HIPSTYLE.COM, INC.
2002 STOCK OPTION PLAN
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ARTICLE ONE
GENERAL PROVISIONS
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I. Purpose of the Plan
The HipStyle.com, Inc. 2002 Stock Option Plan (the "Plan") is intended to
assist HipStyle.com, Inc., a Florida corporation (the "Company"), and any entity
which controls, is controlled by, or is under common control with the Company
("Related Entities") in recruiting and retaining employees, directors, officers,
agents, consultants, independent contractors and advisors (collectively,
"Participants"), and in compensating Participants by enabling them to
participate in the future success of the Company and the Related Entities and to
associate their interests with those of the Company and its stockholders.
Capitalized terms used and not otherwise defined shall have the meanings
assigned to such terms in the attached Appendix.
II. Structure of the Plan
Pursuant to the Plan, eligible persons may, at the discretion of the
Administrator, be granted options ("Stock Options") to purchase shares of the
Company's Common Stock, $.0001 par value (the "Common Stock"). The Stock Options
granted under the Plan are intended to be either incentive stock options
("Incentive Stock Options") within the meaning of Section 422A of the Internal
Revenue Code of 1986, as amended ("Code"), or options that do not meet the
requirements of Incentive Stock Options ("Non-Statutory Stock Options").
III. Administration of the Plan
A. The Plan shall be administered by the Board of Directors of the Company
(the "Board") or, in the event the Board shall appoint and/or authorize a
committee, such as the Compensation Committee, of two or more members of the
Board to administer the Plan by such committee (the "Administrator"). The
Administrator shall have authority to grant Stock Options upon such terms (not
inconsistent with the provisions of the Plan) as the Administrator may consider
appropriate. Such terms may include conditions (in addition to those contained
in this Plan) on the exercisability, transferability or forfeitability of all or
any part of a Stock Option, including, by way of example and not limitation,
requirements that the Participant complete a specified period of employment with
or service to the Company or a Related Entity, that the Company achieve a
specified level of financial performance or that the Company achieve a specified
level of financial return. Notwithstanding any such conditions, the
Administrator may, in its discretion, accelerate the time at which a Stock
Option may be exercised, transferred or become nonforfeitable. The Administrator
shall have the absolute discretion to determine whether specific grants shall be
of Incentive Stock Options or Non-Statutory Stock Options. In addition, the
Administrator shall have complete authority to determine Fair Market Value, to
interpret all provisions of the Plan, to prescribe the form of the documents
evidencing the grant of Stock Options under the Plan ("Agreements"), to adopt,
amend, and rescind rules and regulations pertaining to the administration of the
Plan and to make all other determinations necessary or advisable for the
administration of this Plan. The express grant in the Plan of any specific power
to the Administrator shall not be construed as limiting any power or authority
of the Administrator. Any decision made, or action taken, by the Administrator
or in connection with the administration of the Plan shall be final and
conclusive. Neither the Administrator nor any member of the Board shall be
liable for any act done in good faith with respect to the Plan, any Agreements
or Stock Options. All expenses of administering this Plan shall be borne by the
Company.
B. The Board, in its discretion, may appoint a committee of the Board and
delegate to such committee all or part of the Board's authority and duties with
respect to the Plan. The Board may revoke or amend the terms of a delegation at
any time but such action shall not invalidate any prior actions of the Board's
delegate or delegates that were consistent with the terms of the Plan.
IV. Eligibility
A. The persons eligible to participate in the Plan are as follows:
(i) Employees, directors and officers of the Company or any Related
Entity;
(ii) non-employee members of the Board or non-employee members of the
board of directors of any Related Entity; and
(iii)consultants agents and other independent advisors who provide
services to the Company or to any Related Entity.
V Stock Subject to the Plan
A. Shares Issued. Upon the exercise of a Stock Option, the Company may
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issue to the Participant (or the Participant's broker if the
Participant so directs), shares of Common Stock from its authorized
but unissued Common Stock or reacquired Common Stock.
B. Aggregate Limit. The maximum aggregate number of shares of Common
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Stock that may be issued under the Plan shall not exceed 2,000,000
shares.
C. Reallocation of Shares. If a Stock Option is terminated, in whole or
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in part, for any reason other than its exercise, the number of shares
of Common Stock allocated to the Stock Option or portion thereof may
be reallocated to other Stock Options to be granted under the Plan.
Unvested shares issued under the Plan and subsequently repurchased by
the Company, at the option exercise or direct issue price paid per
share, pursuant to the Company's repurchase rights under the Plan,
shall be added back to the number of shares of Common Stock reserved
for issuance under the Plan and shall accordingly be available for
reissuance through one or more subsequent Stock Options under the
Plan.
D. Stock Split; Recapitalization. Should any change be made to the Common
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Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting
the outstanding Common Stock as a class, without the Company's receipt
of consideration, appropriate adjustments shall be made to (i) the
maximum number of shares of Common Stock issuable under the Plan and
(ii) the number of shares of Common Stock and the exercise price per
share in effect under each outstanding Stock Option, in order to
prevent the dilution or enlargement of benefits thereunder. The
adjustments determined by the Administrator shall be final, binding
and conclusive. In no event shall any such adjustments be made in
connection with the conversion of one or more outstanding shares of
the Company's preferred stock into shares of Common Stock.
ARTICLE TWO
STOCK OPTION GRANTS
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I. Stock Option Terms
Each Stock Option shall be evidenced by an Agreement, consisting of one or
more documents in the form approved by the Administrator; provided, however,
that each such document shall comply with the terms specified below. Each
Agreement evidencing an Incentive Stock Option, shall, in addition, be subject
to the provisions of the Plan applicable to Incentive Stock Options.
A. Exercise Price.
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1. The exercise price per share for Common Stock purchased upon the
exercise of a Non-Statutory Stock Option shall be determined by the
Administrator on the date of grant.
2. The exercise price per share of Common Stock purchased upon the exercise
of an Incentive Stock Option shall be such amount as the Administrator shall, in
its best judgement, determine to be not be less than the Fair Market Value on
the date the Incentive Stock Option is granted, provided, however, that in the
case of an Incentive Stock Option granted to a Participant who, at the time such
Incentive Stock Option is granted owns stock of the Company or a Related Entity
possessing more than ten percent (10%) of the aggregate voting power of all
classes of stock of the Company or such Related Entity ("10% Stockholder"), the
exercise price per share of Common Stock purchased upon the exercise of such
Incentive Stock Option shall be such amount as the Administrator shall, in its
best judgement, determine to be not less than one-hundred and ten percent (110%)
of the Fair Market Value on the date such Incentive Stock Option is granted.
3. Unless otherwise provided by the Agreement, the exercise price shall
become immediately due upon exercise of a Stock Option and shall, subject to the
provisions of Section I of Article Three and the Agreement, be payable in cash
or check made payable to the Company.
4. Cashless Exercise. Should the Common Stock be registered under Section
12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") at
the time a Stock Option is exercised, then the exercise price may also be paid
as follows:
(i) in shares of Common Stock held 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) to the extent the option is exercised for vested shares, through a
special sale and remittance procedure pursuant to which the
Participant shall concurrently provide irrevocable 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 exercise and
(B) to the Company to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale.
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Effect of Termination of Service.
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1. The following provisions shall govern the exercise of any Stock Options
held by a Participant at the time of cessation of Service or death:
(i) Should the Participant cease to remain in Service for any reason other
than death, Disability or Misconduct, then the Participant shall have
a period of three (3) months following the date of such cessation of
Service during which to exercise each outstanding Stock Option held by
such Participant.
(ii) Should Participant's Service terminate by reason of Disability, then
the Participant shall have a period of six (6) months following the
date of such cessation of Service during which to exercise each
outstanding Stock Option held by such Participant.
(iii)If the Participant dies while holding an outstanding Stock Option,
then the personal representative of his or her estate or the person or
persons to whom the Stock Option is transferred pursuant to the
Participant's will or the laws of descent and distribution shall have
a period of six (6) month following the date of the Participant's
death during which to exercise each outstanding Stock Option
previously held by such Participant.
(iv) Under no circumstances, however, shall any such Stock Option be
exercisable after the specified expiration of the option term.
(v) During the applicable post-Service exercise period, the Stock Option
may not be exercised in the aggregate for more than the number of
vested shares for which the Stock Option is exercisable on the date of
the Participant's cessation of Service. Upon the expiration of the
applicable post-Service exercise period or (if earlier) upon the
expiration of the option term, the Stock Option shall terminate and
cease to be outstanding for any vested shares for which the Stock
Option has not been exercised. However, the Stock Option shall,
immediately upon the Participant's cessation of Service, terminate and
cease to be outstanding with respect to any and all option shares for
which the Stock Option is not otherwise at the time exercisable or in
which the Participant is not otherwise at that time vested.
(vi) Should Participant's Service be terminated for Misconduct, then all
outstanding Stock Options held by the Participant shall terminate
immediately and cease to remain outstanding.
2. The Administrator shall have the discretion, exercisable either at the
time a Stock Option is granted or at any time while the Stock Option remains
outstanding, to:
(i) extend the period of time for which the Stock Option is to remain
exercisable, following Participant's cessation of Service or death,
from the limited period otherwise in effect for that Stock Option to
such greater period of time as the Administrator shall deem
appropriate, but in no event beyond the expiration of the option term;
and/or
(ii) permit the Stock Option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number of
vested shares of Common Stock for which such Stock Option is
exercisable at the time of the Participant's cessation of Service but
also with respect to one or more additional installments in which the
Participant would have vested under the Stock Option had the
Participant continued in Service.
B. Stockholder Rights. The holder of an option shall have no stockholder
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rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and
become the record holder of the purchased shares.
C. Unvested Shares. The Administrator shall have the discretion to grant
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Stock Options which are exercisable for unvested shares of Common
Stock. Should the Participant cease Service while holding such
unvested shares, the Company shall have the right to repurchase, at
the exercise price paid per share, any or all of those unvested
shares. The terms upon which such repurchase right shall be
exercisable (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares) shall be
established by the Administrator and set forth in the document
evidencing such repurchase right.
D. Limited Transferability of Stock Options. During the lifetime of the
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Participant, the option shall be exercisable only by the Participant
and shall not be assignable or transferable other than by will or by
the laws of descent and distribution following the Participant's
death.
II. Incentive Stock Options
The terms specified below shall be applicable to all Incentive Stock
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Three shall be applicable to Incentive Stock
Options. Stock Options which are specifically designated as Non-Statutory Stock
Options shall not be subject to the terms of this Section II.
A. Eligibility. Incentive Stock Options may only be granted to Employees.
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B. Exercise Price. The exercise price per share shall not be less than one
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hundred percent (100%) of the Fair Market Value per share of Common Stock on the
option grant date, provided, however, that in the case of an Incentive Stock
Option granted to a 10% Stockholder, the exercise price per share of Common
Stock purchased upon the exercise of such Incentive Stock Option shall be such
amount as the Administrator shall, in its best judgement, determine to be not
less than one-hundred and ten percent (110%) of the Fair Market Value on the
date such Incentive Stock Option is granted.
C. Dollar Limitation. The aggregate Fair Market Value of the shares of
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Common Stock (determined as of the respective date or dates of grant) for which
one or more Stock Options granted to any Employee under the Plan (or any other
option plan of the Company or any Related Entity) may for the first time become
exercisable as Incentive Stock Options during any one (1) calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such Stock Options which become exercisable for
the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Stock Options shall be applied on
the basis of the order in which such Stock Options are granted.
D. Term of Incentive Stock Options. The maximum period in which an
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Incentive Stock Option shall be exercisable shall be ten (10) years from the
date of grant, provided, however, that if any Employee to whom an Incentive
Stock Option is granted is a 10% Stockholder, then the option term shall not
exceed five (5) years measured from the option grant date.
III. Corporate Transaction
A. The shares subject to each Stock Option outstanding under the Plan at
the time of a Corporate Transaction shall automatically vest in full so that
each such Stock Option shall, immediately prior to the effective date of the
Corporate Transaction, become fully exercisable for all of the shares of Common
Stock at the time subject to that Stock Option and may be exercised for any or
all of those shares as fully-vested shares of Common Stock. However, the shares
subject to an outstanding Stock Option shall not vest on such an accelerated
basis if and to the extent:
(i) such Stock Option is assumed by the successor Company (or parent
thereof) in the Corporate Transaction and any repurchase rights of the
Company with respect to the unvested option shares are concurrently to be
assigned to such successor Company (or parent thereof) or (ii) such Stock
Option is to be replaced with a cash incentive program of the successor
Company (or parent thereof) which preserves the spread existing on the
unvested option shares at the time of the Corporate Transaction and
provides for subsequent payout in accordance with the same vesting schedule
applicable to those unvested option shares or (iii) the acceleration of
such Stock Option is subject to other limitations imposed by the
Administrator at the time of the option grant.
B. All outstanding repurchase rights shall also terminate automatically,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Corporate Transaction, except to
the extent: (i) those repurchase rights are assigned to the successor Company
(or parent thereof) in connection with such Corporate Transaction or (ii) such
accelerated vesting is precluded by other limitations imposed by the
Administrator at the time the repurchase right is issued.
C. Immediately following the consummation of the Corporate Transaction, all
outstanding Stock Options shall terminate and cease to be outstanding, except to
the extent assumed by the successor Company (or parent thereof).
D. Each Stock Option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Participant in consummation of such Corporate Transaction
had the Stock Option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to (i) the number and
class of securities available for issuance under the Plan following the
consummation of such Corporate Transaction and (ii) the exercise price payable
per share under each outstanding Stock Option, provided, however, that the
aggregate exercise price payable for such securities shall remain the same.
E. The Administrator shall have the discretion, exercisable either at the
time a Stock Option is granted or at any time while a Stock Option remains
outstanding, to structure one or more Stock Options so that those Stock Options
shall automatically accelerate and vest in full (and any repurchase rights of
the Company with respect to the unvested shares subject to those Stock Options
shall immediately terminate) upon the occurrence of a Corporate Transaction,
whether or not those Stock Options are to be assumed in the Corporate
Transaction.
F. The Administrator shall also have full power and authority, exercisable
either at the time the Stock Option is granted or at any time while the Stock
Option remains outstanding, to structure such Stock Option so that the shares
subject to that Stock Option will automatically vest on an accelerated basis
should the Participant's Service terminate by reason of an Involuntary
Termination within a designated period (not to exceed eighteen (18) months)
following the effective date of any Corporate Transaction in which the Stock
Option is assumed and the repurchase rights applicable to those shares do not
otherwise terminate. Any Stock Option so accelerated shall remain exercisable
for the fully-vested option shares until the expiration or sooner termination of
the option term. In addition, the Administrator may provide that one or more of
the Company's outstanding repurchase rights with respect to shares held by the
Participant at the time of such Involuntary Termination shall immediately
terminate on an accelerated basis, and the shares subject to those terminated
rights shall accordingly vest at that time.
G. The portion of any Incentive Stock Option accelerated in connection with
a Corporate Transaction shall remain exercisable as an Incentive Stock Option
only to the extent the applicable One Hundred Thousand Dollar limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such Incentive Stock Option shall be exercisable as a Non-Statutory
Option under the Code.
H. The grant of Stock Options under the Plan shall in no way affect the
right of the Company to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
IV. Cancellation and Regrant of Stock Options
The Administrator shall have the authority to effect, at any time and from
time to time, with the consent of the affected Participants, the cancellation of
any or all outstanding Stock Options under the Plan and to grant in substitution
therefor new Stock Options covering the same or different number of shares of
Common Stock but with an exercise price per share based on the Fair Market Value
per share of Common Stock on the new option grant date.
ARTICLE THREE
MISCELLANEOUS
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I. Financing
The Administrator may permit any Participant to pay the option exercise
price upon exercise of a Stock Option by delivering a full-recourse, interest
bearing promissory note payable in one or more installments and secured by the
purchased shares. The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Administrator in
its sole discretion. In no event may the maximum credit available to the
Participant exceed the sum of (i) the aggregate option exercise price (less the
par value of those shares) plus (ii) any Federal, state and local income and
employment tax liability incurred by the Participant in connection with the
option exercise.
II. Effective Date and Term of Plan
A. The Plan shall become effective on the date on which it is adopted by
the Board (the "Effective Date"), provided, however, that if the Plan
is not approved by a vote of the stockholders of the Company within
twelve (12) months after the Effective Date, the Plan and any Benefits
granted under the Plan shall terminate.
B. The Plan shall terminate upon the earliest of (i) December 31, 2011,
(ii) the date on which all shares of Common Stock available for
issuance under the Plan shall have been issued as vested shares or
(iii) the termination of all outstanding Stock Options in connection
with a Corporate Transaction. Upon such Plan termination, all Stock
Options and unvested stock issuances outstanding under the Plan shall
continue to have full force and effect in accordance with the
provisions of the Agreements.
III. Amendment of the Plan
A. The Board shall have complete and exclusive power and authority to amend
or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
Stock Options or unvested stock issuances at the time outstanding under the Plan
unless the Participant or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws and regulations.
B. Stock Options may be granted under the Plan which are in excess of the
number of shares of Common Stock then available for issuance under the Plan,
provided any excess shares actually issued shall be held in escrow until there
is obtained stockholder approval of an amendment sufficiently increasing the
number of shares of Common Stock available for issuance under the Plan. If such
stockholder approval is not obtained within twelve (12) months after the date
the first such excess grants are made, then (i) any unexercised Stock Options
granted on the basis of such excess shares shall terminate and cease to be
outstanding and (ii) the Company shall promptly refund to the Participants the
exercise or purchase price paid for any excess shares issued under the Plan and
held in escrow, together with interest (at the applicable Short Term Federal
Rate) for the period the shares of Common Stock were held in escrow, and such
shares shall thereupon be automatically cancelled and cease to be outstanding.
IV. Use of Proceeds
Any cash proceeds received by the Company from the sale of shares of Common
Stock under the Plan shall be used for general corporate purposes.
V. Withholding
The Company's obligation to deliver shares of Common Stock upon the
exercise of any Stock Options under the Plan shall be subject to the
satisfaction of all applicable Federal, state and local income and employment
tax withholding requirements.
VI. Regulatory Approvals
The implementation of the Plan, the granting of any Stock Options under the
Plan and the issuance of any shares of Common Stock upon the exercise of any
Stock Option shall be subject to the Company's procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan and
the Stock Options granted under it.
VII. No Employment or Service Rights
Nothing in the Plan shall confer upon a Participant any right to continue
in Service for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Company (or any Related Entity employing
or retaining a Participant), which rights are hereby expressly reserved, to
terminate a Participant's Service at any time for any reason, with or without
cause.
APPENDIX
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The following definitions shall be in effect under the Plan:
A. Board shall mean the Company's Board of Directors.
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B. Committee shall mean a committee of two (2) or more Board members
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appointed by the Board to exercise one or more administrative
functions under the Plan.
C. Corporate Transaction shall mean either of the following
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stockholder-approved transactions to which the Company is a
party:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities are
transferred to a person or persons different from the
persons holding those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Company's assets in complete
liquidation or dissolution of the Company.
D. Disability shall mean the inability of the Participant to engage
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in any substantial gainful activity by reason of any medically
determinable physical or mental impairment and shall be
determined by the Administrator on the basis of such medical
evidence as the Administrator deems warranted under the
circumstances.
E. Employee shall mean an individual who is in the employ of the
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Company (or any Related Entity), subject to the control and
direction of the employer entity as to both the work to be
performed and the manner and method of performance.
F. Fair Market Value per share of Common Stock on any relevant date
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shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, the SmallCap Market or the OTC Bulletin
Board, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in
question, as such price is reported on the Nasdaq National
Market, the SmallCap Market or the OTC Bulletin Board, as
the case may be. If there is no closing selling price for
the Common Stock on the date in question, then the Fair
Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in
question on the Stock Exchange determined by the
Administrator to be the primary market for the Common Stock,
as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation
exists.
(iii)If the Common Stock is at the time neither listed on any
Stock Exchange nor traded on the Nasdaq National Market or
SmallCap Market or the OTC Bulletin Board, then the Fair
Market Value shall be determined by the Administrator after
taking into account such factors as the Administrator shall
deem appropriate.
G. Involuntary Termination shall mean the termination of the Service
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of any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Company for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a
change in his or her position with the Company which
materially reduces his or her duties and responsibilities or
the level of management to which he or she reports, or (B) a
reduction in his or her level of compensation (including
base salary, fringe benefits and target bonuses under any
corporate-performance based bonus or incentive programs) by
more than thirty percent (30%).
H. Misconduct shall mean the commission of any act of fraud,
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embezzlement or dishonesty by a Participant, any unauthorized use
or disclosure by such person of confidential information or trade
secrets of the Company (or any Related Entity), or any other
intentional misconduct by such person adversely affecting the
business or affairs of the Company (or any Related Entity) in a
material manner. The foregoing definition shall not be deemed to
be inclusive of all the acts or omissions which the Company (or
any Related Entity) may consider as grounds for the dismissal or
discharge of any Participant, Participant or other person in the
Service of the Company (or any Related Entity).
I. Administrator shall mean either the Board or the Committee acting
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in its capacity as administrator of the Plan.
J. Service shall mean the provision of services to the Company (or
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any Related Entity) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or
independent advisor, except to the extent otherwise specifically
provided in the documents evidencing the option grant.
K. Stock Exchange shall mean either the American Stock Exchange or
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the New York Stock Exchange.
L. 10% Stockholder shall mean the owner of stock (as determined
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under Code Section 424(d)) possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the
Company (or any Related Entity).