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Title: |
Incentive Stock Plan |
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Date: |
2001 |
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$83 |
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#289836 |
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MEDCARE TECHNOLOGIES, INC.
INCENTIVE STOCK PLAN
1. Objectives. The MedCare Technologies, Inc. 2001-- Incentive Stock Plan
(the "Plan") is designed to retain directors, executives and selected employees
and consultants and reward them for making major contributions to the success of
the Company. These objectives are accomplished by making long-term incentive
awards under the Plan thereby providing Participants with a proprietary interest
in the growth and performance of the Company.
2. Definitions.
(a) "Board" - The Board of Directors of the Company.
(b) "Delaware Securities Rules" - corporate securities rules of the state
of Delaware.
(c) "Code" - The Internal Revenue Code of 1986, as amended from time to
time.
(d) "Committee" - The Executive Compensation Committee of the Company's
Board, or such other committee of the Board that is designated by the
Board to administer the Plan, composed of not less than two members of
the Board all of whom are disinterested persons, as contemplated by
Rule 16b-3 ("Rule 16b-3") promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(e) "Company" - MedCare Technologies, Inc. and its subsidiaries including
subsidiaries of subsidiaries.
(f) "Exchange Act" - The Securities Exchange Act of 1934, as amended from
time to time.
(g) "Fair Market Value" - The fair market value of the Company's issued
and outstanding Stock as determined in good faith by the Board or
Committee.
(h) "Grant" - The grant of any form of stock option, stock award, or stock
purchase offer, whether granted singly, in combination or in tandem,
to a Participant pursuant to such terms, conditions and limitations as
the Committee may establish in order to fulfill the objectives of the
Plan.
(i) "Grant Agreement" - An agreement between the Company and a Participant
that sets forth the terms, conditions and limitations applicable to a
Grant.
(j) "Option" - Either an Incentive Stock Option, in accordance with
Section 422 of Code, or a Nonstatutory Option, to purchase the
Company's Stock that may be awarded to a Participant under the Plan. A
Participant who receives an award of an Option shall be referred to as
an "Optionee."
(k) "Participant" - A director, officer, employee or consultant of the
Company to whom an Award has been made under the Plan.
(l) "Restricted Stock Purchase Offer" - A Grant of the right to purchase a
specified number of shares of Stock pursuant to a written agreement
issued under the Plan.
(m) "Securities Act" - The Securities Act of 1933, as amended from time to
time.
(n) "Stock" - Authorized and issued or unissued shares of common stock of
the Company.
(o) "Stock Award" - A Grant made under the Plan in stock or denominated in
units of stock for which the Participant is not obligated to pay
additional consideration.
3. Administration. The Plan shall be administered by the Board, provided
however, that the Board may delegate such administration to the Committee.
Subject to the provisions of the Plan, the Board and/or the Committee shall have
authority to (a) grant, in its discretion, Incentive Stock Options in accordance
with Section 422 of the Code, or Nonstatutory Options, Stock Awards or
Restricted Stock Purchase Offers; (b) determine in good faith the fair market
value of the Stock covered by any Grant; (c) determine which eligible persons
shall receive Grants and the number of shares, restrictions, terms and
conditions to be included in such Grants; (d) construe and interpret the Plan;
(e) promulgate, amend and rescind rules and regulations relating to its
administration, and correct defects, omissions and inconsistencies in the Plan
or any Grant; (f) consistent with the Plan and with the consent of the
Participant, as appropriate, amend any outstanding Grant or amend the exercise
date or dates thereof; (g) determine the duration and purpose of leaves of
absence which may be granted to Participants without constituting termination of
their employment for the purpose of the Plan or any Grant; and (h) make all
other determinations necessary or advisable for the Plan's administration. The
interpretation and construction by the Board of any provisions of the Plan or
selection of Participants shall be conclusive and final. No member of the Board
or the Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any Grant made thereunder.
4. Eligibility.
{PAGE}
(a) General: The persons who shall be eligible to receive Grants shall be
directors, officers, employees or consultants to the Company. The term
consultant shall mean any person, other than an employee, who is
engaged by the Company to render services and is compensated for such
services. An Optionee may hold more than one Option. Any issuance of a
Grant to an officer or director of the Company subsequent to the first
registration of any of the securities of the Company under the
Exchange Act shall comply with the requirements of Rule 16b-3.
(b) Incentive Stock Options: Incentive Stock Options may only be issued to
employees of the Company. Incentive Stock Options may be granted to
officers or directors, provided they are also employees of the
Company. Payment of a director's fee shall not be sufficient to
constitute employment by the Company.
The Company shall not grant an Incentive Stock Option under the Plan to any
employee if such Grant would result in such employee holding the right to
exercise for the first time in any one calendar year, under all Incentive Stock
Options granted under the Plan or any other plan maintained by the Company, with
respect to shares of Stock having an aggregate fair market value, determined as
of the date of the Option is granted, in excess of $100,000. Should it be
determined that an Incentive Stock Option granted under the Plan exceeds such
maximum for any reason other than a failure in good faith to value the Stock
subject to such option, the excess portion of such option shall be considered a
Nonstatutory Option. To the extent the employee holds two (2) or more such
Options which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability of such Option as Incentive Stock
Options under the Federal tax laws shall be applied on the basis of the order in
which such Options are granted. If, for any reason, an entire Option does not
qualify as an Incentive Stock Option by reason of exceeding such maximum, such
Option shall be considered a Nonstatutory Option.
(c) Nonstatutory Option: The provisions of the foregoing Section 4(b)
shall not apply to any Option designated as a "Nonstatutory Option" or
which sets forth the intention of the parties that the Option be a
Nonstatutory Option.
(d) Stock Awards and Restricted Stock Purchase Offers: The provisions of
this Section 4 shall not apply to any Stock Award or Restricted Stock
Purchase Offer under the Plan.
5. Stock.
(a) Authorized Stock: Stock subject to Grants may be either unissued or
reacquired Stock.
(b) Number of Shares: Subject to adjustment as provided in Section 6(i) of
the Plan, the total number of shares of Stock which may be purchased
or granted directly by Options, Stock Awards or Restricted Stock
Purchase Offers, or purchased indirectly through exercise of Options
granted under the Plan shall not exceed 10,000,000. If any Grant shall
for any reason terminate or expire, any shares allocated thereto but
remaining unpurchased upon such expiration or termination shall again
be available for Grants with respect thereto under the Plan as though
no Grant had previously occurred with respect to such shares. Any
shares of Stock issued pursuant to a Grant and repurchased pursuant to
the terms thereof shall be available for future Grants as though not
previously covered by a Grant.
(c) Reservation of Shares: The Company shall reserve and keep available at
all times during the term of the Plan such number of shares as shall
be sufficient to satisfy the requirements of the Plan. If, after
reasonable efforts, which efforts shall not include the registration
of the Plan or Grants under the Securities Act, the Company is unable
to obtain authority from any applicable regulatory body, which
authorization is deemed necessary by legal counsel for the Company for
the lawful issuance of shares hereunder, the Company shall be relieved
of any liability with respect to its failure to issue and sell the
shares for which such requisite authority was so deemed necessary
unless and until such authority is obtained.
(d) Application of Funds The proceeds received by the Company from the
sale of Stock pursuant to the exercise of Options or rights under
Stock Purchase Agreements will be used for general corporate purposes.
(e) No Obligation to Exercise The issuance of a Grant shall impose no
obligation upon the Participant to exercise any rights under such
Grant.
6. Terms and Conditions of Options. Options granted hereunder shall be
evidenced by agreements between the Company and the respective Optionees, in
such form and substance as the Board or Committee shall from time to time
approve. The form of Incentive Stock Option Agreement attached hereto as Exhibit
"A" and the three forms of a Nonstatutory Stock Option Agreement for employees,
for directors and for consultants, attached hereto as Exhibits "B-1," "B-2" and
"B-3," respectively, shall be deemed to be approved by the Board. Option
agreements need not be identical, and in each case may include such provisions
as the Board or Committee may determine, but all such agreements shall be
subject to and limited by the following terms and conditions:
{PAGE}
(a) Number of Shares: Each Option shall state the number of shares to
which it pertains.
(b) Exercise Price: Each Option shall state the exercise price, which
shall be determined as follows:
(i) Any Incentive Stock Option granted to a person who at the time
the Option is granted 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 or value of all
classes of stock of the Company ("Ten Percent Holder") shall have
an exercise price of no less than 110% of the Fair Market Value
of the Stock as of the date of grant; and
(ii) Incentive Stock Options granted to a person who at the time the
Option is granted is not a Ten Percent Holder shall have an
exercise price of no less than 100% of the Fair Market Value of
the Stock as of the date of grant.
For the purposes of this Section 6(b), the Fair Market Value shall be as
determined by the Board in good faith, which determination shall be conclusive
and binding; provided however, that if there is a public market for such Stock,
the Fair Market Value per share shall be the average of the bid and asked prices
(or the closing price if such stock is listed on the NASDAQ National Market
System or Small Cap Issue Market) on the date of grant of the Option, or if
listed on a stock exchange, the closing price on such exchange on such date of
grant.
(c) Medium and Time of Payment: The exercise price shall become
immediately due upon exercise of the Option and shall be paid in cash
or check made payable to the Company. Should the Company's outstanding
Stock be registered under Section 12(g) of the Exchange Act at the
time the Option is exercised, then the exercise price may also be paid
as follows:
(i) in shares of Stock held by the Optionee for the requisite period
necessary to avoid a charge to the Company's earnings for
financial reporting purposes and valued at Fair Market Value on
the exercise date, or
(ii) through a special sale and remittance procedure pursuant to which
the Optionee shall concurrently provide irrevocable written
instructions (a) to a Company designated brokerage firm to effect
the immediate sale of the purchased shares and remit to the
Company, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate exercise price
payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be
withheld by the Company by reason of such purchase and (b) to the
Company to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale
transaction.
At the discretion of the Board, exercisable either at the time of Option
grant or of Option exercise, the exercise price may also be paid (i) by
Optionee's delivery of a promissory note in form and substance satisfactory to
the Company and permissible under the securities rules of the State of Delaware
and bearing interest at a rate determined by the Board in its sole discretion,
but in no event less than the minimum rate of interest required to avoid the
imputation of compensation income to the Optionee under the Federal tax laws, or
(ii) in such other form of consideration permitted by the Delaware corporations
law as may be acceptable to the Board.
(d)Term and Exercise of Options: Any Option granted to an employee of the
Company shall become exercisable over a period of no longer than five
(5) years, and no less than twenty percent (20%) of the shares covered
thereby shall become exercisable annually. No Option shall be
exercisable, in whole or in part, prior to one (1) year from the date
it is granted unless the Board shall specifically determine otherwise,
as provided herein. In no event shall any Option be exercisable after
the expiration of ten (10) years from the date it is granted, and no
Incentive Stock Option granted to a Ten Percent Holder shall, by its
terms, be exercisable after the expiration of five (5) years from the
date of the Option. Unless otherwise specified by the Board or the
Committee in the resolution authorizing such Option, the date of grant
of an Option shall be deemed to be the date upon which the Board or
the Committee authorizes the granting of such Option.
Each Option shall be exercisable to the nearest whole share, in
installments or otherwise, as the respective Option agreements may provide.
During the lifetime of an Optionee, the Option shall be exercisable only by the
Optionee and shall not be assignable or transferable by the Optionee, and no
other person shall acquire any rights therein. To the extent not exercised,
installments (if more than one) shall accumulate, but shall be exercisable, in
whole or in part, only during the period for exercise as stated in the Option
agreement, whether or not other installments are then exercisable.
(e)Termination of Status as Employee, Consultant or Director: If Optionee's
status as an employee shall terminate for any reason other than
Optionee's disability or death, then Optionee (or if the Optionee
shall die after such termination, but prior to exercise, Optionee's
personal representative or the person entitled to succeed to the
Option) shall have the right to exercise the portions of any of
Optionee's Incentive Stock Options which were exercisable as of the
date of such termination, in whole or in part, not less than 30 days
nor more than three (3) months after such termination (or, in the
event of "termination for cause" as that term is defined in the
Delware Labor Code and case law related thereto, or by the terms of
the Plan or the Option Agreement or an employment agreement, the
Option shall automatically terminate as of the termination of
employment as to all shares covered by the Option).
{PAGE}
With respect to Nonstatutory Options granted to employees, directors or
consultants, the Board may specify such period for exercise, not less than 30
days (except that in the case of "termination for cause" or removal of a
director, the Option shall automatically terminate as of the termination of
employment or services as to shares covered by the Option, following termination
of employment or services as the Board deems reasonable and appropriate. The
Option may be exercised only with respect to installments that the Optionee
could have exercised at the date of termination of employment or services.
Nothing contained herein or in any Option granted pursuant hereto shall be
construed to affect or restrict in any way the right of the Company to terminate
the employment or services of an Optionee with or without cause.
(f) Disability of Optionee: If an Optionee is disabled (within the meaning
of Section 22(e)(3) of the Code) at the time of termination, the three
(3) month period set forth in Section 6(e) shall be a period, as
determined by the Board and set forth in the Option, of not less than
six months nor more than one year after such termination.
(g) Death of Optionee: If an Optionee dies while employed by, engaged as a
consultant to, or serving as a Director of the Company, the portion of
such Optionee's Option which was exercisable at the date of death may
be exercised, in whole or in part, by the estate of the decedent or by
a person succeeding to the right to exercise such Option at any time
within (i) a period, as determined by the Board and set forth in the
Option, of not less than six (6) months nor more than one (1) year
after Optionee's death, which period shall not be more, in the case of
a Nonstatutory Option, than the period for exercise following
termination of employment or services, or (ii) during the remaining
term of the Option, whichever is the lesser. The Option may be so
exercised only with respect to installments exercisable at the time of
Optionee's death and not previously exercised by the Optionee.
(h) Nontransferability of Option: No Option shall be transferable by the
Optionee, except by will or by the laws of descent and distribution.
(i) Recapitalization: Subject to any required action of shareholders, the
number of shares of Stock covered by each outstanding Option, and the
exercise price per share thereof set forth in each such Option, shall
be proportionately adjusted for any increase or decrease in the number
of issued shares of Stock of the Company resulting from a stock split,
stock dividend, combination, subdivision or reclassification of
shares, or the payment of a stock dividend, or any other increase or
decrease in the number of such shares affected without receipt of
consideration by the Company; provided, however, the conversion of any
convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration" by the Company.
In the event of a proposed dissolution or liquidation of the Company, a
merger or consolidation in which the Company is not the surviving entity, or a
sale of all or substantially all of the assets or capital stock of the Company
(collectively, a "Reorganization"), unless otherwise provided by the Board, this
Option shall terminate immediately prior to such date as is determined by the
Board, which date shall be no later than the consummation of such
Reorganization. In such event, if the entity which shall be the surviving entity
does not tender to Optionee an offer, for which it has no obligation to do so,
to substitute for any unexercised Option a stock option or capital stock of such
surviving of such surviving entity, as applicable, which on an equitable basis
shall provide the Optionee with substantially the same economic benefit as such
unexercised Option, then the Board may grant to such Optionee, in its sole and
absolute discretion and without obligation, the right for a period commencing
thirty (30) days prior to and ending immediately prior to the date determined by
the Board pursuant hereto for termination of the Option or during the remaining
term of the Option, whichever is the lesser, to exercise any unexpired Option or
Options without regard to the installment provisions of Paragraph 6(d) of the
Plan; provided, that any such right granted shall be granted to all Optionees
not receiving an offer to receive substitute options on a consistent basis, and
provided further, that any such exercise shall be subject to the consummation of
such Reorganization.
Subject to any required action of shareholders, if the Company shall be the
surviving entity in any merger or consolidation, each outstanding Option
thereafter shall pertain to and apply to the securities to which a holder of
shares of Stock equal to the shares subject to the Option would have been
entitled by reason of such merger or consolidation. In the event of a change in
the Stock of the Company as presently constituted, which is limited to a change
of all of its authorized shares without par value into the same number of shares
with a par value, the shares resulting from any such change shall be deemed to
be the Stock within the meaning of the Plan. To the extent that the foregoing
adjustments relate to stock or securities of the Company, such adjustments shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided in this Section 6(i), the
Optionee shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class, and the
number or price of shares of Stock subject to any Option shall not be affected
by, and no adjustment shall be made by reason of, any dissolution, liquidation,
merger, consolidation or sale of assets or capital stock, or any issue by the
Company of shares of stock of any class or securities convertible into shares of
stock of any class. The Grant of an Option pursuant to the Plan shall not affect
in any way the right or power of the Company to make any adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve, or liquidate or to sell or
transfer all or any part of its business or assets.
{PAGE}
(j) Rights as a Shareholder: An Optionee shall have no rights as a
shareholder with respect to any shares covered by an Option until the
effective date of the issuance of the shares following exercise of
such Option by Optionee. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date
is prior to the date such stock certificate is issued, except as
expressly provided in Section 6(i) hereof.
(k) Modification, Acceleration, Extension, and Renewal of Options: Subject
to the terms and conditions and within the limitations of the Plan,
the Board may modify an Option, or, once an Option is exercisable,
accelerate the rate at which it may be exercised, and may extend or
renew outstanding Options granted under the Plan or accept the
surrender of outstanding Options (to the extent not theretofore
exercised) and authorize the granting of new Options in substitution
for such Options, provided such action is permissible under Section
422 of the Code and the Delaware securities rules. Notwithstanding the
provisions of this Section 6(k), however, no modification of an Option
shall, without the consent of the Optionee, alter to the Optionee's
detriment or impair any rights or obligations under any Option
theretofore granted under the Plan.
(l) Exercise Before Exercise Date: At the discretion of the Board, the
Option may, but need not, include a provision whereby the Optionee may
elect to exercise all or any portion of the Option prior to the stated
exercise date of the Option or any installment thereof. Any shares so
purchased prior to the stated exercise date shall be subject to
repurchase by the Company upon termination of Optionee's employment as
contemplated by Section 6(n) hereof prior to the exercise date stated
in the Option and such other restrictions and conditions as the Board
or Committee may deem advisable.
(m) Other Provisions: The Option agreements authorized under the Plan
shall contain such other provisions, including, without limitation,
restrictions upon the exercise of the Options, as the Board or the
Committee shall deem advisable. Shares shall not be issued pursuant to
the exercise of an Option, if the exercise of such Option or the
issuance of shares thereunder would violate, in the opinion of legal
counsel for the Company, the provisions of any applicable law or the
rules or regulations of any applicable governmental or administrative
agency or body, such as the Code, the Securities Act, the Exchange
Act, the Delaware securities rules, Delaware corporation law, and the
rules promulgated under the foregoing or the rules and regulations of
any exchange upon which the shares of the Company are listed. Without
limiting the generality of the foregoing, the exercise of each Option
shall be subject to the condition that if at any time the Company
shall determine that (i) the satisfaction of withholding tax or other
similar liabilities, or (ii) the listing, registration or
qualification of any shares covered by such exercise upon any
securities exchange or under any state or federal law, or (iii) the
consent or approval of any regulatory body, or (iv) the perfection of
any exemption from any such withholding, listing, registration,
qualification, consent or approval is necessary or desirable in
connection with such exercise or the issuance of shares thereunder,
then in any such event, such exercise shall not be effective unless
such withholding, listing registration, qualification, consent,
approval or exemption shall have been effected, obtained or perfected
free of any conditions not acceptable to the Company.
(n) Repurchase Agreement: The Board may, in its discretion, require as a
condition to the Grant of an Option hereunder, that an Optionee
execute an agreement with the Company, in form and substance
satisfactory to the Board in its discretion ("Repurchase Agreement"),
(i) restricting the Optionee's right to transfer shares purchased
under such Option without first offering such shares to the Company or
another shareholder of the Company upon the same terms and conditions
as provided therein; and (ii) providing that upon termination of
Optionee's employment with the Company, for any reason, the Company
(or another shareholder of the Company, as provided in the Repurchase
Agreement) shall have the right at its discretion (or the discretion
of such other shareholders) to purchase and/or redeem all such shares
owned by the Optionee on the date of termination of his or her
employment at a price equal to (A) the fair value of such shares as of
such date of termination, or (B) if such repurchase right lapses at
20% of the number of shares per year, the original purchase price of
such shares, and upon terms of payment permissible under the Delaware
securities rules; provided that in the case of Options or Stock Awards
granted to officers, directors, consultants or affiliates of the
Company, such repurchase provisions may be subject to additional or
greater restrictions as determined by the Board or Committee.
{PAGE}
7. Stock Awards and Restricted Stock Purchase Offers.
(a) Types of Grants.
(i) Stock Award. All or part of any Stock Award under the Plan may be
subject to conditions established by the Board or the Committee,
and set forth in the Stock Award Agreement, which may include,
but are not limited to, continuous service with the Company,
achievement of specific business objectives, increases in
specified indices, attaining growth rates and other comparable
measurements of Company performance. Such Awards may be based on
Fair Market Value or other specified valuation. All Stock Awards
will be made pursuant to the execution of a Stock Award Agreement
substantially in the form attached hereto as Exhibit "C".
(ii) Restricted Stock Purchase Offer. A Grant of a Restricted Stock
Purchase Offer under the Plan shall be subject to such (i)
vesting contingencies related to the Participant's continued
association with the Company for a specified time and (ii) other
specified conditions as the Board or Committee shall determine,
in their sole discretion, consistent with the provisions of the
Plan. All Restricted Stock Purchase Offers shall be made pursuant
to a Restricted Stock Purchase Offer substantially in the form
attached hereto as Exhibit "D".
(b) Conditions and Restrictions. Shares of Stock which Participants may
receive as a Stock Award under a Stock Award Agreement or Restricted
Stock Purchase Offer under a Restricted Stock Purchase Offer may
include such restrictions as the Board or Committee, as applicable,
shall determine, including restrictions on transfer, repurchase
rights, right of first refusal, and forfeiture provisions. When
transfer of Stock is so restricted or subject to forfeiture provisions
it is referred to as "Restricted Stock". Further, with Board or
Committee approval, Stock Awards or Restricted Stock Purchase Offers
may be deferred, either in the form of installments or a future lump
sum distribution. The Board or Committee may permit selected
Participants to elect to defer distributions of Stock Awards or
Restricted Stock Purchase Offers in accordance with procedures
established by the Board or Committee to assure that such deferrals
comply with applicable requirements of the Code including, at the
choice of Participants, the capability to make further deferrals for
distribution after retirement. Any deferred distribution, whether
elected by the Participant or specified by the Stock Award Agreement,
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