of outstanding shares of common stock of the Company.
The 1998-B Plan will expire on December 12, 2009, unless earlier
terminated by the Board. Set forth below is a summary of the 1998-B Plan, but
this summary is qualified in its entirety by reference to the full text of the
1998-B Plan, a copy of which is attached as Appendix A to this Information
Statement. Capitalized terms shall bear the same definitions as set forth in the
full text of the 1998-B Plan.
The 1998-B Plan is authorized for 1,500,000 shares of Common Stock. If
shares subject to an option or other right under the 1998-B Plan cease to be
subject to such option or right, or if shares awarded under the 1998-B Plan are
forfeited, or otherwise terminate without a payment being made to the
participant in the form of stock, such shares will again be available for future
issuance under the 1998-B Plan.
Awards under the 1998-B Plan may be made to key employees, including
officers and directors of and consultants to the Company and its subsidiaries.
Members of the Compensation Committee are also eligible for options granted
under the 1998-B Plan. The 1998-B Plan imposes no limit on the number of
officers and other key employees to whom awards may be made.
CERTAIN ELIGIBILITY PROVISIONS. Incentive Stock Options may be granted only to
Employees of the Company. Nonstatutory Stock Options may be granted to
Employees, Directors and Consultants. No stockholder holding 10% or more of the
Company's Common Stock shall be eligible for the grant of an Incentive Stock
Option unless the exercise price of such Option is at least one hundred ten
percent (110%) of the Fair Market Value of the Common Stock at the date of grant
and the Option is not exercisable after the expiration of five (5) years from
the date of grant.
5
<PAGE>
A Consultant shall not be eligible to exercise an Option if, at the
time of such exercise, a Form S-8 Registration Statement under the Securities
Act ("Form S-8") is not available to register either the offer or the sale of
the Company's securities to such Consultant because of the nature of the
services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that such
exercise (A) shall be registered in another manner under the Securities Act
(E.G., on a Form S-3 Registration Statement) or (B) does not require
registration under the Securities Act in order to comply with the requirements
of the Securities Act, if applicable, and (ii) that such exercise complies with
the securities laws of all other
EXERCISE PRICE OF AN OPTION. The exercise price of each Incentive Stock Option
shall be not less than one hundred percent (100%) of the Fair Market Value of
the stock subject to the Option on the date the Option is granted. The exercise
price of each Nonstatutory Stock Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of the stock subject to the Option on the
date the Option is granted. Notwithstanding the foregoing, an Option may be
granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying certain provision of the Internal Revenue
Code.
VESTING. The total number of shares of Common Stock subject to an Option may,
but need not, vest and therefore become exercisable in periodic installments
that may, but need not be equal. The Option may be subject to such other terms
and conditions on the time or times when it may be exercised (which may be based
on performance or other criteria) as the Board or the Committee may deem
appropriate.
RE-LOAD OPTIONS. The Board or the Commitee shall have the authority to include
as part of any Option Agreement a provision entitling the Optionholder to a
further Option (a "Re-Load Option") in the event the Optionholder exercises the
Option evidenced by the Option Agreement, in whole or in part, by surrendering
other shares of Common Stock in accordance with the Plan and the terms and
conditions of the Option Agreement. Any such Re-Load Option shall (i) provide
for a number of shares equal to the number of shares surrendered as part or all
of the exercise price of such Option; (ii) have an expiration date which is the
same as the expiration date of the Option the exercise of which gave rise to
such Re-Load Option; and (iii) have an exercise price which is equal to one
hundred percent (100%) of the Fair Market Value of the Common Stock subject to
the Re-Load Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Re-Load Option shall be subject to the same
exercise price and term provisions heretofore described for Options under the
Plan.
6
<PAGE>
CHANGE IN CONTROL--ASSET SALE, MERGER, CONSOLIDATION OR REVERSE MERGER. In the
event of (1) a sale of substantially all of the assets of the Company, (2) a
merger or consolidation in which the Company is not the surviving corporation or
(3) a reverse merger in which the Company is the surviving corporation but the
shares of Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise, then any surviving corporation or acquiring
corporation shall assume any Options outstanding under the Plan or shall
substitute similar Options for those outstanding under the Plan. In the event
any surviving corporation or acquiring corporation refuses to assume such
Options or to substitute similar Options for those outstanding under the Plan,
then with respect to Options held by Optionholders whose Continuous Service has
not terminated, the vesting shall be accelerated in full, and the Options shall
terminate if not exercised at or prior to such event. With respect to any other
Options outstanding under the Plan, such Options shall terminate if not
exercised prior to such event.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Pursuant to their employment agreements, Messrs. Salim, Leong, Lin are
entitled to receive options to purchase 350,000, 150,000 and 150,000 shares of
Common Stock, respectively, at the market price of the Common Stock on the date
of shareholder approval, subject to ratable vesting over a 36 month period,
although such options shall be accelerable if certain performance objectives
have been met at that time. Those performance objectives relate to the
establishment of each of three on-line e-commerce stores by the Company. Matthew
Howard has been granted 100,000 options to purchase Common Stock at the market
price on the date of shareholder approval, pursuant to a consulting agreement
with the Company, subject to ratable vesting over a 36 month period, although
such options shall be accelerable if certain performance objectives have been
met at that time. The Company has also granted 476,000 additional options,
pursuant to the 1998 B-Plan, to approximately 15 employees and 6 consultants.
The Board of Directors has approved the grant of each of the foregoing described
options, subject to shareholder approval of the 1998 B-Plan.
The following table summarizes certain information with respect to
options granted during the fiscal year ended December 31, 1999 to Messrs.
Howard, Leong, Lin and Salim described above:
<TABLE>
<CAPTION>
Number of Securities Percent of Total Exercise or
Underlying Options/SARs Granted to Base Price Expiration
Name Options/SARs Granted (#) Employees in Fiscal Year ($/Sh) Date
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Matthew Howard 100,000 6.6% $2.00 12/13/09
Gordon Leong 150,000 10% $2.00 12/13/09
Richard Lin 150,000 10% $2.00 12/13/09
Irfan Salim 350,000 23% $2.00 12/13/09
</TABLE>
Tax consequences of awards provided under the 1998-B Plan are dependent
upon the type of award granted. The grant of an incentive or non-qualified stock
option typically does not result in any taxable income to the recipient or
deduction to the Company. In the case of an incentive stock option, generally
speaking, an employee pays not taxes until the stock is sold. If the employee
holds this stock at least two years from the grant date and one year from the
exercise date, the difference between the exercise price and the proceeds
7
<PAGE>
received from the sale would be taxed at capital gains rate. Under these
circumstances, the Company will not be allowed to a deduction in the amount of
this "gain." If the employee should make a disqualifying transfer of stock
issued upon the exercise of an incentive stock option, the employee will instead
realize ordinary income, and the Company would be entitled to a deduction equal
to the amount by which the fair market value of the stock on the date of
exercise, or the proceeds of the sale of the stock, exceeds the exercise price.
Certain employees may be subject to the application of the alternative minimum
tax whether they make qualifying or nonqualifying transfers of stock issued
under the exercise of an incentive option.
With a non-qualified stock option, the recipient typically recognizes
ordinary income on the date of exercise in the amount by which the fair market
value of the stock exceeds the exercise price of the option. The Company would,
in this event, receives a corresponding tax deduction equal to the amount of
ordinary income recognized by the recipient.
In either the case of non-qualifying or incentive stock options, when
compensation is to be recognized by an employee, The Company will make
appropriate arrangements with the employee with respect to the payment of
applicable withholding and other taxes. The foregoing discussion is subject to
qualification by reference to specific federal tax laws and regulations, and is
further subject to government revision and amendment.
The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," in October 1995. This accounting standard permits the use of
either a fair value based method of accounting or the method defined in
Accounting Principles Board Opinion 25 ("APB 25"), "Accounting for Stock Issued
to Employees" to account for stock-based compensation arrangements. Companies
that elect to employ the method prescribed by APB 25 are required to disclose
the pro forma net income (loss) that would have resulted from the use of the
fair value based method. I-Storm has elected to account for its stock-based
compensation arrangements under the provisions of APB 25, and accordingly, it
has included the pro forma disclosures required under SFAS No. 123 in Note 8.
EXHIBITS
Exhibit 20 Form of December 13, 1999 Shareholder Consent
Exhibit 99 Form of 1998 Supplemental Stock Option Plan
8
<PAGE>
STOCKHOLDER PROPOSALS AND SUBMISSIONS
If any stockholder wishes to present a proposal for inclusion in the
proxy materials to be solicited by the Company's Board of Directors with respect
to the next Annual Meeting of Stockholders, that proposal must be presented to
the Company's management prior to March 31, 2000.
I-STORM, INC.
/S/ Calbert Lai
-----------------------------
Calbert Lai, President
9
I-STORM, INC.
ACTION BY WRITTEN CONSENT
IN LIEU OF ANNUAL MEETING OF THE STOCKHOLDERS
The undersigned, being the stockholders of I-Storm, Inc., a Nevada
corporation (the "Corporation"), in lieu of annual meeting hereby take the
following actions and adopt the following resolutions by written consent,
pursuant to 78.320 of the Nevada Revised Statutes, to take effect as set forth
herein, and hereby direct the Secretary of the Corporation (the "Secretary") to
make this instrument a part of the records of the Corporation.
WHEREAS, the undersigned shareholders deem it advisable to authorize
and approve the adoption of a 1998 Supplemental Incentive and Non-Statutory
Option Plan ("1998 B-Plan") for options to purchase 1.5 million shares of Common
Stock of the Corporation;
WHEREAS, the undersigned shareholders deem it advisable and in the best
interests of the Corporation to elect the following directors to serve a one
year term until the next annual meeting of the shareholders: Calbert Lai,
Matthew Howard, Joseph Hoffman, Warren Flick and Tommy Bennett
WHEREAS, the undersigned shareholders deem it advisable and in the best
interests of the Corporation to approve and ratify the issuance of stock options
to the following directors and officers of the Corporation and further to
approve and ratify that certain of such stock options become stock options under
the 1998 B-Plan:
Matthew Howard 100,000 shares of common stock exercisable
over 10 years vesting ratably on a monthly basis over
3 years with certain performance acceleration rights.
Such options shall be granted under the 1998 B-Plan.
Gordon Leong Options to purchase 150,000 shares of Common
Stock, exerciseable until December 31, 2009. Such
options would vest ratably on a monthly basis over a
period of three years from the date of hire. The
vesting of the options would also be accelerated so
that 60,000 options would vest at the time that the
first E-commerce CyberStore of the Company becomes
operational; and an additional 45,000 options would
vest at the time that the second E-commerce
CyberStore shall becomes operational. Finally, an
additional 45,000 options would vest at the time that
the third E-commerce CyberStore shall becomes
operational. Such options shall be granted under the
1998 B-Plan.
<PAGE>
Irfan Salim Options to purchase 350,000 shares of Common
Stock at today's price per share, exercisable until
December 31, 2009. Such options would vest ratably on
a monthly basis over a period of three years from the
date of hire. The vesting of the options would also
be accelerated so that 100,000 options would vest at
the time that the first E-commerce CyberStore of the
Company becomes operational; and an additional
100,000 options would vest at the time that the
second E-commerce CyberStore shall becomes
operational. Finally, an additional 100,000 options
would vest at the time that the third E-commerce
CyberStore shall becomes operational. Such options
shall be granted under the 1998 B-Plan.
WHEREAS, the undersigned shareholders deem it advisable and in the best
interests of the Corporation to approve and ratify actions of the Board of
Directors and officers of the Corporation, to the extent such approval and
ratification is necessary under Nevada law, with respect to any actions which
have been taken by either the Board or the officers in connection with the
approval of minutes of the Board since July 23, 1998;
WHEREAS, the signatories below constitute in the aggregate the
ownership of 57.7% of outstanding shares of Common Stock issued and outstanding;
NOW THEREFORE, be it
RESOLVED, that the undersigned shareholders deem it advisable to
authorize and approve the adoption of a 1998 SupplementalIncentive and
Non-Statutory Option Plan for options to purchase 1.5 million shares of Common
Stock of the Corporation ("1998 B-Plan"). Such Plan will provide that options
granted under the Plan may be either incentive stock options or nonstatutory
stock options, as designated by the Board of Directors; options granted under
the Plan will expire on the tenth anniversary of the date of grant; the exercise
price of each incentive stock option will be no less than 100% of the fair
market value of the common stock at the date of the grant; the exercise price of
each nonstatutory stock option will be no less than 85% of the fair market value
of the common stock at the date of the grant; the exercise price to an optionee
who possesses more than 10% of the total combined voting power of all classes of
stock will be no less than 110% of the fair market value of the common stock at
the date of the grant and is not exercisable after the expiration of five years
from the date of grant; vesting provisions of individual options under the 1998
B-Plan may vary as the Board of Directors will have the authority to set
exercise dates, payment terms and other provisions for each grant. The options
granted under the 1998 B-Plan and the stock underlying such options will not be
exempt from registration under the federal securities laws.
<PAGE>
RESOLVED, that the undersigned shareholders deem it advisable and in
the best interests of the Corporation to elect the following directors to serve
a one year term until the next annual meeting of the shareholders: Calbert Lai,
Matthew Howard, Joseph Hoffman, Warren Flick and Tommy Bennett;:
RESOLVED, that the undersigned shareholders deem it advisable and in
the best interests of the Corporation to approve and ratify the issuance of the
following stock options to the following directors and officers of the
Corporation:
RESOLVED, the undersigned shareholders deem it advisable and in the
best interests of the Corporation to approve and ratify the issuance of stock
options to the following directors and officers of the Corporation and further
to approve and ratify that certain of such stock options become stock options
under the 1998 B-Plan:
Matthew Howard 100,000 shares of common stock exercisable
over 10 years vesting ratably on a monthly basis over
3 years with certain performance acceleration rights.
Such options shall be granted under the 1998 B-Plan.
Gordon Leong Options to purchase 150,000 shares of Common
Stock at, exercisable at $2.00 per share,
exerciseable until December 31, 2009. Such options
would vest ratably on a monthly basis over a period
of three years from the date of hire. The vesting of
the options would also be accelerated so that 60,000
options would vest at the time that the first
E-commerce CyberStore of the Company becomes
operational; and an additional 45,000 options would
vest at the time that the second E-commerce
CyberStore shall becomes operational. Finally, an
additional 45,000 options would vest at the time that
the third E-commerce CyberStore shall becomes
operational. Such options shall be granted under the
1998 B-Plan.
Irfan Salim Options to purchase 350,000 shares of Common
Stock at today's price per share, exercisable until
December 31, 2009. Such options would vest ratably on
a monthly basis over a period of three years from the
date of hire. The vesting of the options would also
be accelerated so that 100,000 options would vest at
the time that the first E-commerce CyberStore of the
Company becomes operational; and an additional
100,000 options would vest at the time that the
second E-commerce CyberStore shall becomes
operational. Finally, an additional 100,000 options
would vest at the time that the third E-commerce
CyberStore shall becomes operational. Such options
shall be granted under the 1998 B-Plan.
<PAGE>
RESOLVED, that pursuant to Nevada statute, the record date of this
consent shall be deemed to be the date the actions hereunder are taken; and,
further
RESOLVED, that the officers of the Corporation, and each of them, be
and hereby are authorized and directed to execute and deliver, for and on behalf
of the Corporation, and affix the corporate seal thereto, where appropriate,
such agreements and such covenants, guarantees, representations, certificates
and such other documents, and to pay such amounts, deliver such notes, checks
and agreements, to take such action and in general to do all such things as may
be necessary or appropriate to give effect to the foregoing resolution.
This shareholder consent may be executed in in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one original.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the date first indicated above.
Shares Owned: 297,642 CALBERT LAI
Date: December__, 1999 ______________________________
Calbert Lai
Shares Owned: 297,642 STEPHEN VENUTI
Date: January 27, 2000 /s/ Stephen Venuti
-------------------------------
Stephen Venuti
Shares Owned: 1,000,000 JSM HOLDING CORP.
Date: January 27, 2000 /s/ John Matthews
-------------------------------
John Matthews
<PAGE>
Shares Owned: 135,000 AVON BRILL, LLC
Date: January 27, 2000 /s/ Leon D. Burrows
-------------------------------
Leon D. Burrows, Manager
Shares: 125,000 MACKENZIE SHEA, INC.
Date: January 27, 2000 /s/ Robert Kendrick
-------------------------------
Robert Kendrick, President
Shares Owned: 240,000 SOMA 2000, L.L.C.
Date: January 27, 2000 /s/ Leon D. Burrows
-------------------------------
Leon D. Burrows, Manager
Shares Owned: 175,000 LA PLAZA CAPITAL, INC.
Date: January 27, 2000 /s/ Adriel Brathwaithe
-------------------------------
Adriel Brathwaithe,
Authorized Signatory
Shares Owned : 125,000 THOMAS SCHULTZ
Date: January 27, 2000 /s/ Thomas Schultz
-------------------------------
Thomas Schultz
Shares Owned: 200,000 KAYNE INTERNATIONAL
CORPORATION
Date: January 27, 2000 /s/ Adriel Brathwaite
-------------------------------
Adriel Brathwaite,
Authorised Signatory
<PAGE>
Shares Owned: 90,000 DANIEL BOUTCHER
Date: January 27, 2000 /s/ Daniel Boutcher
-------------------------------
Daniel Boutcher
Shares owned: 9,999 CORY ROBERTS
Date: January 27, 2000 /s/ Cory Roberts
-------------------------------
Cory Roberts
Shares owned: 40,000 WINK CAPITAL
Date: January 27, 2000 /s/
-------------------------------
Name: ________________________
Position: ____________________
Shares owned: 99,960 ROBERT WILSON
Date: January 27, 2000 /s/ Robert Wilson
-------------------------------
Robert Wilson, IRA
Security Trust Trustee
Shares owned: 19,992 CUSHMAN JOHNSON
Date: January 27, 2000 /s/ Glenn Cushman
-------------------------------
Glenn Cushman, Principal
I-STORM, INC.
1998 Supplemental Stock Option Plan
Adopted/Effective December 13, 1999
Termination Date: December 12, 2009
1. PURPOSES.
(a) ELIGIBLE OPTION RECIPIENTS. The persons eligible to receive Options
are the Employees, Directors and Consultants of the Company and its Affiliates.
(b) AVAILABLE OPTIONS. The purpose of the Plan is to provide a means by
which eligible recipients of Options may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of the following
Options: (i) Incentive Stock Options, and (ii) Nonstatutory Stock Options.
(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Options, to secure and
retain the services of new members of this group and to provide incentives for
such persons to exert maximum efforts for the success of the Company and its
Affiliates.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(d).
(e) "COMMON STOCK" means the common stock of the Company.
(f) "COMPANY" means I-Storm, Inc., a Nevada corporation, or any
successor thereto.
(g) "CONSULTANT" means any person, including an advisory board member
or an advisor, (1) engaged by the Company or an Affiliate to render consulting
or advisory services and who is compensated for such services or (2) who is a
member of the Board of Directors of an Affiliate. However, the term "Consultant"
shall not include either Directors of the Company who are not compensated by the
Company for their services as Directors or Directors of the Company who are
merely paid a director's fee by the Company for their services as Directors.
1.
<PAGE>
(h) "CONTINUOUS SERVICE" means that the Optionholder's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Optionholder's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Optionholder renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Optionholder
renders such service, provided that there is no interruption or termination of
the Optionholder's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director of the
Company will not constitute an interruption of Continuous Service. The Board or
the chief executive officer of the Company, in that party's sole discretion, may
determine whether Continuous Service shall be considered interrupted in the case
of any leave of absence approved by that party, including sick leave, military
leave or any other personal leave.
(i) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.
(j) "DIRECTOR" means a member of the Board of Directors of the Company.
(k) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
2.
<PAGE>
(p) "NON-EMPLOYEE DIRECTOR" means a Director of the Company who either
(i) is not a current Employee or Officer of the Company or its parent or a
subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or a subsidiary for services rendered as a consultant or
in any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act ("Regulation S-K")), does not possess an interest
in any other transaction as to which disclosure would be required under Item
404(a) of Regulation S-K and is not engaged in a business relationship as to
which disclosure would be required under Item 404(b) of Regulation S-K; or (ii)
is otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(q) "NONSTATUTORY STOCK OPTION" means an Option that does not qualify
as an Incentive Stock Option.
(r) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.
(t) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(u) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.
(v) "OUTSIDE DIRECTOR" means a Director of the Company who either (i)
is not a current employee of the Company or an "affiliated corporation" (within
the meaning of Treasury Regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an "affiliated corporation"
receiving compensation for prior services (other than benefits under a tax
qualified pension plan), was not an officer of the Company or an "affiliated
corporation" at any time and is not currently receiving direct or indirect
remuneration from the Company or an "affiliated corporation" for services in any
capacity other than as a Director or (ii) is otherwise considered an "outside
director" for purposes of Section 162(m) of the Code.
(w) "PLAN" means this I-Storm, Inc. 1998 Supplemental Stock Option
Plan.
(x) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(y) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(z) "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.
3. ADMINISTRATION.
(a) ADMINISTRATION BY BOARD. The Board will administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(d).
3.
<PAGE>
(b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To construe and interpret the Plan and Options granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(ii) To amend the Plan or an Option as provided in Section 11.
(iii) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) POWERS OF THE COMPENSATION COMMITTEE. Notwithstanding the
foregoing, the Compensation Committee of the Board (the "Compensation
Committee") shall have the sole power to determine from time to time which of
the persons eligible under the Plan shall be granted Options; when and how each
Option shall be granted; what type or combination of types of Option shall be
granted; the provisions of each Option granted (which need not be identical),
including the time or times when a person shall be permitted to receive stock
pursuant to an Option; and the number of shares with respect to which an Option
shall be granted to each such person. Neither the Compensation Committee nor the
Board may delegate these powers nor may the Board vest these powers in itself.
(d) DELEGATION TO COMMITTEE.
(i) GENERAL. The Board may delegate its powers relating to the
administration of the Plan to a Committee or Committees of one or more members
of the Board, and the term "Committee" shall apply to any person or persons to
whom such authority has been delegated. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board, including the power to
delegate to a subcommittee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board shall
thereafter be to the Committee or subcommittee), subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board. The Board may abolish the Committee at any time
and revest in the Board the administration of the Plan.
(ii) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY TRADED. At
such time as the Common Stock is publicly traded, in the discretion of the
Board, the Compensation Committee may consist solely of two or more Outside
Directors, in accordance with Section 162(m) of the Code, and/or solely of two
or more Non-Employee Directors, in accordance with Rule 16b-3. The Compensation
Committee may (i) delegate to a committee of one or more members of the Board
who are not Outside Directors, the authority to grant Options to eligible
persons who are either (a) not then Covered Employees and are not expected to be
Covered Employees at the time of recognition of income resulting from such
Option or (b) not persons with respect to whom the Company wishes to comply with
Section 162(m) of the Code and/or (ii) delegate to a committee of one or more
members of the Board who are not Non-Employee Directors the authority to grant
Options to eligible persons who are not then subject to Section 16 of the
Exchange Act.
4.
<PAGE>
4. SHARES SUBJECT TO THE PLAN.
(a) SHARE RESERVE. Subject to the provisions of Section 10 relating to
adjustments upon changes in stock, the stock that may be issued pursuant to
Options shall not exceed in the aggregate One Million Five Hundred Thousand
(1,500,000) shares of Common Stock.
(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Option shall for
any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full, the stock not acquired under such Option shall revert to
and again become available for issuance under the Plan. If any Common Stock
acquired pursuant to the exercise of an Option shall for any reason be
repurchased by the Company under an unvested share repurchase option provided
under the Plan, the stock repurchased by the Company under such repurchase
option shall not revert to and again become available for issuance under the
Plan.
(c) SOURCE OF SHARES. The stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) ELIGIBILITY FOR SPECIFIC OPTIONS. Incentive Stock Options may be
granted only to Employees. Nonstatutory Stock Options may be granted to
Employees, Directors and Consultants.
(b) TEN PERCENT STOCKHOLDERS. No Ten Percent Stockholder shall be
eligible for the grant of an Incentive Stock Option unless the exercise price of
such Option is at least one hundred ten percent (110%) of the Fair Market Value
of the Common Stock at the date of grant and the Option is not exercisable after
the expiration of five (5) years from the date of grant.
(c) CONSULTANTS. A Consultant shall not be eligible to exercise an
Option if, at the time of such exercise, a Form S-8 Registration Statement under
the Securities Act ("Form S-8") is not available to register either the offer or
the sale of the Company's securities to such Consultant because of the nature of
the services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that such
exercise (A) shall be registered in another manner under the Securities Act
(e.g., on a Form S-3 Registration Statement) or (B) does not require
registration under the Securities Act in order to comply with the requirements
of the Securities Act, if applicable, and (ii) that such exercise complies with
the securities laws of all other relevant jurisdictions.
(d) SECTION 162(m) LIMITATION. Subject to the provisions of Section 11
relating to adjustments upon changes in stock, no employee shall be eligible to
be granted Options covering more than _________________________________
(_________) shares of the Common Stock during any calendar year.
5.
<PAGE>
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and a separate certificate or certificates will be issued for shares
purchased on exercise of each type of Option. The provisions of separate Options
need not be identical, but each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the substance of each
of the following provisions:
(a) TERM. Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.
(b) EXERCISE PRICE OF AN OPTION. Subject to the provisions of
subsection 5(b) regarding grants of Incentive Stock Options to Ten Percent
Stockholders, the exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted. The exercise price of
each Nonstatutory Stock Option shall be not less than eighty-five percent (85%)
of the Fair Market Value of the stock subject to the Option on the date the
Option is granted. Notwithstanding the foregoing, an Option may be granted with
an exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option
in a manner satisfying the provisions of Section 424(a) of the Code.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) by delivery to the
Company of other Common Stock, according to a deferred payment or other
arrangement (which may include, without limiting the generality of the
foregoing, the use of other Common Stock) with the Optionholder or in any other
form of legal consideration that may be acceptable to the Board; provided,
however, that at any time that the Company is incorporated in Delaware, payment
of the Common Stock's "par value," as defined in the Delaware General
Corporation Law, shall not be made by deferred payment.
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(d) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing provisions of this
subsection 6(d), the Optionholder may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who, in
the event of the death of the Optionholder, shall thereafter be entitled to
exercise the Option.
6.
<PAGE>
(e) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory
Stock Option shall be transferable to the extent provided in the Option
Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing provisions of this subsection 6(e), the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.
(f) VESTING. The total number of shares of Common Stock subject to an
Option may, but need not, vest and therefore become exercisable in periodic
installments that may, but need not, be equal. The Option may be subject to such
other terms and conditions on the time or times when it may be exercised (which
may be based on performance or other criteria) as the Board may deem
appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(f) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be exercised.
(g) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionholder's Continuous Service (or
such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If,
after termination, the Optionholder does not exercise his or her Option within
the time specified in the Option Agreement, the Option shall terminate.
(h) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service (other than upon the Optionholder's death
or Disability) would be prohibited at any time solely because the issuance of
shares would violate the registration requirements under the Securities Act,
then the Option shall terminate on the earlier of (i) the expiration of the term
of the Option set forth in subsection 6(a) or (ii) the expiration of a period of
three (3) months after the termination of the Optionholder's Continuous Service
during which the exercise of the Option would not be in violation of such
registration requirements.
(i) DISABILITY OF OPTIONHOLDER. In the event an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise it as of the date of termination), but only within such
period of time ending on the earlier of (i) the date twelve (12) months
following such termination (or such longer or shorter period specified in the
Option Agreement) or (ii) the expiration of the term of the Option as set forth
in the Option Agreement. If, after termination, the Optionholder does not
exercise his or her Option within the time specified herein, the Option shall
terminate.
7.
<PAGE>
(j) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder's Continuous Service for a
reason other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise the Option as of the date of death) by the
Optionholder's estate, by a person who acquired the right to exercise the Option
by bequest or inheritance or by a person designated to exercise the option upon
the Optionholder's death pursuant to subsection 6(d) or 6(e), but only within
the period ending on the earlier of (1) the date eighteen (18) months following
the date of death (or such longer or shorter period specified in the Option
Agreement) or (2) the expiration of the term of such Option as set forth in the
Option Agreement. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate.
(k) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares subject to the Option prior to the full vesting of the Option. Any
unvested shares so purchased may be subject to an unvested share repurchase
option in favor of the Company or to any other restriction the Board determines
to be appropriate.
(l) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board to make or not to make grants of Options hereunder, the Board shall have
the authority (but not an obligation) to include as part of any Option Agreement
a provision entitling the Optionholder to a further Option (a "Re-Load Option")
in the event the Optionholder exercises the Option evidenced by the Option
Agreement, in whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option Agreement.
Any such Re-Load Option shall (i) provide for a number of shares equal to the
number of shares surrendered as part or all of the exercise price of such
Option; (ii) have an expiration date which is the same as the expiration date of
the Option the exercise of which gave rise to such Re-Load Option; and (iii)
have an exercise price which is equal to one hundred percent (100%) of the Fair
Market Value of the Common Stock subject to the Re-Load Option on the date of
exercise of the original Option. Notwithstanding the foregoing, a Re-Load Option
shall be subject to the same exercise price and term provisions heretofore
described for Options under the Plan.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board may designate at the time of the grant
of the original Option; provided, however, that the designation of any Re-Load
Option as an Incentive Stock Option shall be subject to the one hundred thousand
dollars ($100,000) annual limitation on exercisability of Incentive Stock
Options described in subsection 9(d) and in Section 422(d) of the Code. There
shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option shall
be subject to the availability of sufficient shares under subsection 4(a) and
the "Section 162(m) Limitation" on the grants of Options under subsection 5(d)
and shall be subject to such other terms and conditions as the Board may
determine which are not inconsistent with the express provisions of the Plan
regarding the terms of Options.
8.
<PAGE>
7. COVENANTS OF THE COMPANY.
(a) AVAILABILITY OF SHARES. During the terms of the Options, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Options.
(b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Options and to issue and sell shares of
Common Stock upon exercise of the Options; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Option or any stock issued or issuable pursuant to any such
Option. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such Options unless and until such authority is obtained.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
9. MISCELLANEOUS.
(a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have
the power to accelerate the time at which an Option may first be exercised or
the time during which an Option or any part thereof will vest in accordance with
the Plan, notwithstanding the provisions in the Option stating the time at which
it may first be exercised or the time during which it will vest.
(b) STOCKHOLDER RIGHTS. No Optionholder shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
subject to such Option unless and until such Optionholder has satisfied all
requirements for exercise of the Option pursuant to its terms.
(c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Option granted pursuant thereto shall confer upon any
Optionholder or other holder of Options any right to continue to serve the
Company or an Affiliate in the capacity in effect at the time the Option was
granted or shall affect the right of the Company or an Affiliate to terminate
(i) the employment of an Employee with or without notice and with or without
cause, (ii) the service of a Consultant pursuant to the terms of such
Consultant's agreement with the Company or an Affiliate or (iii) the service of
a Director pursuant to the Bylaws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be.
(d) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of stock with
respect to which Incentive Stock Options are exercisable for the first time by
any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
9.
<PAGE>
(e) INVESTMENT ASSURANCES. The Company may require an Optionholder, as
a condition of exercising or acquiring stock under any Option, (i) to give
written assurances satisfactory to the Company as to the Optionholder's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option; and (ii) to give
written assurances satisfactory to the Company stating that the Optionholder is
acquiring the stock subject to the Option for the Optionholder's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (iii) the issuance of the shares upon the
exercise or acquisition of stock under the Option has been registered under a
then currently effective registration statement under the Securities Act or (iv)
as to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.
(f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of an
Option Agreement, the Optionholder may satisfy any federal, state or local tax
withholding obligation relating to the exercise or acquisition of stock under an
Option by any of the following means (in addition to the Company's right to
withhold from any compensation paid to the Optionholder by the Company) or by a
combination of such means: (i) tendering a cash payment; (ii) authorizing the
Company to withhold shares from the shares of the Common Stock otherwise
issuable to the Optionholder as a result of the exercise or acquisition of stock
under the Option; provided that the Company shall not be authorized to withhold
shares of Common Stock in excess of the minimum statutory withholding rates for
federal and state tax purposes, including payroll taxes; or (iii) delivering to
the Company owned and unencumbered shares of the Common Stock.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in the stock
subject to the Plan, or subject to any Option, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person pursuant to subsection 5(d), and the outstanding Options
will be appropriately adjusted in the class(es) and number of securities and
price per share of stock subject to such outstanding Options. Such adjustments
shall be made by the Board, the determination of which shall be final, binding
and conclusive. (The conversion of any convertible securities of the Company
shall not be treated as a transaction "without receipt of consideration" by the
Company.)
10.
<PAGE>
(b) CHANGE IN CONTROL--DISSOLUTION OR LIQUIDATION. In the event of a
dissolution or liquidation of the Company, then such Options shall be terminated
if not exercised (if applicable) prior to such event.
(c) CHANGE IN CONTROL--ASSET SALE, MERGER, CONSOLIDATION OR REVERSE
MERGER. In the event of (1) a sale of substantially all of the assets of the
Company, (2) a merger or consolidation in which the Company is not the surviving
corporation or (3) a reverse merger in which the Company is the surviving
corporation but the shares of Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise, then any surviving corporation or
acquiring corporation shall assume any Options outstanding under the Plan or
shall substitute similar Options (including an award to acquire the same
consideration paid to the stockholders in the transaction described in this
subsection 10(c) for those outstanding under the Plan. In the event any
surviving corporation or acquiring corporation refuses to assume such Options or
to substitute similar Options for those outstanding under the Plan, then with
respect to Options held by Optionholders whose Continuous Service has not
terminated, the vesting shall be accelerated in full, and the Options shall
terminate if not exercised at or prior to such event. With respect to any other
Options outstanding under the Plan, such Options shall terminate if not
exercised prior to such event.
11. AMENDMENT OF THE PLAN AND OPTIONS.
(a) AMENDMENT OF PLAN. The Board may at any time, and from time to
time, amend the Plan. However, except as provided in Section 10 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.
(b) STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.
(c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or advisable
to provide eligible Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.
(d) NO IMPAIRMENT OF RIGHTS. Rights under any Option granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Optionholder, and (ii) the
Optionholder consents in writing.
11.
<PAGE>
(e) AMENDMENT OF OPTIONS. Subject to the requirements of the Plan, the
Compensation Committee may at any time, and from time to time, amend the terms
of any one or more Options; provided, however, that the rights under any Option
shall not be impaired by any such amendment unless (i) the Compensation
Committee requests the consent of the Optionholder, and (ii) the Optionholder
consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No Options may be granted
under the Plan while the Plan is suspended or after it is terminated.
(b) NO IMPAIRMENT OF RIGHTS. Rights and obligations under any Option
granted while the Plan is in effect shall not be impaired by suspension or
termination of the Plan, except with the written consent of the Optionholder.
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective December 13, 1999, but no Incentive
Stock Option shall be exercised unless and until the Plan has been approved by
the stockholders of the Company, which approval shall be within twelve (12)
months before or after the date the Plan is adopted by the Board. In the event
that the Plan is not submitted to the stockholders of the Company for approval
prior to December 13, 1999, all Incentive Stock Options granted under the Plan
shall automatically be converted into Nonstatutory Stock Options, and no further
Incentive Stock Options shall be granted under the Plan.
12.
