Published on December 22, 2005
DIGICORP
STOCK OPTION AND RESTRICTED STOCK PLAN
1. PURPOSE OF THE PLAN
The purpose of this Stock Option and Restricted Stock Plan (this "Plan")
is to advance the interests of Digicorp (the "Company") and its subsidiaries by
providing to key employees of the Company and its subsidiaries who have
substantial responsibility for the direction and management of the Company, as
well as certain directors and consultants of the Company, additional incentives,
to the extent permitted by law, to exert their best efforts on behalf of the
Company, to increase their proprietary interest in the success of the Company,
to reward outstanding performance and to provide a means to attract and retain
persons of outstanding ability to the service of the Company. It is recognized
that the Company cannot attract or retain these individuals without this
compensation. Options granted under this Plan may qualify as incentive stock
options ("ISOs"), as defined in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. ADMINISTRATION
This Plan shall be administered by a committee (the "Committee") comprised
of at least two (2) members of the Company's Board of Directors ("Board") who
each shall (a) be a "non-employee director," as defined in Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended, unless
administration of the Plan by "non-employee directors" is not then required for
transactions under the Plan to be exempt from the requirements of Rule 16b, and
(b) be an "outside director" as defined under Section 162(m) of the Code, unless
the action taken pursuant to the Plan is not required to be taken by "outside
directors" to qualify for tax deductibility under Section 162(m) of the Code.
The Committee shall interpret this Plan and, to the extent and in the manner
contemplated herein, shall exercise the discretion reserved to it hereunder. The
Committee may prescribe, amend and rescind rules and regulations relating to
this Plan and to make all other determinations necessary for its administration.
The decision of the Committee on any interpretation of this Plan or
administration hereof, if in compliance with the provisions of the Act and
regulations promulgated thereunder, shall be final and binding with respect to
the Company, any optionee, warrant holder or any person claiming to have rights
as, or on behalf of, any optionee or warrant holder.
3. SHARES SUBJECT TO THE PLAN
The shares subject to option, warrant grant and the other provisions of
this Plan shall be shares of the Company's common stock, par value $0.001 per
share ("shares"). Subject to the provisions hereof concerning adjustment, the
total number of shares that may be purchased upon the exercise or surrender of
stock options granted under this Plan shall not exceed the greater of thirty
percent (30%) of the total number of shares authorized and outstanding as of the
most recent quarterly period ended or 15,000,000 REDUCED BY the number of shares
with respect to which restricted stock is awarded. The total number of shares
that may be awarded as restricted shares under this Plan shall not exceed twenty
percent (20%) of the total number of shares subject to the Plan. Any shares that
are authorized for issuance pursuant to the exercise of options may be issued
upon the exercise of ISOs. In the event any option or warrant shall cease to be
exercisable in whole or in part for any reason, the shares which were covered by
such option or warrant, but as to which the option or warrant had not been
exercised, shall again be available under this Plan. Similarly, any shares that
were granted pursuant to an award of restricted stock under this Plan but that
are forfeited pursuant to the terms of the Plan or an award agreement shall
again be available under this Plan. In addition, shares not delivered to
participants in connection with the stock-for-stock exercise of an option or
warrant shall again be available under this Plan. Shares may be made available
from authorized, un-issued or reacquired stock or partly from each.
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4. PARTICIPANTS
(A) Key Employees, Directors and Consultants. The Committee shall
determine and designate from time to time those key employees, directors and
consultants of the Company and its subsidiaries who shall be eligible to
participate in this Plan. The Committee shall also determine the number of
shares to be offered from time to time to each participant, either pursuant to
an option, pursuant to a warrant or pursuant to an award of restricted stock, or
either. In making these determinations, the Committee shall take into account
the past service of each such key employee, director or consultant to the
Company and its subsidiaries, the present and potential contributions of such
key employee, director or consultant to the success of the Company and its
subsidiaries and such other factors as the Committee shall deem relevant in
connection with accomplishing the purposes of this Plan. The agreement
documenting the award of any option, warrant or restricted stock granted
pursuant to this Plan shall contain such terms and conditions as the Committee
shall deem advisable, including but not limited to being vested or exercisable,
as the case may be, only in such installments as the Committee may determine.
(B) Award Agreements. All options, warrants and restricted stock granted
under the Plan will be evidenced by an agreement. Agreements evidencing awards
made to different participants or at different times need not contain similar
provisions. Options that are intended to be ISOs will be designated as such; any
option not so designated will be treated as a nonqualified stock option.
5. OPTION/WARRANT PRICE
Each agreement representing an award of options or warrants shall state
the price at which the subject option or warrant may be exercised, which shall
not be less than the current fair market value of the shares at the date of
issuance of an option or warrant; provided, however, that the exercise price of
any option that is intended to be an ISO and that is granted to a holder of 10%
or more of the Company's shares shall not be less than 110% of such current fair
market value. For purposes of this Plan, the fair market value of any Share as
of any date shall be the average of the high and low trading prices of the
shares on that date.
6. OPTION/WARRANT PERIOD
Each agreement representing an award of options or warrants shall state
the period or periods of time at and within which the subject option or warrant
may be exercised, in whole or in part, by the optionee or warrant holder, which
shall be such period or periods as may be determined by the Committee; provided,
however, that the option or warrant period shall not exceed ten years from the
date of issuance of the option or warrant and, in the case of an option that is
intended to be an ISO and that is granted to a holder of 10% or more of the
Company's shares, shall not exceed five years. Unless specifically provided
otherwise in an agreement evidencing the award of options, any option awarded to
a participant shall become exercisable over four years, with 25% of the option
becoming exercisable on each of the first four anniversaries of the date of the
award.
7. PAYMENT FOR SHARES
Full payment for shares purchased pursuant to an option or warrant shall
be made at the time of exercising the option or warrant in whole or in part.
Payment of the purchase price shall be made in cash (including check, bank draft
or money order), unless the Company provides to any or all participants the
ability to effect a stock-for-stock exercise of his or her options or warrants.
8. RESTRICTED STOCK
Each agreement representing an award of restricted stock shall state the
number of shares subject to the award and the terms and conditions pursuant to
which the recipient of the award shall acquire a nonforfeitable right to the
shares awarded as restricted stock. Unless specifically provided otherwise in an
agreement evidencing the award of restricted stock, a participant shall acquire
a nonforfeitable right to the shares subject to the award over four years, with
25% of the restricted stock becoming vested on each of the first four
anniversaries of the date of the award, and shares that are not vested upon a
participant's termination of employment with, or cessation of providing services
to, the Company shall be forfeited.
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9. TRANSFERABILITY OF OPTIONS, WARRANTS AND RESTRICTED STOCK
Options, warrants and restricted stock shall not be transferable other
than to the spouse or lineal descendants (including adopted children) of the
participant, any trust for the benefit of the participant or the benefit of the
spouse or lineal descendants (including adopted children) of the participant, or
the guardian or conservator of the participant ("Permitted Transferees").
10. TERMINATION OF OPTIONS, WARRANTS AND RESTRICTED STOCK AWARDS
All rights to exercise options and warrants shall terminate sixty days
after any optionee or warrant holder ceases to be a director of the Company or a
key employee or consultant of the Company and any of its subsidiaries, and no
options or warrants will vest after an optionee's or warrant holder's
termination date. Notwithstanding the foregoing, however, if an optionee's or
warrant holder's service as a director of the Company or key employee or
consultant terminates as a result of the optionee's or warrant holder's death or
his total and permanent disability, the optionee or warrant holder or the
executors or administrators or legatees or distributees of the estate, as the
case may be and to the extent they are Permitted Transferees, shall have the
right, from time to time within one year after the optionee's or warrant
holder's total and permanent disability or death and prior to the expiration of
the term of the option or warrant, to exercise any portion of the option or
warrant not previously exercised, in whole or in part, as provided in the
respective agreement evidencing the award of the options or warrants. A
participant's rights to shares awarded as restricted stock shall, under all
circumstances, be set forth in the agreement evidencing the award of restricted
stock.
11. EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN
Subject to any required action by the shareholders of the Company and the
provisions of applicable corporate law, the number of shares represented by the
unexercised portion of an option or warrant, the number of shares that has been
authorized or reserved for issuance hereunder, and the number of Shares covered
by any applicable vesting schedule hereunder, as well as the exercise price for
a share represented by the unexercised portion of an option or warrant, shall be
proportionately adjusted for (a) a division, combination or reclassification of
any of the shares of common stock of the Company or (b) a dividend payable in
shares of common stock of the Company.
12. GENERAL RESTRICTION
Each award shall be subject to the requirement that, if at any time the
Board shall determine, at its discretion, that the listing, registration or
qualification of the shares subject to such option or warrant upon any
securities exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such award or the issue or
purchase of the shares thereunder, such option or warrant may not be exercised
in whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company. Subject to the limitations of paragraph 6, no option
or warrant shall expire during any period when exercise of such option or
warrant has been prohibited by the Board, but shall be extended for such further
period so as to afford the optionee or warrant holder a reasonable opportunity
to exercise his option or warrant.
13. MISCELLANEOUS PROVISIONS
(A) No optionee or warrant holder shall have rights as a shareholder with
respect to shares covered by his option or warrant until the date of exercise of
his option or warrant.
(B) The granting of any award under the Plan shall not impose upon the
Company any obligation to appoint or to continue to appoint as a director, key
employee or consultant any participant, and the right of the Company and its
subsidiaries to terminate the employment of any key employee or other employee
or consultant, or service of any director, shall not be diminished or affected
by reason of the fact that an award has been made under the Plan to such
participant.
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(C) Awards under the Plan shall be evidenced by award agreements in such
form and subject to the terms and conditions of this Plan as the Committee shall
approve from time to time, consistent with the provisions of this Plan. Such
award agreements may contain such other provisions, as the Committee in its
discretion may deem advisable. In the case of any discrepancy between the terms
of the Plan and the terms of any award agreement, the Plan provisions shall
control.
(D) The aggregate fair market value (determined as of the date of issuance
of an option) of the Shares with respect to which an option, or portion thereof,
intended to be an ISO is exercisable for the first time by any optionee during
any calendar year (under all incentive stock option plans of the Company and
subsidiary corporations) shall not exceed $100,000.
(E) All awards under this Plan shall be made within ten years from the
earlier of the date of adoption of this Plan (or any amendment thereto requiring
shareholder approval pursuant to the Code) or the date this Plan (or any
amendment thereto requiring shareholder approval pursuant to the Code) is
approved by the shareholders of the Company.
(F) A leave of absence granted to an employee does not constitute an
interruption in continuous employment for purposes of this Plan as long as the
leave of absence does not extend beyond one year.
(G) Any notices given in writing shall be deemed given if delivered in
person or by certified mail; if given to the Company addressed to Corporate
Secretary, Digicorp, 100 Wilshire Boulevard, Suite 1750, Santa Monica,
California 90401; and, if to an optionee or warrant holder, in care of the
optionee or warrant holder at his or her last known address.
(H) This Plan and all actions taken by those acting under this Plan shall
be governed by the substantive laws of Delaware without regard to any rules
regarding conflict-of-law or choice-of-law.
(I) All costs and expenses incurred in the operation and administration of
this Plan shall be borne by the Company.
14. AMENDMENT AND TERMINATION
The Board may modify, revise or terminate this Plan at any time and from
time to time, subject to such supermajority voting requirements as may be
contained in the Company's certificate of incorporation or by-laws. While the
Board may seek shareholder approval of an action modifying a provision of the
Plan where it is determined that such shareholder approval is advisable under
the provisions of applicable law, the Board of Directors shall be permitted to
make any modification or revision to any provision of this Plan without
shareholder approval. This Plan shall terminate when all Shares reserved for
issuance hereunder have been issued upon the exercise of options or warrants and
all restricted stock awards have fully vested, or by action of the Board of
Directors pursuant to this paragraph, whichever shall first occur.
15. EFFECTIVE DATE OF THE PLAN
The Plan shall become effective upon the adoption by the Board.
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