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Exhibit 10.2
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EARTHWATCH INCORPORATED
1999 Equity Incentive Plan
Adopted February 15, 2000
Approved By Stockholders ____________, 1999
Termination Date: February 15, 2010
I. PURPOSES.
A. Eligible Stock Award Recipients. The persons eligible to receive Stock
Awards are the Employees, Directors and Consultants of the Company and
its Affiliates.
B. Available Stock Awards. The purpose of the Plan is to provide a means
by which eligible recipients of Stock Awards may be given an
opportunity to benefit from increases in value of the Common Stock
through the granting of the following Stock Awards: (i) Incentive
Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses
and (iv) rights to acquire restricted stock.
C. General Purpose. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards,
to secure and retain the services of new members of this group and to
provide incentives for such persons to exert maximum efforts for the
success of the Company and its Affiliates.
II. DEFINITIONS.
A. "Accountants" means the independent public accountants of the Company.
B. "Affiliate" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined
in Sections 424(e) and (f), respectively, of the Code.
C. "Board" means the Board of Directors of the Company.
D. "Cause" means (i) conviction of, a guilty plea with respect to, or a
plea of nolo contendere to a charge that a Participant has committed a
felony under the laws of the United States or of any state or a crime
involving moral turpitude, including, but not limited to, fraud, theft,
embezzlement or any crime that results in or is intended to result in
personal enrichment at the expense of the Company or an Affiliate; (ii)
material breach of any agreement entered into between the Participant and
the Company or an Affiliate that impairs the Company's or the Affiliate's
interest therein; (iii) willful misconduct, significant failure of the
Participant to perform the Participant's duties, or gross neglect by the
Participant of the Participant's duties; or (iv) engagement in any activity
that constitutes a material conflict of interest with the Company or any
Affiliate.
E. "Change in Control" means (i) a sale, lease or other disposition of
all or substantially all of the assets of the Company; (ii) a consolidation
or merger of the
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Company with or into any other corporation or other entity or person, or
any other corporate reorganization, in which the stockholders of the
Company immediately prior to such consolidation, merger or reorganization,
own less than 50% of the outstanding voting power of the surviving entity
(or its parent) following the consolidation, merger or reorganization;
(iii) a reverse merger in which the Company is the surviving corporation
but the shares of the Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether
in the form of securities, cash or otherwise; (iv) prior to the Listing
Date, any transaction or series of related transactions in which in excess
of fifty percent (50%) of the Company's outstanding voting power is
transferred to a person, entity or group within the meaning of Section
13(d) or 14(d) of the Exchange Act, as hereafter amended or succeeded,
excluding any employee benefit plan, or related trust, sponsored or
maintained by the Company or an Affiliate (such person, entity or group, a
"Group"); or (v) after the Listing Date, an acquisition by any Group of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of securities of the Company or its successor
representing at least thirty percent (30%) of the combined voting power
entitled to vote in the election of directors. Notwithstanding the
foregoing, in the case of (ii) and (iii) above, such transactions shall
only be deemed a "Change in Control" if the stockholders of the Company or
its successor immediately prior to such merger, consolidation or reverse
merger: (A) hold less than fifty percent (50%) of the outstanding
securities of the surviving company following the merger, consolidation or
reverse merger, or (B) in the event that the securities of an affiliated
entity or corporation are issued to the stockholders of the Company in the
transaction, hold less than fifty percent (50%) of the outstanding
securities of such affiliated entity or corporation. "Change in Control"
does not include the initial public offering of the securities of the
Company pursuant to a registration statement filed under the Securities Act
(the "IPO"), nor does it include any event, transaction or series of
transactions constituting part of an IPO or an attempted IPO.
F. "Code" means the Internal Revenue Code of 1986, as amended.
G. "Committee" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).
H. "Common Stock" means the common stock of the Company.
I. "Company" means EarthWatch Incorporated, a Delaware corporation.
J. "Constructive Termination" means the occurrence of any of the
following events or conditions: (i) (A) a change in the Participant's
status, title, position or responsibilities (including reporting
responsibilities) which represents an adverse change from the Participant's
status, title, position or responsibilities as in effect at any time within
ninety (90) days preceding the date of a Change in Control or at any time
thereafter; (B) the assignment to the Participant of any duties or
responsibilities which are inconsistent with the Participant's status,
title, position or responsibilities as in effect at any time within ninety
(90) days preceding the date of a Change in Control or at any time
thereafter; or (C) any removal of the Participant from or failure to
reappoint or reelect the Participant to any of such offices or positions,
except in connection with the termination of the Participant's Continuous
Service for Cause, as a result of the Participant's Disability or death or
by the Participant other than as a result of Constructive Termination; (ii)
a reduction in the Participant's annual base compensation or any failure to
pay the
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Participant any compensation or benefits to which the Participant is
entitled within five (5) days of the date due; (iii) the Company's
requiring the Participant to relocate to any place outside a thirty (30)
mile radius of the Participant's current work site, except for reasonably
required travel on the business of the Company or its Affiliates which is
not materially greater than such travel requirements prior to the Change in
Control; (iv) the failure by the Company to (A) continue in effect (without
reduction in benefit level and/or reward opportunities) any material
compensation or employee benefit plan in which the Participant was
participating at any time within ninety (90) days preceding the date of a
Change in Control or at any time thereafter, unless such plan is replaced
with a plan that provides substantially equivalent compensation or benefits
to the Participant, or (B) provide the Participant with compensation and
benefits, in the aggregate, at least equal (in terms of benefit levels
and/or reward opportunities) to those provided for under each other
employee benefit plan, program and practice in which the Participant was
participating at any time within ninety (90) days preceding the date of a
Change in Control or at any time thereafter; (v) any material breach by the
Company of any provision of an agreement between the Company and the
Participant, whether pursuant to this Plan or otherwise, other than a
breach which is cured by the Company within fifteen (15) days following
notice by the Participant of such breach; or (vi) the failure of the
Company to obtain an agreement, satisfactory to the Participant, from any
successors and assigns to assume and agree to perform the obligations
created under this Plan.
K. "Consultant" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and
who is compensated for such services or (ii) who is a member of the Board
of Directors of an Affiliate. However, the term "Consultant" shall not
include either Directors who are not compensated by the Company for their
services as Directors or Directors who are merely paid a director's fee by
the Company for their services as Directors.
L. "Continuous Service" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is
not interrupted or terminated. The Participant's Continuous Service shall
not be deemed to have terminated merely because of a change in the capacity
in which the Participant renders service to the Company or an Affiliate as
an Employee, Consultant or Director or a change in the entity for which the
Participant renders such service, provided that there is no interruption or
termination of the Participant's Continuous Service. For example, a change
in status from an Employee of the Company to a Consultant of an Affiliate
or a Director will not constitute an interruption of Continuous Service.
The Board or the chief executive officer of the Company, in that party's
sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.
M. "Covered Employee" means the chief executive officer and the four (4)
other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange
Act, as determined for purposes of Section 162(m) of the Code.
N. "Director" means a member of the Board of Directors of the Company.
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O. "Disability" means (i) before the Listing Date, the inability of a
person, in the opinion of a qualified physician acceptable to the Company,
to perform the major duties of that person's position with the Company or
an Affiliate of the Company because of the sickness or injury of the person
and (ii) after the Listing Date, the permanent and total disability of a
person within the meaning of Section 22(e)(3) of the Code.
P. "Employee" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company or
an Affiliate shall not be sufficient to constitute "employment" by the
Company or an Affiliate.
Q. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
R. "Fair Market Value" means, as of any date, the value of the Common
Stock determined as follows:
1. If the Common Stock is listed on any established stock exchange
or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the Fair Market Value of a share of Common Stock shall be
the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or market (or the
exchange or market with the greatest volume of trading in the
Common Stock) on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable.
2. In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
3. Prior to the Listing Date, the value of the Common Stock shall be
determined in a manner consistent with Section 260.140.50 of
Title 10 of the California Code of Regulations.
S. "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
T. "Listing Date" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice
of issuance as a national market security on an interdealer quotation
system if such securities exchange or interdealer quotation system has been
certified in accordance with the provisions of Section 25100(o) of the
California Corporate Securities Law of 1968.
U. "Non-Employee Director" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary,
does not receive compensation (directly or indirectly) from the Company or
its parent or a subsidiary for services rendered as a consultant or in any
capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K
promulgated pursuant to the Securities Act ("Regulation S-K")), does not
possess an interest in any other transaction as to which disclosure would
be required under Item 404(a) of Regulation S-K and is
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not engaged in a business relationship as to which disclosure would be
required under Item 404(b) of Regulation S-K; or (ii) is otherwise
considered a "non-employee director" for purposes of Rule 16b-3.
V. "Nonstatutory Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.
W. "Officer" means (i) before the Listing Date, any person designated by
the Company as an officer and (ii) on and after the Listing Date, a person
who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.
X. "Option" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.
Y. "Option Agreement" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions
of the Plan.
Z. "Optionholder" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding
Option.
AA. "Outside Director" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning
of Treasury Regulations promulgated under Section 162(m) of the Code), is
not a former employee of the Company or an "affiliated corporation"
receiving compensation for prior services (other than benefits under a tax
qualified pension plan), was not an officer of the Company or an
"affiliated corporation" at any time and is not currently receiving direct
or indirect remuneration from the Company or an "affiliated corporation"
for services in any capacity other than as a Director or (ii) is otherwise
considered an "outside director" for purposes of Section 162(m) of the
Code.
BB. "Participant" means a person to whom a Stock Award is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Stock Award.
CC. "Plan" means this EarthWatch Incorporated 1999 Equity Incentive Plan.
DD. "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
EE. "Securities Act" means the Securities Act of 1933, as amended.
FF. "Stock Award" means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.
GG. "Stock Award Agreement" means a written agreement between the Company
and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject
to the terms and conditions of the Plan.
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HH. "Ten Percent Stockholder" means a person who 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 of all classes of stock of
the Company or of any of its Affiliates.
III. Administration.
A. Administration by Board. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c). Any interpretation of the Plan by the Board and any
decision by the Board under the Plan shall be final and binding on all
persons.
B. Powers of Board. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
1. To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each
Stock Award shall be granted; what type or combination of types
of Stock Award shall be granted; the provisions of each Stock
Award granted (which need not be identical), including the time
or times when a person shall be permitted to receive Common Stock
pursuant to a Stock Award; and the number of shares of Common
Stock with respect to which a Stock Award shall be granted to
each such person.
2. To construe and interpret the Plan and Stock Awards granted under
it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan or in
any Stock Award Agreement, in a manner and to the extent it shall
deem necessary or expedient to make the Plan fully effective.
3. To amend the Plan or a Stock Award as provided in Section 12.
4. Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best
interests of the Company which are not in conflict with the
provisions of the Plan.
C. Delegation to Committee.
1. General. The Board may delegate administration of the Plan to a
Committee or Committees of one (1) or more members of the Board,
and the term "Committee" shall apply to any person or persons to
whom such authority has been delegated. If administration is
delegated to a Committee, the Committee shall have, in connection
with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board
shall thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by
the
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Board. The Board may abolish the Committee at any time and revest
in the Board the administration of the Plan.
2. Committee Composition when Common Stock is Publicly Traded. At
such time as the Common Stock is publicly traded, in the
discretion of the Board, a Committee may consist solely of two or
more Outside Directors, in accordance with Section 162(m) of the
Code, and/or solely of two or more Non-Employee Directors, in
accordance with Rule 16b-3. Within the scope of such authority,
the Board or the Committee may (1) delegate to a committee of one
or more members of the Board who are not Outside Directors the
authority to grant Stock Awards to eligible persons who are
either (a) not then Covered Employees and are not expected to be
Covered Employees at the time of recognition of income resulting
from such Stock Award or (b) not persons with respect to whom the
Company wishes to comply with Section 162(m) of the Code and/or
(2) delegate to a committee of one or more members of the Board
who are not Non-Employee Directors the authority to grant Stock
Awards to eligible persons who are not then subject to Section 16
of the Exchange Act.
IV. Shares Subject to the Plan.
A. Share Reserve. Subject to the provisions of Section 11 relating to
adjustments upon changes in Common Stock, the Common Stock that may be
issued pursuant to Stock Awards shall not exceed in the aggregate
ten million (10,000,000) shares of Common Stock.
B. Reversion of Shares to the Share Reserve. If any Stock Award shall for
any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not acquired
under such Stock Award shall revert to and again become available for
issuance under the Plan.
C. Source of Shares. The shares of Common Stock subject to the Plan may
be unissued shares or reacquired shares, bought on the market or otherwise.
D. Share Reserve Limitation. Prior to the Listing Date and to the extent
then required by Section 260.140.45 of Title 10 of the California Code of
Regulations, the total number of shares of Common Stock issuable upon
exercise of all outstanding Options and the total number of shares of
Common Stock provided for under any stock bonus or similar plan of the
Company shall not exceed the applicable percentage as calculated in
accordance with the conditions and exclusions of Section 260.140.45 of
Title 10 of the California Code of Regulations, based on the shares of
Common Stock of the Company that are outstanding at the time the
calculation is made.
V. Eligibility.
A. Eligibility for Specific Stock Awards. Incentive Stock Options may be
granted only to Employees. Stock Awards other than Incentive Stock Options
may be granted to Employees, Directors and Consultants.
B. Ten Percent Stockholders.
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1. A Ten Percent Stockholder shall not be granted an Incentive Stock
Option unless the exercise price of such Option is at least one
hundred ten percent (110%) of the Fair Market Value of the Common
Stock at the date of grant and the Option is not exercisable
after the expiration of five (5) years from the date of grant.
2. Prior to the Listing Date, a Ten Percent Stockholder shall not be
granted a Nonstatutory Stock Option unless the exercise price of
such Option is at least (i) one hundred ten percent (110%) of the
Fair Market Value of the Common Stock at the date of grant or
(ii) such lower percentage of the Fair Market Value of the Common
Stock at the date of grant as is permitted by Section 260.140.41
of Title 10 of the California Code of Regulations at the time of
the grant of the Option.
3. Prior to the Listing Date, a Ten Percent Stockholder shall not be
granted a restricted stock award unless the purchase price of the
restricted stock is at least (i) one hundred percent (100%) of
the Fair Market Value of the Common Stock at the date of grant or
(ii) such lower percentage of the Fair Market Value of the Common
Stock at the date of grant as is permitted by Section 260.140.41
of Title 10 of the California Code of Regulations at the time of
the grant of the Option.
C. Section 162(m) Limitation. Subject to the provisions of Section 11
relating to adjustments upon changes in the shares of Common Stock, no
Employee shall be eligible to be granted Options covering more than
10,000,000 shares of Common Stock during any calendar year. This
subsection 5(c) shall not apply prior to the Listing Date and, following
the Listing Date, this subsection 5(c) shall not apply until (i) the
earliest of: (1) the first material modification of the Plan (including any
increase in the number of shares of Common Stock reserved for issuance
under the Plan in accordance with Section 4); (2) the issuance of all of
the shares of Common Stock reserved for issuance under the Plan; (3) the
expiration of the Plan; or (4) the first meeting of stockholders at which
Directors are to be elected that occurs after the close of the third
calendar year following the calendar year in which occurred the first
registration of an equity security under Section 12 of the Exchange Act; or
(ii) such other date required by Section 162(m) of the Code and the rules
and regulations promulgated thereunder.
D. Consultants.
1. Prior to the Listing Date, a Consultant shall not be eligible for
the grant of a Stock Award if, at the time of grant, either the
offer or the sale of the Company's securities to such Consultant
is not exempt under Rule 701 of the Securities Act ("Rule 701")
because of the nature of the services that the Consultant is
providing to the Company, or because the Consultant is not a
natural person, or as otherwise provided by Rule 701, unless the
Company determines that such grant need not comply with the
requirements of Rule 701 and will satisfy another exemption under
the Securities Act as well as comply with the securities laws of
all other relevant jurisdictions.
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2. From and after the Listing Date, a Consultant shall not be
eligible for the grant of a Stock Award if, at the time of grant,
a Form S-8 Registration Statement under the Securities Act ("Form
S-8") is not available to register either the offer or the sale
of the Company's securities to such Consultant because of the
nature of the services that the Consultant is providing to the
Company, or because the Consultant is not a natural person, or as
otherwise provided by the rules governing the use of Form S-8,
unless the Company determines both (1) that such grant (a) shall
be registered in another manner under the Securities Act (e.g.,
on a Form S-3 Registration Statement) or (b) does not require
registration under the Securities Act in order to comply with the
requirements of the Securities Act, if applicable, and (2) that
such grant complies with the securities laws of all other
relevant jurisdictions.
3. Rule 701 and Form S-8 generally are available to consultants and
advisors only if (1) they are natural persons; (2) they provide
bona fide services to the issuer, its parents, its majority-owned
subsidiaries or majority-owned subsidiaries of the issuer's
parent; and (3) the services are not in connection with the offer
or sale of securities in a capital-raising transaction, and do
not directly or indirectly promote or maintain a market for the
issuer's securities.
VI. Option Provisions.
A. Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be
separately designated Incentive Stock Options or Nonstatutory Stock Options
at the time of grant, and, if certificates are issued, a separate
certificate or certificates will be issued for shares of Common Stock
purchased on exercise of each type of Option. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:
B. Term. Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Option shall be exercisable after the expiration
of ten (10) years from the date it was granted.
C. Exercise Price of an Incentive Stock Option. Subject to the provisions
of subsection 5(b) regarding Ten Percent Stockholders, the exercise price
of each Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option
on the date the Option is granted. Notwithstanding the foregoing, an
Incentive Stock Option may be granted with an exercise price lower than
that set forth in the preceding sentence if such Option is granted pursuant
to an assumption or substitution for another option in a manner satisfying
the provisions of Section 424(a) of the Code.
D. Exercise Price of a Nonstatutory Stock Option. Subject to the
provisions of subsection 5(b) regarding Ten Percent Stockholders, the
exercise price of each Nonstatutory Stock Option granted prior to the
Listing Date shall be not less than eighty-five percent (85%) of the Fair
Market Value of the Common Stock subject to the Option on the date the
Option is granted. The exercise price of each Nonstatutory Stock Option
granted on or after the Listing Date shall be
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not less than eighty-five percent (85%) of the Fair Market Value of the
Common Stock subject to the Option on the date the Option is granted.
Notwithstanding the foregoing, a Nonstatutory Stock Option may be granted
with an exercise price lower than that set forth in the preceding sentence
if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of
the Code.
E. Consideration. The purchase price of Common Stock acquired pursuant to
an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii)
at the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to
the Company of other Common Stock, (2) according to a deferred payment or
other similar arrangement with the Optionholder or (3) in any other form of
legal consideration that may be acceptable to the Board; provided, however,
that at any time that the Company is incorporated in Delaware, payment of
the Common Stock's "par value," as defined in the Delaware General
Corporation Law, shall not be made by deferred payment. In the case of any
deferred payment arrangement, interest shall be compounded at least
annually and shall be charged at the minimum rate of interest necessary to
avoid the treatment as interest, under any applicable provisions of the
Code, of any amounts other than amounts stated to be interest under the
deferred payment arrangement. Unless otherwise specifically provided in the
Option, the purchase price of Common Stock acquired pursuant to an Option
that is paid by delivery to the Company of other Common Stock acquired,
directly or indirectly from the Company, shall be paid only by shares of
the Common Stock of the Company that have been held for more than six (6)
months (or such longer or shorter period of time required to avoid a charge
to earnings for financial accounting purposes).
F. Transferability of an Incentive Stock Option. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent
and distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of
the death of the Optionholder, shall thereafter be entitled to exercise the
Option.
G. Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock
Option granted prior to the Listing Date shall not be transferable except
by will or by the laws of descent and distribution and, to the extent
provided in the Option Agreement, to such further extent as permitted by
Section 260.140.41(d) of Title 10 of the California Code of Regulations at
the time of the grant of the Option, and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder. A Nonstatutory Stock
Option granted on or after the Listing Date shall be transferable to the
extent provided in the Option Agreement. If the Nonstatutory Stock Option
does not provide for transferability, then the Nonstatutory Stock Option
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of
the death of the Optionholder, shall thereafter be entitled to exercise the
Option.
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H. Vesting Generally. The total number of shares of Common Stock subject
to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may
be exercised (which may be based on performance or other criteria) as the
Board may deem appropriate. The vesting provisions of individual Options
may vary. The provisions of this subsection 6(g) are subject to any Option
provisions governing the minimum number of shares of Common Stock as to
which an Option may be exercised.
I. Minimum Vesting Prior to the Listing Date. Notwithstanding the
foregoing subsection 6(g), to the extent that the following restrictions on
vesting are required by Section 260.140.41(f) of Title 10 of the California
Code of Regulations at the time of the grant of the Option, then:
1. Options granted prior to the Listing Date to an Employee who is
not an Officer, Director or Consultant shall provide for vesting
of the total number of shares of Common Stock at a rate of at
least twenty percent (20%) per year over five (5) years from the
date the Option was granted, subject to reasonable conditions
such as continued employment; and
2. Options granted prior to the Listing Date to Officers, Directors
or Consultants may be made fully exercisable, subject to
reasonable conditions such as continued employment, at any time
or during any period established by the Company.
J. Termination of Continuous Service. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent
that the Optionholder was entitled to exercise such Option as of the date
of termination) but only within such period of time ending on the earlier
of (i) the date thirty (30) days following the termination of the
Optionholder's Continuous Service (or such longer or shorter period
specified in the Option Agreement, which period shall not be less than
thirty (30) days for Options granted prior to the Listing Date unless such
termination is for cause), or (ii) the expiration of the term of the Option
as set forth in the Option Agreement. If, after termination, the
Optionholder does not exercise his or her Option within the time specified
in the Option Agreement, the Option shall terminate.
K. Extension of Termination Date. An Optionholder's Option Agreement may
also provide that if the exercise of the Option following the termination
of the Optionholder's Continuous Service (other than upon the
Optionholder's death or Disability) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the
registration requirements under the Securities Act, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option
set forth in subsection 6(a) or (ii) the expiration of a period of thirty
(30) days after the termination of the Optionholder's Continuous Service
during which the exercise of the Option would not be in violation of such
registration requirements.
L. Disability of Optionholder. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability,
the Optionholder may exercise his or her Option (to the extent that the
Optionholder
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was entitled to exercise such Option as of the date of termination), but
only within such period of time ending on the earlier of (i) the date
twelve (12) months following such termination (or such longer or shorter
period specified in the Option Agreement, which period shall not be less
than six (6) months for Options granted prior to the Listing Date) or (ii)
the expiration of the term of the Option as set forth in the Option
Agreement. If, after termination, the Optionholder does not exercise his or
her Option within the time specified herein, the Option shall terminate.
M. Death of Optionholder. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder's Continuous Service
for a reason other than death, then the Option may be exercised (to the
extent the Optionholder was entitled to exercise such Option as of the date
of death) by the Optionholder's estate, by a person who acquired the right
to exercise the Option by bequest or inheritance or by a person designated
to exercise the option upon the Optionholder's death pursuant to subsection
6(e) or 6(f), but only within the period ending on the earlier of (1) the
date twelve (12) months following the date of death (or such longer or
shorter period specified in the Option Agreement, which period shall not be
less than six (6) months for Options granted prior to the Listing Date) or
(2) the expiration of the term of such Option as set forth in the Option
Agreement. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate.
N. Early Exercise. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all
of the shares of Common Stock subject to the Option prior to the full
vesting of the Option. Subject to the "Repurchase Limitation" in subsection
10(h), any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the
Board determines to be appropriate. Provided that the "Repurchase
Limitation" in subsection 10(h) is not violated, the Company will not
exercise its repurchase option until at least six (6) months (or such
longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes) have elapsed following exercise of the
Option unless the Board otherwise specifically provides in the Option.
O. Right of Repurchase. Subject to the "Repurchase Limitation" in
subsection 10(h), the Option may, but need not, include a provision whereby
the Company may elect, prior to the Listing Date, to repurchase all or any
part of the vested shares of Common Stock acquired by the Optionholder
pursuant to the exercise of the Option. Provided that the "Repurchase
Limitation" in subsection 10(h) is not violated, the Company will not
exercise its repurchase option until at least six (6) months (or such
longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes) have elapsed following exercise of the
Option unless the Board otherwise specifically provides in the Option.
P. Right of First Refusal. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to
exercise a right of first refusal following receipt of notice from the
Optionholder of the intent to transfer all or any part of the shares of
Common Stock received upon the exercise of the Option. Except as expressly
provided in this subsection 6(o), such
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right of first refusal shall otherwise comply with any applicable
provisions of the Bylaws of the Company.
Q. Re-Load Options. Without in any way limiting the authority of the
Board to make or not to make grants of Options hereunder, the Board shall
have the authority (but not an obligation) to include as part of any Option
Agreement a provision entitling the Optionholder to a further Option (a
"Re-Load Option") in the event the Optionholder exercises the Option
evidenced by the Option Agreement, in whole or in part, by surrendering
other shares of Common Stock in accordance with this Plan and the terms and
conditions of the Option Agreement. Any such Re-Load Option shall (i)
provide for a number of shares of Common Stock equal to the number of
shares of Common Stock surrendered as part or all of the exercise price of
such Option; (ii) have an expiration date which is the same as the
expiration date of the Option the exercise of which gave rise to such Re-
Load Option; and (iii) have an exercise price which is equal to one hundred
percent (100%) of the Fair Market Value of the Common Stock subject to the
Re-Load Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Re-Load Option shall be subject to the
same exercise price and term provisions heretofore described for Options
under the Plan. Unless otherwise specifically provided in the Option, the
Optionholder shall not surrender shares of Common Stock acquired, directly
or indirectly from the Company, unless such shares have been held for more
than six (6) months (or such longer or shorter period of time required to
avoid a charge to earnings for financial accounting purposes).
R. Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board may designate at the time of the
grant of the original Option; provided, however, that the designation of
any Re-Load Option as an Incentive Stock Option shall be subject to the one
hundred thousand dollar ($100,000) annual limitation on the exercisability
of Incentive Stock Options described in subsection 10(d) and in Section
422(d) of the Code. There shall be no Re-Load Options on a Re-Load Option.
Any such Re-Load Option shall be subject to the availability of sufficient
shares of Common Stock under subsection 4(a) and the "Section 162(m)
Limitation" on the grants of Options under subsection 5(c) and shall be
subject to such other terms and conditions as the Board may determine which
are not inconsistent with the express provisions of the Plan regarding the
terms of Options.
VII. Provisions of Stock Awards other than Options.
A. Stock Bonus Awards. Each stock bonus agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of stock bonus agreements may change
from time to time, and the terms and conditions of separate stock bonus
agreements need not be identical, but each stock bonus agreement shall
include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:
1. Consideration. A stock bonus may be awarded in consideration for
past services actually rendered to the Company or an Affiliate
for its benefit.
2. Vesting. Subject to the "Repurchase Limitation" in subsection
10(h), shares of Common Stock awarded under the stock bonus
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agreement may, but need not, be subject to a share repurchase
option in favor of the Company in accordance with a vesting
schedule to be determined by the Board.
3. Termination of Participant's Continuous Service. Subject to the
"Repurchase Limitation" in subsection 10(h), in the event a
Participant's Continuous Service terminates, the Company may
reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination
under the terms of the stock bonus agreement.
4. Transferability. For a stock bonus award made before the Listing
Date, rights to acquire shares of Common Stock under the stock
bonus agreement shall not be transferable except by will or by
the laws of descent and distribution and shall be exercisable
during the lifetime of the Participant only by the Participant.
For a stock bonus award made on or after the Listing Date, rights
to acquire shares of Common Stock under the stock bonus agreement
shall be transferable by the Participant only upon such terms and
conditions as are set forth in the stock bonus agreement, as the
Board shall determine in its discretion, so long as Common Stock
awarded under the stock bonus agreement remains subject to the
terms of the stock bonus agreement.
B. Restricted Stock Awards. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the
Board shall deem appropriate. The terms and conditions of the restricted
stock purchase agreements may change from time to time, and the terms and
conditions of separate restricted stock purchase agreements need not be
identical, but each restricted stock purchase agreement shall include
(through incorporation of provisions hereof by reference in the agreement
or otherwise) the substance of each of the following provisions:
1. Purchase Price. Subject to the provisions of subsection 5(b)
regarding Ten Percent Stockholders, the purchase price under each
restricted stock purchase agreement shall be such amount as the
Board shall determine and designate in such restricted stock
purchase agreement. For restricted stock awards made prior to the
Listing Date, the purchase price shall not be less than eighty-
five percent (85%) of the Common Stock's Fair Market Value on the
date such award is made or at the time the purchase is
consummated. For restricted stock awards made on or after the
Listing Date, the purchase price shall not be less than eighty-
five percent (85%) of the Common Stock's Fair Market Value on the
date such award is made or at the time the purchase is
consummated.
2. Consideration. The purchase price of Common Stock acquired
pursuant to the restricted stock purchase agreement shall be paid
either: (i) in cash at the time of purchase; (ii) at the
discretion of the Board, according to a deferred payment or other
similar arrangement with the Participant; or (iii) in any other
form of legal consideration that may be acceptable to the Board
in its discretion; provided, however, that at any time that the
Company is
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incorporated in Delaware, then payment of the Common Stock's "par
value," as defined in the Delaware General Corporation Law, shall
not be made by deferred payment.
3. Vesting. Subject to the "Repurchase Limitation" in subsection
10(h), shares of Common Stock acquired under the restricted stock
purchase agreement may, but need not, be subject to a share
repurchase option in favor of the Company in accordance with a
vesting schedule to be determined by the Board.
4. Termination of Participant's Continuous Service. Subject to the
"Repurchase Limitation" in subsection 10(h), in the event a
Participant's Continuous Service terminates, the Company may
repurchase or otherwise reacquire any or all of the shares of
Common Stock held by the Participant which have not vested as of
the date of termination under the terms of the restricted stock
purchase agreement.
5. Transferability. For a restricted stock award made before the
Listing Date, rights to acquire shares of Common Stock under the
restricted stock purchase agreement shall not be transferable
except by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Participant only
by the Participant. For a restricted stock award made on or after
the Listing Date, rights to acquire shares of Common Stock under
the restricted stock purchase agreement shall be transferable by
the Participant only upon such terms and conditions as are set
forth in the restricted stock purchase agreement, as the Board
shall determine in its discretion, so long as Common Stock
awarded under the restricted stock purchase agreement remains
subject to the terms of the restricted stock purchase agreement.
VIII. Covenants of the Company.
A. Availability of Shares. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common
Stock required to satisfy such Stock Awards.
B. Securities Law Compliance. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell
shares of Common Stock upon exercise of the Stock Awards; provided,
however, that this undertaking shall not require the Company to register
under the Securities Act the Plan, any Stock Award or any Common Stock
issued or issuable pursuant to any such Stock Award. If, after reasonable
efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems
necessary for the lawful issuance and sale of Common Stock under the Plan,
the Company shall be relieved from any liability for failure to issue and
sell Common Stock upon exercise of such Stock Awards unless and until such
authority is obtained.
IX. Use of Proceeds from Stock.
A. Proceeds from the sale of Common Stock pursuant to Stock Awards shall
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constitute general funds of the Company.
X. Miscellaneous.
A. Acceleration of Exercisability and Vesting. The Board shall have the
power to accelerate the time at which a Stock Award may first be exercised
or the time during which a Stock Award or any part thereof will vest in
accordance with the Plan, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during
which it will vest.
B. Stockholder Rights. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Stock Award unless and until such Participant
has satisfied all requirements for exercise of the Stock Award pursuant to
its terms.
C. No Employment or other Service Rights. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer
upon any Participant any right to continue to serve the Company or an
Affiliate in the capacity in effect at the time the Stock Award was granted
or shall affect the right of the Company or an Affiliate to terminate (i)
the employment of an Employee with or without notice and with or without
cause, (ii) the service of a Consultant pursuant to the terms of such
Consultant's agreement with the Company or an Affiliate or (iii) the
service of a Director pursuant to the Bylaws of the Company or an
Affiliate, and any applicable provisions of the corporate law of the state
in which the Company or the Affiliate is incorporated, as the case may be.
D. Incentive Stock Option $100,000 Limitation. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by any Optionholder during any calendar year (under all plans of
the Company and its Affiliates) exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options.
E. Investment Assurances. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award,
(i) to give written assurances satisfactory to the Company as to the
Participant's knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business
matters and that he or she is capable of evaluating, alone or together with
the purchaser representative, the merits and risks of exercising the Stock
Award; and (ii) to give written assurances satisfactory to the Company
stating that the Participant is acquiring Common Stock subject to the Stock
Award for the Participant's own account and not with any present intention
of selling or otherwise distributing the Common Stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall
be inoperative if (iii) the issuance of the shares of Common Stock upon the
exercise or acquisition of Common Stock under the Stock Award has been
registered under a then currently effective registration statement under
the Securities Act or (iv) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need
not be met in the circumstances under the then applicable securities laws.
The Company may, upon advice of counsel to the Company, place legends on
stock certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply
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with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.
F. Information Obligation. Prior to the Listing Date, to the extent
required by Section 260.140.46 of Title 10 of the California Code of
Regulations, the Company shall deliver financial statements to Participants
at least annually. This subsection 10(g) shall not apply to key Employees
whose duties in connection with the Company assure them access to
equivalent information.
G. Repurchase Limitation. The terms of any repurchase option shall be
specified in the Stock Award and may be either at Fair Market Value at the
time of repurchase or at not less than the original purchase price. To the
extent required by Section 260.140.41 and Section 260.140.42 of Title 10 of
the California Code of Regulations at the time a Stock Award is made, any
repurchase option contained in a Stock Award granted prior to the Listing
Date to a person who is not an Officer, Director or Consultant shall be
upon the terms described below:
1. Fair Market Value. If the repurchase option gives the Company the
right to repurchase the shares of Common Stock upon termination
of employment at not less than the Fair Market Value of the
shares of Common Stock to be purchased on the date of termination
of Continuous Service, then (i) the right to repurchase shall be
exercised for cash or cancellation of purchase money indebtedness
for the shares of Common Stock within ninety (90) days of
termination of Continuous Service (or in the case of shares of
Common Stock issued upon exercise of Stock Awards after such date
of termination, within ninety (90) days after the date of the
exercise) or such longer period as may be agreed to by the
Company and the Participant (for example, for purposes of
satisfying the requirements of Section 1202(c)(3) of the Code
regarding "qualified small business stock") and (ii) the right
terminates when the shares of Common Stock become publicly
traded.
2. Original Purchase Price. If the repurchase option gives the
Company the right to repurchase the shares of Common Stock upon
termination of Continuous Service at the original purchase price,
then (i) the right to repurchase at the original purchase price
shall lapse at the rate of at least twenty percent (20%) of the
shares of Common Stock per year over five (5) years from the date
the Stock Award is granted (without respect to the date the Stock
Award was exercised or became exercisable) and (ii) the right to
repurchase shall be exercised for cash or cancellation of
purchase money indebtedness for the shares of Common Stock within
ninety (90) days of termination of Continuous Service (or in the
case of shares of Common Stock issued upon exercise of Options
after such date of termination, within ninety (90) days after the
date of the exercise) or such longer period as may be agreed to
by the Company and the Participant (for example, for purposes of
satisfying the requirements of Section 1202(c)(3) of the Code
regarding "qualified small business stock").
XI. Adjustments upon Changes in Stock.
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A. Capitalization Adjustments. If any change is made in the Common Stock
subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend
in property other than cash, stock split, liquidating dividend, combination
of shares, exchange of shares, change in corporate structure or other
transaction not involving the receipt of consideration by the Company), the
Plan will be appropriately adjusted in the class(es) and maximum number of
securities subject to the Plan pursuant to subsection 4(a) and the maximum
number of securities subject to award to any person pursuant to subsection
5(c), and the outstanding Stock Awards will be appropriately adjusted in
the class(es) and number of securities and price per share of Common Stock
subject to such outstanding Stock Awards. The Board shall make such
adjustments, and its determination shall be final, binding and conclusive.
(The conversion of any convertible securities of the Company shall not be
treated as a transaction "without receipt of consideration" by the
Company.)
B. Change in Control. In the event of a Change in Control, then with
respect to Stock Awards held by Participants, the vesting of such Stock
Awards (and, if applicable, the time during which such Stock Awards may be
exercised) shall be accelerated in full, and the Stock Awards shall
terminate if not exercised (if applicable) at or prior to such event. With
respect to any other Stock Awards outstanding under the Plan, such Stock
Awards shall terminate if not exercised (if applicable) prior to such
event.
C. Parachute Payments. In the event that the acceleration of the vesting
and exercisability of the Stock Awards and/or lapse of reacquisition or
repurchase rights held by the Company with respect to Stock Awards provided
for in subsection 11(d) and benefits otherwise payable to a Participant (i)
constitute "parachute payments" within the meaning of Section 280G (as it
may be amended or replaced) of the Code, and (ii) but for this subsection
would be subject to the excise tax imposed by Section 4999 (as it may be
amended or replaced) of the Code (the "Excise Tax"), then such
Participant's benefits hereunder shall be either
1. provided to such Participant in full, or
2. provided to such Participant as to such lesser extent which would
result in no portion of such benefits being subject to the Excise
Tax,
D. Whichever of the foregoing amounts, when taking into account
applicable federal, state and local income taxes and the Excise Tax,
results in the receipt by such Participant, on an after-tax basis, of the
greatest amount of benefits, notwithstanding that all or some portion of
such benefits may be taxable under the Excise Tax. Unless the Company and
such Participant otherwise agree in writing, any determination required
under this subsection shall be made in writing in good faith by the
Accountants. In the event of a reduction of benefits hereunder, the
Participant shall be given the choice of which benefits to reduce. For
purposes of making the calculations required by this subsection, the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of the Code. The Company and such Participants
shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under
this subsection. The Company shall bear all costs the
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<PAGE>
Accountants may reasonably incur in connection with any calculations
contemplated by this subsection.
XII. Amendment of the Plan and Stock Awards.
A. Amendment of Plan. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock, no amendment shall be effective
unless approved by the stockholders of the Company to the extent
stockholder approval is necessary to satisfy the requirements of Section
422 of the Code, Rule 16b-3 or any Nasdaq or securities exchange listing
requirements.
B. Stockholder Approval. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval, including, but
not limited to, amendments to the Plan intended to satisfy the
requirements of Section 162(m) of the Code and the regulations thereunder
regarding the exclusion of performance-based compensation from the limit
on corporate deductibility of compensation paid to certain executive
officers.
C. Contemplated Amendments. It is expressly contemplated that the Board
may amend the Plan in any respect the Board deems necessary or advisable
to provide eligible Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan
and/or Incentive Stock Options granted under it into compliance therewith.
D. No Impairment of Rights. Rights under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the Participant and (ii)
the Participant consents in writing.
E. Amendment of Stock Awards. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided,
however, that the rights under any Stock Award shall not be impaired by
any such amendment unless (i) the Company requests the consent of the
Participant and (ii) the Participant consents in writing.
XIII. Termination or Suspension of the Plan.
A. Plan Term. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the
tenth (10th) anniversary of the date the Plan is adopted by the Board or
approved by the stockholders of the Company, whichever is earlier. No
Stock Awards may be granted under the Plan while the Plan is suspended or
after it is terminated.
B. No Impairment of Rights. Suspension or termination of the Plan shall
not impair rights and obligations under any Stock Award granted while the
Plan is in effect except with the written consent of the Participant.
XIV. Effective Date of Plan.
A. The Plan shall become effective as determined by the Board, but no
Stock Award shall be exercised (or, in the case of a stock bonus, shall be
granted) unless and until the Plan has been approved by the stockholders
of the Company, which
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approval shall be within twelve (12) months before or after the date the
Plan is adopted by the Board.
XV. Choice of Law.
A. The law of the State of Colorado shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard
to such state's conflict of laws rules.
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