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EXHIBIT 99.1
IPCELL TECHNOLOGIES, INC.
1999 STOCK OPTION PLAN
PURPOSE
IPCell Technologies, Inc. (the "Company") adopts this IPCell
Technologies, Inc. 1999 Stock Option Plan (the "Plan") to attract and retain key
employees, key consultants, and Outside Directors of the Company and to provide
such persons with a proprietary interest in the Company through the granting of
Incentive Stock Options or Nonqualified Stock Options which will:
(a) increase the interest of such employees, consultants,
and Outside Directors in the Company's welfare;
(b) furnish an incentive to such persons to continue their
services for the Company; and
(c) provide a means through which the Company may attract
able persons to enter its employ.
ARTICLE I
DEFINITIONS
For the purpose of this Plan, unless the context requires otherwise, the
following terms shall have the meanings indicated:
"AFFILIATE" has the meaning set forth under Rule 405 promulgated under
the Securities Act of 1933.
"BOARD" means the board of directors of the Company.
"CAUSE" means (i) acts of fraud or dishonesty in the course of
employment, (ii) violations of law causing material harm to the Company, (iii)
substance abuse causing harm to the Company or impairing performance, (iv)
conviction of a felony involving moral turpitude, or (v) insubordination,
dereliction of duties, habitual absenteeism, or material failure to follow
reasonable Company instructions after (solely in the case of this clause (v))
notice to Participant and Participant's failure to correct same within the time
period specified in the notice, which time period shall be not less than ten
(10) business days.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMON STOCK" means the common stock which the Company is currently
authorized to issue or may in the future be authorized to issue.
"COMPANY" means IPCell Technologies, Inc., a Texas corporation.
"DATE OF GRANT" means the effective date on which a Stock Option is
awarded to a Participant as set forth in the Stock Option Agreement.
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"DISABILITY" means total and permanent disability or the equivalent
thereof as defined in the Company's long-term disability plan for which the
Participant is eligible or, if the Participant is not eligible to participate in
any such plan, total and permanent disability as defined in Section 22(e) of the
Code.
"ELIGIBLE PARTICIPANT" shall have the meaning set forth in Section 5.1
hereof.
"FAIR MARKET VALUE" means the most recent valuation of Common Stock as
determined by the Board in good faith. The Board may in its discretion appoint
an Independent Third Party to determine the Fair Market Value. As of any
Valuation Date The date as of which any valuation is performed is the "Valuation
Date" of that valuation. A valuation shall be performed at least annually, and
if the Valuation Date of the most recent valuation is more than 12 months prior
to the event for which the Fair Market Value of the Common Stock must be
determined, a valuation shall be performed as of a date which is no earlier than
the end of the most recently completed calendar quarter. In addition, the
Company may, at any time, require a new valuation to be performed as of a
Valuation Date which is no earlier than the end of the most recently completed
calendar quarter, and such new valuation shall apply to all events occurring
after the end of such Valuation Date. The Fair Market Value of the Common Stock
shall be determined by applying all appropriate discounts, including minority
interest and lack of marketability.
"INCENTIVE STOCK OPTION" means an option to purchase shares of Common
Stock granted to an Eligible Participant pursuant to Article V and which is
intended to qualify as an incentive stock option under Section 422 of the Code.
"INDEPENDENT THIRD PARTY" means an individual or entity independent of
the Company having experience in providing investment banking or similar
appraisal or valuation services and with expertise generally in the valuation of
securities or other property for purposes of this Plan. The Company's
independent accountants shall be deemed to satisfy the criteria for an
Independent Third Party if selected by the Board for that purpose. The Board may
utilize one or more Independent Third Parties.
"LIQUIDITY EVENT" means the occurrence of any of the following events:
(a) the consummation of the Company's Public Offering; (b) the consummation or
effectiveness of a sale of all or substantially all of the Company's assets to
any other corporation or business entity (excluding any such transaction with an
Affiliate of the Company provided that such Affiliate assumes the obligations of
the Company under this Plan); or (c) an event or series of related events
including, without limitation, mergers, consolidations, share exchanges, sales
of shares, share repurchases or public offerings, the result of which is the
disposition to any entity, other than to an Affiliate that assumes the
obligations of the Company under this Plan, of shares representing a majority of
the voting power of the capital stock of the Company entitled to vote generally
in the election of directors of the Company outstanding immediately prior to the
effectiveness of such disposition.
"NONQUALIFIED STOCK OPTION" means an option to purchase shares of Common
Stock granted to a Participant pursuant to Article IV and which is not intended
to qualify as an incentive stock option under Section 422 of the Code.
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"OUTSIDE DIRECTOR" means any member of the Board who is not an employee
of the Company or any Subsidiary.
"PARTICIPANT" means any employee, consultant, or Outside Director of the
Company or any Subsidiary of the Company who is, or who is proposed to be, a
recipient of a Stock Option.
"PLAN" means the IPCell Technologies, Inc. 1999 Stock Option Plan, as
amended from time to time.
"PUBLIC OFFERING" means consummation of one or a series of firmly
underwritten public offerings by the Company, pursuant to registration
statements filed by the Company with the Securities and Exchange Commission,
resulting in gross proceeds to the Company of at least $15,000,000.
"RETIREMENT" means the Participant's Termination of Service upon or
after the Participant attaining the age of 65
"SPREAD" shall have the meaning set forth in Article XII hereof.
"STOCK DIVIDEND" means a dividend or other distribution declared on the
shares of Common Stock payable in (i) capital stock of the Company or any
Subsidiary of the Company, or (ii) rights, options or warrants to receive or
purchase capital stock of the Company or any Subsidiary of the Company, or (iii)
securities convertible into or exchangeable for capital stock of the Company or
any Subsidiary of the Company, or (iv) any capital stock received upon the
exercise of, or with respect to, the foregoing.
"STOCK OPTION" shall mean an Incentive Stock Option or a Nonqualified
Stock Option granted pursuant to the Plan.
"STOCK OPTION AGREEMENT" means a written agreement between the Company
and a Participant that sets forth the terms, conditions and limitations
applicable to a Stock Option.
"SUBSIDIARY" means any corporation in an unbroken chain of corporations
beginning with the Company if, at the time of granting of the Stock Option, each
of the corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in the chain, and "Subsidiaries" means
more than one of any such corporations.
"TERMINATION" or "TERMINATION OF SERVICE" occurs when a Participant who
is an employee, consultant, or Outside Director of the Company or any Subsidiary
shall cease to serve as an employee, consultant, or Outside Director of the
Company and all of its Subsidiaries, for any reason.
"TRANSFER" shall mean any direct or indirect sale, assignment, gift,
devise, pledge, hypothecation or other encumbrance, or any other disposition of
Common Stock (or any interest in or voting power of Shares) either voluntarily
or by operation of law.
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ARTICLE II
ADMINISTRATION
Subject to the terms of this Article II, the Plan shall be administered
by the Board or such committee of the Board as is designated by the Board to
administer the Plan (the "Committee"). The Committee shall consist of at least
two members. Any member of the Committee may be removed at any time, with or
without cause, by resolution of the Board. Any vacancy occurring in the
membership of the Committee may be filled by appointment by the Board.
The Board shall select one of its members to act as the Chairman of the
Committee, and the Committee shall make such rules and regulations for its
operation as it deems appropriate. A majority of the Committee shall constitute
a quorum, and the actions of a majority of the members of the Committee present
at a meeting at which a quorum is present shall be the actions of the Committee.
Subject to the terms hereof, the Committee shall have exclusive power to:
a. Designate, from time to time, the particular key employees, key
consultants, and Outside Directors of the Company to whom Stock
Options will be granted;
b. Designate the time or times when Stock Options will be granted;
c. Determine the number of shares of Common Stock subject to
issuance pursuant to any Stock Option award, and all of the
terms, conditions, restrictions and limitations, if any, of an
award of Stock Options, including the time and conditions of
exercise or vesting;
d. Accelerate the vesting or exercise of any Stock Options when
such actions would be in the best interests of the Company;
e. Interpret the Plan, prescribe, amend, and rescind any rules and
regulations necessary or appropriate for the administration of
the Plan; and
f. Make such other determinations and take such other action as it
deems necessary or advisable in connection with the foregoing.
The Committee shall have full authority and responsibility to administer
the Plan, including authority to interpret and construe any provision of the
Plan and the terms of any Stock Options issued under it and to adopt such rules
and regulations for administering the Plan as it may deem necessary. Except as
provided below, any interpretation, determination, or other action made or taken
by the Committee shall be final, binding, and conclusive on all interested
parties, including the Company and all Participants. The Committee may delegate
to the President of the Company and to other senior officers of the Company its
duties under this Plan pursuant to such conditions or limitations as the
Committee may establish. In the event that the Board does not appoint a
Committee, then the Board shall administer this Plan, and unless and until a
Committee is so appointed, all references in this Plan to the "Committee" shall
be construed to mean, except where the context otherwise requires, the Board.
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ARTICLE III
SHARES SUBJECT TO THE PLAN
Subject to the provisions of Articles XI and XII of the Plan, the
maximum number of shares of Common Stock issuable pursuant to the exercise of
Stock Options granted under the Plan shall be 1,146,000 shares of Common Stock.
The Board and the appropriate officers of the Company shall from time to time
take whatever actions are necessary to execute, acknowledge, file and deliver
any documents required to be filed with or delivered to any governmental
authority or any stock exchange or transaction reporting system on which shares
of Common Stock are listed or quoted in order to make shares of Common Stock
available for issuance pursuant to this Plan. Shares of Common Stock subject to
Stock Options that (i) are forfeited or terminated, (ii) expire unexercised,
(iii) are settled in cash in lieu of Common Stock, or (iv) are exchanged for
Common Stock owned by the Participant upon exercise of a Stock Option, shall
immediately become available for the subsequent granting of Stock Options;
provided, however, that in no event shall more than 1,146,000 shares of Common
Stock issued under this Plan be issued subject to an Incentive Stock Option.
Shares to be distributed and sold may be made available from either authorized
but unissued Common Stock or Common Stock held by the Company in its treasury.
ARTICLE IV
Stock Option Grants
4.1 Eligibility. The Committee shall, from time to time, select the
particular key employees, key consultants, and Outside Directors of the Company
and its Subsidiaries to whom the Stock Options are to be granted in recognition
of each such Participant's contribution to the Company's or a Subsidiary's
success.
4.2 Grant of Stock Options. All grants of Stock Options under this
Article IV shall be awarded by the Committee. Each grant of Stock Options shall
be evidenced by a Stock Option Agreement setting forth the total number of
shares subject to the Stock Option, the option exercise price, the term of the
Stock Option, the vesting schedule, and such other terms and provisions as are
approved by the Committee, but, except to the extent permitted herein, are not
inconsistent with the Plan. In the case of an Incentive Stock Option, the Stock
Option Agreement shall also include provisions that may be necessary to assure
that the option is an incentive stock option under the Code. The Company shall
execute Stock Option Agreements upon instructions from the Committee.
4.3 Exercise Price. The exercise price for a Nonqualified Stock Option
shall be no less than ten percent (10%) of the Fair Market Value per share of
the Common Stock on the Date of Grant. The exercise price for an Incentive Stock
Option shall be determined by the Committee and shall be an amount not less than
the Fair Market Value per share of the Common Stock on the Date of Grant.
Notwithstanding anything to the contrary contained in this Section 4.3, the
exercise price of each Stock Option granted pursuant to the Plan shall not be
less than the par value per share of the Common Stock.
4.4 Option Period. The option period will begin and terminate on the
respective dates specified by the Committee, but may not terminate later than
ten years from the Date of Grant.
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No Stock Option granted under the Plan may be exercised at any time after the
expiration of its option period. The Committee may provide for the vesting and
exercise of Stock Options in installments and upon such terms, conditions and
restrictions as it may determine.
ARTICLE V
LIMITS ON INCENTIVE STOCK OPTIONS
5.1 Option Period. Notwithstanding the provisions of Section 4.4 hereof,
if a Participant eligible to receive a grant of an Incentive Stock Option under
Section 422 of the Code (an "Eligible Participant") owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than 10% of
the combined voting power of all classes of stock of the Company (or any
Subsidiary of the Company) and an Incentive Stock Option is granted to such
Eligible Participant, the option period term of such Incentive Stock Option (to
the extent required by the Code at the time of grant) shall be no more than five
years from the Date of Grant. In addition, the option price of any such
Incentive Stock Option granted to any such Eligible Participant owning more than
10% of the combined voting power of all classes of stock of the Company (or any
Subsidiary of the Company) shall be at least 110% of the Fair Market Value of
the Common Stock on the Date of Grant.
5.2 Limitation on Exercises of Shares Subject to Incentive Stock
Options. To the extent required by the Code for incentive stock options, the
exercise of Incentive Stock Options granted under the Plan shall be subject to
the $100,000 calendar year limit as set forth in Section 422(d) of the Code; to
the extent that any grant exceeds such $100,000 calendar year limit, the portion
of such granted Stock Option shall be deemed a Nonqualified Stock Option.
5.3 Disqualifying Disposition. If Common Stock acquired upon exercise of
an Incentive Stock Option is disposed of by an Eligible Participant prior to the
expiration of either two years from the Date of Grant of such Stock Option or
one year from the transfer of shares to such Eligible Participant pursuant to
the exercise of such Stock Option, or in any other disqualifying disposition
within the meaning of Section 422 of the Code, such Eligible Participant shall
notify the Company in writing of the date and terms of such disposition. A
disqualifying disposition by an Eligible Participant shall not affect the status
of any other Stock Option granted under the Plan as an incentive stock option
within the meaning of Section 422 of the Code.
5.4 Termination. Notwithstanding the provisions of Article VIII, the
option period of an Eligible Participant's Incentive Stock Options shall
terminate no later than ninety (90) days after such Participant's Termination of
Service with the Company and its Subsidiaries; provided that if such service
terminates by reason of the death or Disability of the Participant, then the
option period of such Participant's Incentive Stock Options shall terminate no
later than twelve (12) months after such termination by reason of death or
Disability.
ARTICLE VI
EXERCISE OF STOCK OPTIONS; RESTRICTED STOCK
6.1 Exercise of Options.
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(a) Stock Options granted to Participants shall be exercisable
in accordance with the terms of the applicable Stock Option
Agreement that are not inconsistent with the Plan.
(b) A Stock Option may be exercised solely by the Participant
during his lifetime, by the Participant's guardian if the
Participant is incapacitated as a result of a Disability, or
after the Participant's death by the person or persons entitled
thereto under his will or the laws of descent and distribution.
In the event that such a person exercises a Stock Option, all
rights, responsibilities, conditions, limitations or
restrictions that would be applicable to the Participant shall
be applicable to the person exercising the Stock Option.
(c) The purchase price of the shares as to which a Stock Option
is exercised shall be paid in full at the time of the exercise.
The full purchase price of shares purchased shall be paid upon
exercise of the Stock Option in cash, by the delivery of shares
of Common Stock previously owned by the Participant, or in any
other manner which the Committee may in its discretion approve
or authorize, in the amount of the full purchase price of the
shares purchased.
(d) No holder of a Stock Option shall be, or have any of the
rights or privileges of, a stockholder of the Company in respect
of any shares subject to any Stock Option unless and until
certificates evidencing such shares shall have been issued by
the Company to such holder.
6.2 Restricted Stock. In the event that a Participant exercises a Stock
Option prior to a Public Offering, the following restrictions and conditions
will apply to the shares of Common Stock (the "Restricted Stock") issued to the
Participant upon such exercise:
(a) Restriction Period. Except as otherwise provided in the
Plan, the restrictions place on the Restricted Stock, and any Stock
Dividend paid on or with respect to such Restricted Stock (which shall
also be deemed Restricted Stock), under this Article VI shall continue
from the date of exercise to the date of a Public Offering (such period
of restriction being referred to herein as the "Restriction Period").
(b) Rights with Respect to Restricted Stock. During the
Restriction Period, the Participant shall have the right to receive any
dividends on his or her Restricted Stock (and any Stock Dividends paid
on such Restricted Stock), but the Participant shall not have the right
to vote any Restricted Stock or Stock Dividends paid on such shares.
Contemporaneous with the exercise of any Stock Option, the Participant
shall also be required to execute an irrevocable proxy with respect to
all such shares exercised thereunder designating the Committee to vote
such shares on all issues. Each Participant who is to receive Restricted
Stock shall be issued a stock certificate in respect of such shares of
Restricted Stock, registered in the name of the Participant, which shall
bear an appropriate legend referring to the restrictions applicable to
such Restricted Stock, to read substantially in the following form:
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"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions of
the IPCell Technologies, Inc. 1999 Stock Option Plan. A copy of
such Plan is on file in the primary offices of IPCell
Technologies, Inc."
Upon receipt of the stock certificate or certificates representing the
Restricted Stock, the Participant shall endorse such certificates or
certificates in blank or execute stock powers in form satisfactory to
the Company in blank and deliver such certificate or certificates and
executed stock powers to the Company.
(c) Right of First Refusal.
(i) Voluntary Transfer. Prior to any voluntary Transfer
of any shares of Restricted Stock during a Participant's
lifetime, the Participant shall first give written
notice to the Company of his intention to Transfer all
or a portion of his shares of Restricted Stock. If the
proposed Transfer is a purchase, the notice shall
contain a conformed copy of the proposed transferee's
offer to purchase and shall describe the number of
shares of Restricted Stock involved, the price per
share, the terms and consideration of payment, and the
name of the proposed transferee. The Participant's
written notice of proposed Transfer shall constitute an
offer, irrevocable for sixty (60) days, to sell the
offered shares of Restricted Stock in whole or in part
to the Company. For a period of sixty (60) days after
the Company receives the written notice of proposed
Transfer, the Company shall have the right to elect to
purchase all or any portion of the offered shares of
Restricted Stock at the price described in the notice.
If the Company desires to accept in whole or in part the
offer to sell, the Company shall signify acceptance and
the number of shares of Restricted Stock to be purchased
by written notice to the Participant within the sixty
(60) day option period. If the Company fails to notify
the Participant of its election or if the Company's
notice to the Participant shall specify for purchase
less than the whole number of shares of Restricted Stock
offered by the Participant, the offer by the Participant
to the Company to the extent not accepted shall lapse
sixty (60) days after the Company receives the written
notice of proposed Transfer.
(ii) Involuntary Transfer. Whenever a Participant has
any notice or knowledge of any attempted, impending or
consummated involuntary Transfer, or lien or charge upon
any of his shares of Restricted Stock, whether by
operation of law or otherwise, he shall give immediate
written notice to the Company. Whenever the Company has
notice or knowledge of any such attempted, impending or
consummated involuntary Transfer, lien or charge, it
shall give written notice to the Participant. In either
case, the Participant agrees to immediately disclose to
the Company all pertinent information in his possession
relating to the Transfer. If any share of Restricted
Stock is subjected to an involuntary Transfer, lien or
charge, the Company shall at all times have the
immediate and continuing
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option to purchase the shares of Restricted Stock upon
notice by the Company to the Participant or other record
holder at the Fair Market Value as of the date of such
purchase. Any shares of Restricted Stock so purchased
shall in every case be free and clear of the Transfer,
lien or charge. The purchase price shall first be paid
directly to the holder of the encumbrance on the shares
of Restricted Stock in an amount sufficient to discharge
the obligation underlying, and release, the encumbrance.
The balance of the purchase price, if any, shall be paid
to the selling Participant.
(iii) Transfers in Bankruptcy. If a Participant is the
named debtor in bankruptcy or receivership proceedings
and a Transfer of shares of Restricted Stock is proposed
or directed, the Company shall have a right of first
refusal to purchase the named debtor Participant's
shares of Restricted Stock to the same extent as if that
Transfer constituted an offer to purchase shares of
Restricted Stock under Section 6.2(c)(i), and the
provisions of Section 6.2(c)(i) shall accordingly
control the exercise of this right of first refusal.
(iv) Rights in Transferred Shares. If the Company fails
to purchase the Restricted Stock subject to a Transfer,
(i) such Restricted Stock shall remain subject to the
restrictions set forth in this Section 6.2 (the term
"Participant" being deemed to apply to the transferee
and any subsequent transferee) and (ii) the Company may
at any time after the Transfer, upon notice to the
transferee or any subsequent transferee, purchase the
transferred Restricted Stock at the Fair Market Value as
of the date of such purchase.
(v) Subject to Stockholders' Agreement. The Company may
expressly provide in any Participant's Stock Option
Agreement that the right of first refusal granted to the
Company in this Section 6.2 shall be superseded and
supplanted by any right of first refusal set forth in
any stockholders', shareholders', or other similar
agreement that is applicable to such Participant.
(d) Call. The Company shall have the right at any time to
purchase from the Participant for cash any and all shares of
Restricted Stock acquired pursuant to the exercise of a Stock
Option at the Fair Market Value of such shares as of the date of
purchase.
(e) Payment of Purchase Price for Restricted Stock. The payment
of the aggregate purchase price of the Restricted Stock
contemplated by Section 6.2(c) or Section 6.2(d) shall be paid
in cash (including the fair market value of any noncash
consideration to be paid in the proposed Transfer, as determined
in good faith by the Board), by a promissory note of the
Company, or both, with any such promissory note to be paid
within three years of the date of notice of the Transfer of the
Restricted Stock. The promissory note shall provide for equal
annual
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principal payments plus accrued interest at the applicable
federal rate for the month in which such promissory note is
executed.
(f) Bring-Along. The Board may, upon the occurrence of an event
specified in clause (b) or (c) of the definition of a Liquidity
Event contained herein, require the Participant to sell any or
all shares of Restricted Stock acquired pursuant to the exercise
of a Stock Option (whether or not exercised pursuant to such
Liquidity Event) to any entity to which shares of Restricted
Stock are transferred pursuant to such Liquidity Event on the
same terms and conditions applicable to the shares affected,
changed or receiving consideration in the Liquidity Event.
ARTICLE VII
TERMINATION OF SERVICE
Upon the Termination of Service of a Participant for any reason, the
specific Stock Option Agreement shall govern the treatment of any unexercised
Stock Options. In the event of such a Termination, the Committee may, in its
discretion, provide for the extension of the exercisability of a Stock Option
for any period that is not beyond the applicable expiration date thereof,
accelerate the vesting or exercisability of a Stock Option, eliminate or make
less restrictive any restrictions contained in a Stock Option, waive any
restriction or other provision of this Plan or a Stock Option or otherwise amend
or modify the Stock Option in any manner that is either (a) not adverse to such
Participant or (b) consented to by such Participant.
Notwithstanding the foregoing, an individual grant of a Stock Option
to a Participant under the Plan may provide, pursuant to the terms of the
particular Stock Option Agreement, more restrictive terms than those contained
in this Plan concerning any exercise of such Stock Option with respect to any
Termination of Service by such Participant.
ARTICLE VIII
AMENDMENT OR DISCONTINUANCE
Subject to the limitations set forth in this Article VIII, the Board may
at any time and from time to time, without the consent of the Participants,
alter, amend, revise, suspend, or discontinue the Plan in whole or in part. In
the event of any amendment to the Plan, the holder of any Stock Option
outstanding under the Plan shall, upon request of the Committee and as a
condition to the exercisability thereof, execute a conforming amendment in the
form prescribed by the Committee to any Stock Option Agreement relating thereto
within such reasonable time as the Committee shall specify in such request.
Notwithstanding anything contained in this Plan to the contrary, unless required
by law, no action contemplated or permitted by this Article VIII shall adversely
affect any rights of Participants or obligations of the Company to Participants
with respect to any Stock Options theretofore granted under the Plan without the
consent of the affected Participant.
ARTICLE IX
EFFECT OF THE PLAN
Neither the adoption of this Plan nor any action of the Board or the
Committee shall be deemed to give any employee, consultant, or Outside Director
any right to be granted a Stock
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Option or to purchase or receive Common Stock of the Company or any other rights
except as may be evidenced by a Stock Option Agreement, or any amendment
thereto, duly authorized by and executed on behalf of the Company and then only
to the extent of and upon and subject to the terms and conditions expressly set
forth therein.
ARTICLE X
TERM
The Plan shall be submitted to the Company's stockholders for their
approval. Unless sooner terminated by action of the Board, the Plan will
terminate on July 15, 2009. Stock Options under the Plan may not be granted
after that date, but Stock Options granted before that date will continue to be
effective in accordance with their terms and conditions.
ARTICLE XI
CAPITAL ADJUSTMENTS
If at any time while the Plan is in effect or unexercised Stock Options
are outstanding there shall be any increase or decrease in the number of issued
and outstanding shares of Common Stock through the declaration of a Stock
Dividend or through any recapitalization resulting in a stock split-up,
combination, or exchange of shares of Common Stock, then and in such event:
(i) An appropriate adjustment shall be made in the
maximum number of shares of Common Stock then subject to being
awarded under grants pursuant to the Plan, to the end that the
same proportion of the Company's issued and outstanding shares
of Common Stock shall continue to be subject to being so
awarded; and
(ii) Appropriate adjustments shall be made in the number
of shares of Common Stock and the exercise price per share
thereof then subject to purchase pursuant to each such Stock
Option previously granted and unexercised, to the end that the
same proportion of the Company's issued and outstanding shares
of Common Stock in each instance shall remain subject to
purchase at the same aggregate exercise price.
Any fractional shares resulting from any adjustment made pursuant to
this Article XI shall be eliminated for the purposes of such adjustment. Except
as otherwise expressly provided herein, the issuance by the Company of shares of
its capital stock of any class, or securities convertible into shares of capital
stock of any class, either in connection with direct sale or upon the exercise
of rights or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall be made with respect
to, the number of or exercise price of shares of Common Stock then subject to
outstanding Stock Options granted under the Plan.
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ARTICLE XII
RECAPITALIZATION, MERGER AND CONSOLIDATION
(a) The existence of this Plan and Stock Options granted
hereunder shall not affect in any way the right or power of the Company
or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's
capital structure or its business, or any merger or consolidation of the
Company, or any issue of bonds, debentures, preferred or prior
preference stocks ranking prior to or otherwise affecting the Common
Stock or the rights thereof (or any rights, options or warrants to
purchase same), or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or
otherwise.
(b) Subject to any required action by the stockholders, if the
Company shall be the surviving or resulting corporation in any merger or
consolidation, any outstanding Stock Option granted hereunder shall
pertain to and apply to the securities or rights (including cash,
property or assets) to which a holder of the number of shares of Common
Stock subject to the Stock Option would have been entitled.
(c) In the event of any reorganization, merger or consolidation
pursuant to which the Company is not the surviving or resulting
corporation, or of any proposed sale of substantially all of the assets
of the Company, there may be substituted for each share of Common Stock
subject to the unexercised portions of such outstanding Stock Option
that number of shares of each class of stock or other securities or that
amount of cash, property or assets of the surviving or consolidated
company which were distributed or distributable to the stockholders of
the Company in respect of each share of Common Stock held by them, such
outstanding Stock Options to be thereafter exercisable for such stock,
securities, cash or property in accordance with their terms.
Notwithstanding the foregoing, however, the Board, in its sole
discretion, may cancel all such Stock Options as of the effective date
of any such reorganization, merger or consolidation, or of any such
proposed sale of substantially all of the assets of the Company, or of
any dissolution or liquidation of the Company, and either:
(i) give notice to each holder thereof or his personal
representative of its intention to cancel such Stock Options and
permit the purchase during the thirty (30) day period next
preceding such effective date of any or all of the shares
subject to such outstanding Stock Options, including shares as
to which such Stock Options would not otherwise be exercisable;
or
(ii) pay the holder thereof an amount equal to a
reasonable estimate of an amount (hereinafter the "Spread")
equal to the difference between the net amount per share payable
in such transaction or as a result of such transaction, less the
exercise price of such Stock Options. In estimating the Spread,
appropriate adjustments to give effect to the existence of the
Stock Options shall be made, such as deeming the Stock Options
to have been exercised, with the Company receiving the exercise
price payable thereunder, and treating the shares receivable
upon exercise of the Options as being outstanding in determining
the
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net amount per share. In cases where the proposed transaction
consists of the acquisition of assets of the Company, the net
amount per share shall be calculated on the basis of the net
amount receivable with respect to shares of Common Stock upon a
distribution and liquidation by the Company after giving effect
to expenses and charges, including but not limited to taxes,
payable by the Company before such liquidation could be
completed.
(d) Notwithstanding sub-Section (c) above of this Article XII,
in case the Company shall, at any time while any Stock Option under this
Plan shall be in force and remain unexpired, (i) sell all or
substantially all of its property or (ii) dissolve, liquidate, or wind
up its affairs, then, provided that the Board so determines in its sole
discretion, each Participant may thereafter receive upon exercise hereof
(in lieu of each share of Common Stock of the Company which such
Participant would have been entitled to receive) the same kind and
amount of any securities or assets as may be issuable, distributable or
payable upon any such sale, dissolution, liquidation, or winding up with
respect to each share of Common Stock of the Company. In the event that
the Company shall, at any time prior to the expiration of any Stock
Option, make any partial distribution of its assets in the nature of a
partial liquidation, whether payable in cash or in kind (but excluding
the distribution of a cash dividend payable out of retained earnings or
earned surplus and designated as such), then in such event the exercise
prices then in effect with respect to each option shall be reduced, as
of the payment date of such distribution, in proportion to the
percentage reduction in the tangible book value of the shares of the
Company's Common Stock (determined in accordance with generally accepted
accounting principles) resulting by reason of such distribution;
provided, that in no event shall any adjustment of exercise prices in
accordance with the terms of the Plan result in any exercise prices
being reduced below the par value per share of the Common Stock.
(e) Upon the occurrence of each event requiring an adjustment of
the exercise price and/or the number of shares purchasable pursuant to
Stock Options granted pursuant to the terms of this Plan, the Company
shall mail forthwith to each Participant a copy of its computation of
such adjustment which shall be conclusive and shall be binding upon each
such Participant, except as to any Participant who contests such
computation by written notice to the Company within thirty (30) days
after receipt thereof by such Participant.
ARTICLE XIII
OPTIONS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER CORPORATIONS
Stock Options may be granted under the Plan from time to time in substitution
for such stock options held by employees, consultants, or outside directors of a
corporation who become or are about to become employees, consultants, or outside
directors of the Company or a Subsidiary as the result of a merger or
consolidation of such corporation with the Company or a Subsidiary or the
acquisition by either of the foregoing of stock of such corporation as the
result of which it becomes a Subsidiary. The terms and conditions of the
substitute options so granted may vary from the terms and conditions set forth
in this Plan to such extent as the Committee at the time of
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grant may deem appropriate to conform, in whole or in part, to the provisions of
the options in substitution for which they are granted.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1 Exercise of Stock Options. Notwithstanding anything to the contrary
contained herein, Stock Options may not be exercised, nor may shares be issued
pursuant to a Stock Option, if any necessary listing of the shares on a stock
exchange or any registration under state or federal securities laws required
under the circumstances has not been accomplished.
14.2 Assignability. Except as otherwise provided herein or as provided
in the Stock Option Agreement, no Stock Option granted under this Plan shall be
assignable or otherwise transferable by the Participant (or his or her
authorized legal representative) during the Participant's lifetime and, after
the death of the Participant, other than by will or the laws of descent and
distribution; and any attempted assignment or transfer in violation of this
Section 14.2 shall be null and void. Upon the Participant's death, the personal
representative or other person entitled to succeed to the rights of the
Participant (the "Successor Participant") may exercise such rights. A Successor
Participant must furnish proof satisfactory to the Company of his or her right
to exercise the Stock Option under the Participant's will or under the
applicable laws of descent and distribution. A Successor Participant shall be
subject to the same restrictions to which a Participant is subject.
14.3 Investment Intent. The Company may require that there be presented
to and filed with it by any Participant(s) under the Plan, such evidence as it
may deem necessary to establish that the Stock Options granted or the shares of
Common Stock to be purchased or transferred are being acquired for investment
purposes and not with a view to their distribution.
14.4 No Right to Continue Employment. This Plan does not constitute a
contract of employment. Nothing in the Plan or in any Stock Option confers upon
any employee the right to continue in the employ of the Company or interferes
with or restricts in any way the right of the Company to discharge any employee
at any time (subject to any contract rights of such employee).
14.5 No Right to Continue Directorship. Nothing in the Plan or in any
Stock Option confers upon any Outside Director the right to continue as a member
of the Board or interferes with or restricts in any way the right of the Company
to remove any Outside Director at any time.
14.6 No Right to Continue as Consultant. Nothing in the Plan or in any
Stock Option confers upon any consultant the right to continue as a consultant
of the Company or to interfere with or restrict in any way the right of the
Company to terminate such consultant from serving as a consultant to the Company
(subject to any rights the consultant may have under a separate agreement with
the Company).
14.7 Tax Requirements. Any employee who exercises any Stock Option shall
be required to pay the Company the amount of all taxes which the Company is
required to withhold as a result of the exercise of the Stock Option. The
Participant's obligation to pay such taxes
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may be satisfied by the following, or any combination thereof: (i) the delivery
of cash to the Company in an amount necessary to satisfy the required tax
withholding obligation of the Company and/or (ii) the actual delivery by the
exercising Participant to the Company of shares of Common Stock which the
Participant owns and/or the Company's withholding of a number of shares to be
delivered upon the exercise of the Stock Option), which shares so delivered or
withheld have an aggregate Fair Market Value which equals or exceeds (if
necessary to avoid the issuance of fractional shares) the required tax
withholding payment. Any such withholding payments with respect to the exercise
of a Nonqualified Stock Option made by a Participant in cash or by actual
delivery of shares of Common Stock shall be required to be made within thirty
(30) days after the delivery to the Participant of any certificate representing
the shares of Common Stock acquired upon exercise of the Stock Option.
14.8 Indemnification of Board and Committee. No current or previous
member of the Board or the Committee, nor any officer or employee of the Company
acting on behalf of the Board or the Committee, shall be personally liable for
any action, determination, or interpretation taken or made in good faith with
respect to the Plan, and all such members of the Board or the Committee and each
and any officer or employee of the Company acting on their behalf shall, to the
extent permitted by law, be fully indemnified and protected by the Company in
respect of any such action, determination or interpretation. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification
to which such individuals may be entitled under the Company's Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise.
14.9 Restrictions. This Plan, and the granting and exercise of Stock
Options hereunder, and the obligation of the Company to sell and deliver Common
Stock under such Stock Options, shall be subject to all applicable foreign and
United States laws, rules and regulations, and to such approvals on the part of
any governmental agencies or stock exchanges or transaction reporting systems as
may be required. No Common Stock or other form of payment shall be issued with
respect to any Stock Option unless the Company shall be satisfied based on the
advice of its counsel that such issuance will be in compliance with applicable
federal and state securities laws and the requirements of any regulatory
authority having jurisdiction over the securities of the Company. Unless the
Stock Options and Common Stock covered by this Plan have been registered under
the Securities Act of 1933, as amended, each person exercising a Stock Option
under this Plan may be required by the Company to give a representation in
writing in form and substance satisfactory to the Company to the effect that he
is acquiring such shares for his own account for investment and not with a view
to, or for sale in connection with, the distribution of such shares or any part
thereof. If any provision of this Plan is found not to be in compliance with
such rules, such provision shall be null and void to the extent required to
permit this Plan to comply with such rules. Certificates evidencing shares of
Common Stock delivered under this Plan may be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the Securities and Exchange
Commission, any securities exchange or transaction reporting system upon which
the Common Stock is then listed or quoted, and any applicable federal, foreign
and state securities law. The Committee may cause a legend or legends to be
placed upon any such certificates to make appropriate reference to such
restrictions.
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14.10 Gender and Number. Where the context permits, words in the
masculine gender shall include the feminine and neuter genders, the plural form
of a word shall include the singular form, and the singular form of a word shall
include the plural form.
ARTICLE XV
EFFECTIVE DATE
The effective date of the Plan shall be July 15, 1999, subject to approval and
adoption by the stockholders of the Company. Following such approval, the Plan
will continue in effect until the expiration of its term or until earlier
terminated, amended, or suspended in accordance with the terms hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed as of
the ____ day of ___________, 1999, pursuant to prior action taken by the Board.
IPCELL TECHNOLOGIES, INC.
By:
---------------------------------
President
Attest:
---------------------------------
Secretary
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