DEVELOCAP, INC.
2004 NON-STATUTORY STOCK OPTION PLAN
1. Purpose of this Plan
This Non-Statutory Stock Option Plan (the "Plan") is intended as an
employment incentive, to aid in attracting and retaining in the employ
or service of Develocap, Inc. (the "Company"), a Nevada corporation,
and any Affiliated Corporation, persons of experience and ability and
whose services are considered valuable, to encourage the sense of
proprietorship in such persons, and to stimulate the active interest of
such persons in the development and success of the Company. This Plan
provides for the issuance of non-statutory stock options ("NSOs" or
"Options") which are not intended to qualify as "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").
2. Administration of this Plan
The Company's Board of Directors ("Board") may appoint and maintain as
administrator of this Plan the Compensation Committee (the "Committee")
of the Board which shall consist of at least three members of the
Board. Until such time as the Committee is duly constituted, the Board
itself shall have and fulfill the duties herein allocated to the
Committee. The Committee shall have full power and authority to
designate Plan participants, to determine the provisions and terms of
respective NSOs (which need not be identical as to number of shares
covered by any NSO, the method of exercise as related to exercise in
whole or in installments, or otherwise), including the NSO price, and
to interpret the provisions and supervise the administration of this
Plan. The Committee may, in its discretion, provide that certain NSOs
not vest (that is, become exercisable) until expiration of a certain
period after issuance or until other conditions are satisfied, so long
as not contrary to this Plan.
A majority of the members of the Committee shall constitute a quorum.
All decisions and selections made by the Committee pursuant to this
Plan's provisions shall be made by a majority of its members. Any
decision reduced to writing and signed by all of the members shall be
fully effective as if it had been made by a majority at a meeting duly
held. The Committee shall select one of its members as its chairman and
shall hold its meetings at such times and places as it deems advisable.
If at any time the Board shall consist of seven or more members, then
the Board may amend this Plan to provide that the Committee shall
consist only of Board members who shall not have been eligible to
participate in this Plan (or similar stock or stock option plan) of the
Company or its affiliates at any time within one year prior to
appointment to the Committee.
All NSOs granted under this Plan are subject to, and may not be
exercised before, the approval of this Plan by the holders of a
majority of the Company's outstanding shares, and if such approval is
not obtained, all NSOs previously granted shall be void. Each NSO shall
be evidenced by a written agreement containing terms and conditions
established by the Committee consistent with the provisions of this
Plan.
3. Designation of Participants
The persons eligible for participation in this Plan as recipients of
NSOs shall include full-time and part-time employees (as determined by
the Committee) and officers of the Company or of an Affiliated
Corporation. In addition, directors of the Company or any Affiliated
Corporation who are not employees of the Company or an Affiliated
Corporation and any attorney, consultant or other adviser to the
Company or any Affiliated Corporation shall be eligible to participate
in this Plan. For all purposes of this Plan, any director who is not
also a common law employee and is granted an option under this Plan
shall be considered an "employee" until the effective date of the
director's resignation or removal from the Board of Directors,
including removal due to death or disability. The Committee shall have
full power to designate, from among eligible individuals, the persons
to whom NSOs may be granted. A person who has been granted an NSO
hereunder may be granted an additional NSO or NSOs, if the Committee
shall so determine. The granting of an NSO shall not be construed as a
contract of employment or as entitling the recipient thereof to any
rights of continued employment.
4. Stock Reserved for this Plan
Subject to adjustment as provided in Paragraph 9 below, a total of
20,000,000 shares of Common Stock ("Stock"), of the Company shall be
subject to this Plan. The Stock subject to this Plan shall consist of
un-issued shares or previously issued shares reacquired and held by the
Company or any Affiliated Corporation, and such amount of shares shall
be and is hereby reserved for sale for such purpose. Any of such shares
which may remain unsold and which are not subject to outstanding NSOs
at the termination of this Plan shall cease to be reserved for the
purpose of this Plan, but until termination of this Plan, the Company
shall at all times reserve a sufficient number of shares to meet the
requirements of this Plan. Should any NSO expire or be canceled prior
to its exercise in full, the unexercised shares theretofore subject to
such NSO may again be subjected to an NSO under this Plan.
5. Option Price
The purchase price of each share of Stock placed under NSO shall not be
less than ten percent (10%) of the fair market value of such share on
the date the NSO is granted. The fair market value of a share on a
particular date shall be deemed to be the average of either (i) the
highest and lowest prices at which shares were sold on the date of
grant, if traded on a national securities exchange, (ii) the high and
low prices reported in the consolidated reporting system, if traded on
a "last sale reported" system, such as NASDAQ, or (iii) the high bid
and high asked price for over-the-counter securities. If no
transactions in the Stock occur on the date of grant, the fair market
value shall be determined as of the next earliest day for which reports
or quotations are available. If the common shares are not then quoted
on any exchange or in any quotation medium at the time the option is
granted, then the Board of Directors or Committee will use its
discretion in selecting a good faith value believed to represent fair
market value based on factors then known to them. The cash proceeds
from the sale of Stock are to be added to the general funds of the
Company.
6. Exercise Period
a) The NSO exercise period shall be a term of not more than ten
(10) years from the date of granting of each NSO and shall
automatically terminate:
1) Upon termination of the optionee's employment with the
Company for cause;
2) At the expiration of twelve (12) months from the date of
termination of the optionee's employment with the Company for any
reason other than death, without cause; provided, that if the optioned
dies within such twelve month period, subclause (iii) below shall
apply; or
3) At the expiration of fifteen (15) months after the date of
death of the optioned.
b) "Employment with the Company" as used in this Plan shall
include employment with any Affiliated Corporation, and NSOs granted
under this
Plan shall not be affected by an employee's transfer of
employment among the Company and any Parent or Subsidiary thereof. An
optionee's employment with the Company shall not be deemed interrupted
or terminated by a bona fide leave of absence (such as sabbatical leave
or employment by the Government) duly approved, military leave,
maternity leave or sick leave.
7. Exercise of Options
a) The Committee, in granting NSOs, shall have discretion to
determine the terms upon which NSOs shall be exercisable, subject to
applicable provisions of this Plan. Once available for purchase, un-
purchased shares of Stock shall remain subject to purchase until the
NSO expires or terminates in accordance with Paragraph 6 above. Unless
otherwise provided in the NSO, an NSO may be exercised in whole or in
part, one or more times, but no NSO may be exercised for a fractional
share of Stock.
b) NSOs may be exercised solely by the optioned during his
lifetime, or after his death (with respect to the number of shares
which the optioned could have purchased at the time of death) by the
person or persons entitled thereto under the decedent's will or the
laws of descent and distribution.
c) The purchase price of the shares of Stock as to which an NSO
is exercised shall be paid in full at the time of exercise and no
shares of Stock shall be issued until full payment is made therefore.
Payment shall be made either (i) in cash, represented by bank or
cashier's check, certified check or money order or (ii) in lieu of
payment for bona fide services rendered, and such services were not in
connection with the offer or sale of securities in a capital raising
transaction, (iii) by delivering shares of the Company's Common Stock
which have been beneficially owned by the optioned, the optionee's
spouse, or both of them for a period of at least six (6) months prior
to the time of exercise (the "Delivered Stock") in a number equal to
the number of shares of Stock being purchased upon exercise of the NSO
or (iv) by delivery of shares of corporate stock which are freely
tradable without restriction and which are part of a class of
securities which has been listed for trading on the NASDAQ system or a
national securities exchange, with an aggregate fair market value equal
to or greater than the exercise price of the shares of Stock being
purchased under the NSO, or (v) a combination of cash, services,
Delivered Stock or other corporate shares. An NSO shall be deemed
exercised when written notice thereof, accompanied by the appropriate
payment in full, is received by the Company. No holder of an NSO shall
be, or have any of the rights and privileges of, a shareholder of the
Company in respect of any shares of Stock purchasable upon exercise of
any part of an NSO unless and until certificates representing such
shares shall have been issued by the Company to him or her.
8. Assignability
No NSO shall be assignable or otherwise transferable (by the optioned
or otherwise) except by will or the laws of descent and distribution or
except as permitted in accordance with SEC Release No.33-7646 as
effective April 7, 1999 and in particular that portion thereof which
expands upon transferability as is contained in Article III entitled
"Transferable Options and Proxy Reporting" as indicated in Section A 1
through 4 inclusive and Section B thereof. No NSO shall be pledged or
hypothecated in any manner, whether by operation of law or otherwise,
nor be subject to execution, attachment or similar process.
9. Reorganizations and Recapitalizations of the Company
a) The existence of this Plan and NSOs granted hereunder shall
not affect in any way the right or power of the Company or its
shareholders to make or authorize any and 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 ahead of or affecting the Company's Common Stock or
the rights thereof, or the dissolution or liquidation of the Company,
or any sale, exchange or transfer of all or any part of its assets or
business, or the other corporation act or proceeding, whether of a
similar character or otherwise.
b) The shares of Stock with respect to which NSOs may be granted
hereunder are shares of the Common Stock of the Company as currently
constituted. If, and whenever, prior to delivery by the Company of all
of the shares of Stock which are subject to NSOs granted hereunder, the
Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a Stock dividend, a stock
split, combination of shares (reverse stock split) or recapitalization
or other increase or reduction of the number of shares of the Common
Stock outstanding without receiving compensation therefore in money,
services or property, then the number of shares of Stock available
under this Plan and the number of shares of Stock with respect to
which NSOs granted hereunder may thereafter be exercised shall (i) in
the event of an increase in the number of outstanding shares, be
proportionately increased, and the cash consideration payable per
share shall be proportionately reduced; and (ii) in the event of a
reduction in the number of outstanding shares, be proportionately
reduced, and the cash consideration payable per share shall be
proportionately increased.
c) If the Company is reorganized, merged, consolidated or party
to a plan of exchange with another corporation pursuant to which
shareholders of the Company receive any shares of stock or other
securities, there shall be substituted for the shares of Stock subject
to the unexercised portions of outstanding NSOs an appropriate number
of shares of each class of stock or other securities which were
distributed to the shareholders of the Company in respect of such
shares of Stock in the case of a reorganization, merger, consolidation
or plan of exchange; provided, however, that all such NSOs may be
canceled by the Company as of the effective date of a reorganization,
merger, consolidation, plan of exchange, or any dissolution or
liquidation of the Company, by giving notice to each optioned or his
personal representative of its intention to do so and by permitting the
purchase of all the shares subject to such outstanding NSOs for a
period of not less than thirty (30) days during the sixty (60) days
next preceding such effective date.
d) Except as expressly provided above, the Company's issuance of
shares of Stock of any class, or securities convertible into shares of
Stock of any class, for cash or property, or for labor or services,
either upon 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 shares of Stock or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect
to, the number of shares of Stock subject to NSOs granted hereunder or
the purchase price of such shares.
10. Purchase for Investment
Unless the shares of Stock covered by this Plan have been registered
under the Securities Act of 1933, as amended, each person exercising an
NSO under this Plan may be required by the Company to give a
representation in writing 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 any part thereof.
11. Effective Date and Expiration of this Plan
This Plan shall be effective as of January 27, 2004 the date of its
adoption by the Board, subject to the approval of the Company's
shareholders, and no NSO shall be granted pursuant to this Plan after
its expiration. This Plan shall expire on January 26, 2014 except as to
NSOs then outstanding, which shall remain in effect until they have
expired or been exercised.
12. Amendments or Termination
The Board may amend, alter or discontinue this Plan at any time in such
respects as it shall deem advisable in order to conform to any change
in any other applicable law, or in order to comply with the provisions
of any rule or regulation of the Securities and Exchange Commission
required to exempt this Plan or any NSOs granted thereunder from the
operation of Section 16(b) of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), or in any other respect not inconsistent with
Section 16(b) of the Exchange Act; provided, that no amendment or
alteration shall be made which would impair the rights of any
participant under any NSO theretofore granted, without his consent
(unless made solely to conform such NSO to, and necessary because of,
changes in the foregoing laws, rules or regulations), and except that
no amendment or alteration shall be made without the approval of
shareholders which would:
a) Decrease the NSO price provided for in Paragraph 5 (except as
provided in Paragraph 9), or change the classes of persons eligible to
participate in this Plan as provided in Paragraph 3; or
b) Extend the NSO period provided for in Paragraph 6; or
c) Materially increase the benefits accruing to participants
under this Plan; or
d) Materially modify the requirements as to eligibility for
participation in this Plan; or
e) Extend the expiration date of this Plan as set forth in
Paragraph 11.
13. Government Regulations
This Plan, and the granting and exercise of NSOs hereunder, and the
obligation of the Company to sell and deliver shares of Stock under
such NSOs, shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
14. Liability
No member of the Board of Directors, the Committee or officers or
employees of the Company or any Affiliated Corporation shall be
personally liable for any action, omission or determination made in
good faith in connection with this Plan.
15. Miscellaneous.
The term "Affiliated Corporation" used herein shall mean any Parent or
Subsidiary.
a) The term "Parent" used herein shall mean any corporation
owning 50 percent or more of the total combined voting stock of all
classes of the Company or of another corporation qualifying as a Parent
within this definition.
b) The term "Subsidiary" used herein shall mean any corporation
more than 50 percent of whose total combined voting stock of all
classes is held by the Company or by another corporation qualifying as
a Subsidiary within this definition.
16. Options in Substitution for Other Options
The Committee may, in its sole discretion, at any time during the term
of this Plan, grant new options to an employee under this Plan or any
other stock option plan of the Company on the condition that such
employee shall surrender for cancellation one or more outstanding
options which represent the right to purchase (after giving effect to
any previous partial exercise thereof) a number of shares, in relation
to the number of shares to be covered by the new conditional grant
hereunder, determined by the Committee. If the Committee shall have so
determined to grant such new options on such a conditional basis ("New
Conditional Options"), no such New Conditional Option shall become
exercisable in the absence of such employee's consent to the condition
and surrender and cancellation as appropriate. New Conditional Options
shall be treated in all respects under this Plan as newly granted
options. Option may be granted under this Plan from time to time in
substitution for similar rights held by employees of other corporations
who are about to become employees of the Company or an Affiliated
Corporation, or the merger or consolidation of the employing
corporation with the Company or an Affiliated Corporation, or the
acquisition by the Company or an Affiliated Corporation of the assets
of the employing corporation, or the acquisition by the Company or an
Affiliated Corporation of stock of the employing corporation as the
result of which it becomes an
Affiliated Corporation.
17. Withholding Taxes
Pursuant to applicable federal and state laws, the Company may be
required to collect withholding taxes upon the exercise of a NSO. The
Company may require, as a condition to the exercise of a NSO, that the
optioned concurrently pay to the Company the entire amount or a portion
of any taxes which the Company is required to withhold by reason of
such exercise, in such amount as the Committee or the Company in its
discretion may determine. In lieu of part or all of any such payment,
the optioned may elect to have the Company withhold from the shares to
be issued upon exercise of the option that number of shares having a
Fair Market Value equal to the amount which the Company is required to
withhold.
18. Transferability in accordance With SEC Release No. 33-7646
entitled "Registration of Securities on Form S-8" as effective April 7,
1999
Notwithstanding anything to the contrary as may be contained in this
Plan regarding rights as to transferability or lack thereof, all
options granted hereunder may and shall be transferable to the extent
permitted in accordance with SEC Release No. 33-7646 entitled
"Registration of Securities on Form S-8" as effective April 7, 1999 and
in particular in accordance with that portion of such Release which
expands Form S-8 to include stock option exercise by family members so
that the rules governing the use of Form S-8 (a) do not impede
legitimate intra family transfer of options and (b) may facilitate
transfer for estate planning purposes - all as more specifically
defined in Article III, Sections A and B thereto, the contents of which
are herewith incorporated by reference.
CERTIFICATION OF PLAN ADOPTION
I, the undersigned Secretary of this Corporation, hereby certify that
the foregoing Develocap, Inc. Non-Statutory Stock Option Plan was duly
approved by the requisite number of holders of the issued and
outstanding Common Stock of this corporation as of January 27, 2004.
/s/ Jimmy B. Holton
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By: President and Chief Financial Officer