F1/OPT - applying under cap exempt

[scruggsway]

Hi there,

I am currently in a very difficult situation and don't have clarity regarding what will be my status in the US. I graduated from higher studies last year in May 2011 and I am currently on my OPT period. My OPT expires on May 15, 2012.

I have an old H1B petition with me (2008-2011) i.e. I have worked on H1B before for about a year from about a year Oct 2008 - Aug2009 before joining 2 year full time program.

I joined a company last month and my employer says they are going to apply for H1 request (and not Change of Status to H1) under cap exempt by tomorrow using my old petition.

My concern is if applying under cap exempt, what's going to be my status after May 15, 2012?
Can I continue working in the US waiting for my H1 approval? Note that my status will be still F/student after having applied for H request.
Now if I am not eligible to work, can I remain in the country? In this case, will I have to terminate my employment temporarily in order to ensure that I am not working and after getting the H1 approval, join again?
Now there is another issue that crops up here - if I continue to be in the US without working until the time I get my H1 approval (assuming 3 weeks when applying under premium), will the 90 day OPT employment clock continue (this clock continues when applying under cap gap but I am not sure about cap exempt). If that's the case, then it is inevitable that I will cross the 90-day period because I can only afford an additional week of unemployment.

Please advise.
I would greatly appreciate any help in this regard.

Thank you very much.