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Exhibit 10.4
MAINSPRING, INC.
2000 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose. This Non-Qualified Stock Option Plan, to be known as the 2000
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Non-Employee Director Stock Option Plan (hereinafter, the "Plan") is intended to
promote the interests of Mainspring, Inc. (hereinafter, the "Company") by
providing an inducement to obtain and retain the services of qualified persons
who are not employees or officers of the Company to serve as members of its
Board of Directors (the "Board").
2. Available Shares. The total number of shares of Common Stock, par value
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$.01 per share, of the Company (the "Common Stock") for which options may be
granted under this Plan shall not exceed 200,000 shares, subject to adjustment
in accordance with paragraph 10 of this Plan. Shares subject to this Plan are
authorized but unissued shares or shares that were once issued and subsequently
reacquired by the Company. If any options granted under this Plan are
surrendered before exercise or lapse without exercise, in whole or in part, the
shares reserved therefor shall continue to be available under this Plan.
3. Administration. This Plan shall be administered by the Board or by a
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committee appointed by the Board (the "Committee"). In the event the Board fails
to appoint or refrains from appointing a Committee, the Board shall have all
power and authority to administer this Plan. In such event, the word "Committee"
wherever used herein shall be deemed to mean the Board. The Committee shall,
subject to the provisions of the Plan, have the power to construe this Plan, to
determine all questions hereunder, and to adopt and amend such rules and
regulations for the administration of this Plan as it may deem desirable. No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to this Plan or any option granted
under it.
4. Automatic Grant of Options. The Plan shall first become effective upon
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the date on which the Common Stock of the Company becomes registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Subject to the
availability of shares under this Plan, (a) each person who is or becomes a
member of the Board and who is not an employee or officer of the Company (a
"Non-Employee Director") shall be automatically granted on either (i) the date
such person is first elected to the Board or (ii) the date on which the Common
Stock of the Company first becomes registered under the Exchange Act (the
"Approval Date") ((i) and (ii) collectively referred to as the "Grant Date"),
without further action by the Board, an option to purchase 20,000 shares of the
Common Stock ( the "Initial Options") and (b) each person receiving an option
pursuant to clause (a) hereof who remains a Non-Employee Director through each
anniversary of such person's Grant Date (each, an "Additional Grant Date"),
shall be automatically granted on the anniversary of such persons Grant Date, an
option to purchase an additional 3,000 shares of Common Stock.
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The options to be granted under this paragraph 4 shall be the only options
ever to be granted at any time to such member under this Plan. Notwithstanding
anything to the contrary set forth herein, if this Plan is not approved by a
majority of the Company's stockholders within 12 months of the Approval Date,
then the Plan and the options granted pursuant to this Section 4 shall terminate
and become void, and no further options shall be granted under this Plan.
5. Option Price. The purchase price of the stock covered by an option
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granted pursuant to this Plan shall be 100% of the fair market value of such
shares on the day the option is granted. The option price will be subject to
adjustment in accordance with the provisions of paragraph 10 of this Plan. For
purposes of this Plan, if, at the time an option is granted under the Plan, the
Company's Common Stock is publicly traded, "fair market value" shall mean (i)
the average (on that date) of the high and low prices of the Common Stock on the
principal national securities exchange on which the Common Stock is traded, if
the Common Stock is then traded on a national securities exchange; or (ii) the
last reported sale price (on that date) of the Common Stock on the Nasdaq
Market, if the Common Stock is not then traded on a national securities
exchange; or (iii) the closing bid price (or average of bid prices) last quoted
(on that date) by an established quotation service for over-the-counter
securities, if the Common Stock is not reported on the Nasdaq Market. If the
Common Stock is not publicly traded at the time an option is granted under the
Plan, "fair market value" shall be deemed to be the fair value of the Common
Stock as determined by the Committee after taking into consideration all factors
which it deems appropriate.
6. Period of Option. Unless sooner terminated in accordance with the
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provisions of paragraph 8 of this Plan, an option granted hereunder shall expire
on the date which is ten (10) years after the date of grant of the option.
7. Vesting of Shares and Non-Transferability of Options. All Options
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granted under this Plan shall not be exercisable until they become vested.
(a) Vesting of Initial Options. Initial Options granted under
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Paragraph 4 of this plan shall vest in the optionee and thus become exercisable
with respect to 1,250 shares on the first day of each calendar quarter following
the Grant Date, provided that the optionee has continuously served as a member
of the Board through such vesting date.
(b) Vesting of Additional Options. Additional Options granted under
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Paragraph 4 of this Plan shall vest in the optionee and thus become exercisable
with respect to 750 shares on the first day of each calendar quarter following
the Additional Grant Date, provided that the optionee has continuously served as
a member of the Board through such vesting date.
(c) Transferability. Any option granted pursuant to this Plan shall be
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assignable or transferable by will, the laws of descent and distribution,
pursuant to a domestic relations order or in accordance with the terms of the
optionee's option
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agreement and only in compliance with the provisions of the Securities Act of
1933, as amended (the "Securities Act").
8. Termination of Option Rights.
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(a) Except as otherwise specified in the agreement relating to an
option, in the event an optionee ceases to be a member of the Board for any
reason other than death or permanent disability, any then unexercised portion of
options granted to such optionee shall, to the extent not then vested,
immediately terminate and become void; any portion of an option which is then
vested but has not been exercised at the time the optionee so ceases to be a
member of the Board may be exercised, to the extent it is then vested, by the
optionee at any time prior to the earlier of the scheduled expiration date of
the option or 24 months from the date the optionee ceases to be a member of the
Board.
(b) In the event that an optionee ceases to be a member of the Board by
reason of his or her death or permanent disability, any option granted to such
optionee shall be immediately and automatically accelerated and become fully
vested. All unexercised options which are then exercisable (including those
options which become exercisable pursuant to the first sentence of this Section
8(b)) but have not been exercised at the time the optionee so ceases to be a
member of the Board of Directors may be exercised, to the extent any portion of
such options are then exercisable, by the optionee (or by the optionee's
personal representative, heir or legatee, in the event of death) for a period of
three years thereafter.
(c) No portion of an option may be exercised if the optionee is removed
or resigns from the Board of Directors for any one of the following reasons: (i)
disloyalty, gross negligence, dishonesty or breach of fiduciary duty to the
Company; or (ii) the commission of an act of embezzlement, fraud or deliberate
disregard of the rules or policies of the Company which results in loss, damage
or injury to the Company, whether directly or indirectly; or (iii) the
unauthorized disclosure of any trade secret or confidential information of the
Company; or (iv) the commission of an act which constitutes unfair competition
with the Company or which induces any customer of the Company to break a
contract with the Company; or (v) the conduct of any activity on behalf of any
organization or entity which is a competitor of the Company (unless such conduct
is approved by a majority of the members of the Board of Directors).
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9. Exercise of Option. Subject to the terms and conditions of this Plan
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and the option agreements, an option granted hereunder shall, to the extent then
exercisable, be exercisable in whole or in part by giving written notice to the
Company by mail, facsimile or in person addressed to Mainspring, Inc., at its
principal executive offices, stating the number of shares with respect to which
the option is being exercised, accompanied by payment in full for such shares.
Payment may be (a) in United States dollars in cash or by check, (b) in whole or
in part in shares of the Common Stock of the Company already owned by the person
or persons exercising the option (such shares not having been acquired within
the prior six months by the optionee pursuant to a stock option exercise) valued
at fair market value determined in accordance with the provisions of paragraph 5
or (c) consistent with applicable law, except as otherwise explicitly provided
in the applicable option agreement, and only if the Common Stock is then
publicly traded, delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds to pay
the exercise price, or delivery by the optionee to the Company of a copy of
irrevocable and unconditional instructions to a creditworthy broker to deliver
promptly to the Company cash or a check sufficient to pay the exercise price.
There shall be no such exercise at any one time as to fewer than one hundred
(100) shares or all of the remaining shares then purchasable by the person or
persons exercising the option if fewer than one hundred (100) shares. The
Company's transfer agent shall, on behalf of the Company, prepare a certificate
or certificates representing such shares acquired pursuant to exercise of the
option, shall register the optionee as the owner of such shares on the books of
the Company and shall cause the fully executed certificate(s) representing such
shares to be delivered to the optionee as soon as practicable after payment of
the option price in full. The holder of an option shall not have any rights of a
stockholder with respect to the shares covered by the option, except to the
extent that one or more certificates for such shares shall be delivered to him
or her upon the due exercise of the option.
10. Adjustments Upon Changes in Capitalization and Other Events. Upon the
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occurrence of any of the following events, an optionee's rights with respect to
options granted to him or her hereunder shall be adjusted as hereinafter
provided:
(a) Stock Dividends and Stock Splits. If the shares of Common Stock
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shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.
(b) Recapitalization Adjustments. Immediately upon the consummation of
an Acquisition, all outstanding options under this Plan shall immediately vest
and become fully exercisable and shall remain the obligation of the Company or
be assumed by the surviving or acquiring entity, and there shall automatically
be a substitute for the shares of Common Stock subject to the options the
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consideration payable with respect to the Outstanding Shares of Common Stock in
connection with the Acquisition. In the event of a reorganization,
recapitalization, merger, consolidation, or any other change in the corporate
structure or shares of the Company, to the extent permitted by Rule 16b-3 under
the Securities Exchange Act of 1934 ("Rule 16b-3"), adjustments in the number
and kind of shares authorized by this Plan and in the number and kind of shares
covered by, and in the option price of outstanding options under this Plan
necessary to maintain the proportionate interest of the optionee and preserve,
without exceeding, the value of such option, shall be made. Notwithstanding the
foregoing, no such adjustment shall be made which would, within the meaning of
any applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), constitute a modification, extension or renewal of any Option or a
grant of additional benefits to the holder of an Option. For purposes of this
paragraph 10, an "Acquisition" shall mean: (x) any merger, consolidation or
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purchase of outstanding capital stock of the Company, or other form of business
combination in which the Company is the target of such combination or after
which the voting securities of the Company outstanding immediately prior thereto
represent (either by remaining outstanding or by being converted into voting
securities of the surviving or acquiring entity) less than 50% of the combined
voting power of the voting securities of the Company or such surviving or
acquiring entity outstanding immediately after such event (other than as a
result of a financing transaction); or (y) any sale of all or substantially all
of the capital stock or assets of the Company in a business combination (other
than in a spin-off or similar transaction).
(c) Issuances of Securities. Except as expressly provided
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herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares subject to options. No adjustments shall be made for dividends paid in
cash or in property other than securities of the Company.
(d) Adjustments. Upon the happening of any of the foregoing
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events, the class and aggregate number of shares set forth in paragraph 2 of
this Plan that are subject to options which previously have been or subsequently
may be granted under this Plan shall also be appropriately adjusted to reflect
such events. The Board shall determine the specific adjustments to be made under
this paragraph 10 and its determination shall be conclusive.
11. Restrictions on Issuance of Shares. Notwithstanding the
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provisions of paragraphs 4 and 9 of this Plan, the Company shall have no
obligation to deliver any certificate or certificates upon exercise of an option
until one of the following conditions shall be satisfied:
(a) The issuance of shares with respect to which the option
has been exercised is at the time of the issue of such shares effectively
registered under applicable Federal and state securities laws as now in force or
hereafter amended; or
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(b) Counsel for the Company shall have given an opinion that
the issuance of such shares is exempt from registration under Federal and state
securities laws as now in force or hereafter amended; and the Company has
complied with all applicable laws and regulations with respect thereto,
including without limitation all regulations required by any stock exchange upon
which the Company's outstanding Common Stock is then listed.
12. Legend on Certificates. The certificates representing shares
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issued pursuant to the exercise of an option granted hereunder shall carry such
appropriate legend, and such written instructions shall be given to the
Company's transfer agent, as may be deemed necessary or advisable by counsel to
the Company in order to comply with the requirements of the Securities Act, as
amended, or any state securities laws.
13. Representation of Optionee. If requested by the Company, the
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optionee shall deliver to the Company written representations and warranties
upon exercise of the option that are necessary to show compliance with Federal
and state securities laws, including representations and warranties to the
effect that a purchase of shares under the option is made for investment and not
with a view to their distribution (as that term is used in the Securities Act).
14. Option Agreement. Each option granted under the provisions of
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this Plan shall be evidenced by an option agreement, which agreement shall be
duly executed and delivered on behalf of the Company and by the optionee to whom
such option is granted. The option agreement shall contain such terms,
provisions and conditions not inconsistent with this Plan as may be determined
by the officer executing it.
15. Termination and Amendment of Plan. Options may no longer be
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granted under this Plan after 10 years from the Approval Date, and this Plan
shall terminate when all options granted or to be granted hereunder are no
longer outstanding. The Board may at any time terminate this Plan or make such
modification or amendment thereof as it deems advisable; provided, however, that
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the Board may not, without approval by the affirmative vote of the holders of a
majority of the shares of Common Stock present in person or by proxy and voting
on such matter at a meeting, (a) increase the maximum number of shares for which
options may be granted under this Plan (except by adjustment pursuant to Section
10), (b) materially modify the requirements as to eligibility to participate in
this Plan, or (c) materially increase benefits accruing to option holders under
this Plan. Termination or any modification or amendment of this Plan shall not,
without consent of a participant, affect his or her rights under an option
previously granted to him or her.
16. Withholding of Income Taxes. Upon the exercise of an option,
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the Company, in accordance with Section 3402(a) of the Code, may require the
optionee to pay withholding taxes in respect of amounts considered to be
compensation includible in the optionee's gross income.
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17. Compliance with Regulations. It is the Company's intent that
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this Plan comply in all respects with Rule 16b-3 (or any successor or amended
provision thereof) and any applicable Securities and Exchange Commission
interpretations thereof. If any provision of this Plan is deemed not to be in
compliance with Rule 16b-3, the provision shall be null and void or amended by
the Board of Directors to ensure proper compliance.
18. Governing Law. The validity and construction of this Plan and
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the instruments evidencing options shall be governed by the laws of the State of
Delaware, without giving effect to the principles of conflicts of law thereof.
Adopted by the Board of Directors on:
February 9, 2000
Approved by the stockholders on:
March 29, 2000
