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EXHIBIT 10.4
1999 OMNIBUS STOCK INCENTIVE PLAN, AS AMENDED
SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.
The name of this plan is the Tumbleweed Communications Corp. 1999 Omnibus
Stock Incentive Plan (the "Plan"). The Plan was adopted by the Board (defined
below) on May 27, 1999, subject to the approval of the stockholders of the
Company (defined below). The purpose of the Plan is to enable the Company to
attract and retain highly qualified personnel who will contribute to the
Company's success and to provide incentives to Participants (defined below) that
are linked directly to increases in stockholder value and will therefore inure
to the benefit of all stockholders of the Company.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(1) "ADMINISTRATOR" means the Board, or if and to the extent the Board does
not administer the Plan, the Committee in accordance with Section 2 below.
(2) "BOARD" means the Board of Directors of the Company.
(3) "CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto.
(4) "COMMITTEE" means any committee the Board may appoint to administer the
Plan. To the extent necessary and desirable, the Committee shall be composed
entirely of individuals who meet the qualifications referred to in
Section 162(m) of the Code and Rule 16b-3 under the Exchange Act. If at any time
or to any extent the Board shall not administer the Plan, then the functions of
the Board specified in the Plan shall be exercised by the Committee.
(5) "COMPANY" means Tumbleweed Communications Corp., a Delaware corporation
(or any successor corporation).
(6) "DEFERRED STOCK" means the right to receive Stock at the end of a
specified deferral period granted pursuant to Section 7 below.
(7) "DISABILITY" means the inability of a Participant to perform
substantially his or her duties and responsibilities to the Company or to any
Parent or Subsidiary by reason of a physical or mental disability or infirmity
(i) for a continuous period of six months, or (ii) at such earlier time as the
Participant submits medical evidence satisfactory to the Administrator that the
Participant has a physical or mental disability or infirmity that will likely
prevent the Participant from returning to the performance of the Participant's
work duties for six months or longer. The date of such Disability shall be the
last day of such six-month period or the day on which the Participant submits
such satisfactory medical evidence, as the case may be.
(8) "ELIGIBLE RECIPIENT" means an officer, director, employee, consultant or
advisor of the Company or of any Parent or Subsidiary.
(9) "EMPLOYEE DIRECTOR" means any director of the Company who is also an
employee of the Company or of any Parent or Subsidiary.
(10) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
(11) "FAIR MARKET VALUE" means, as of any given date, with respect to any
awards granted hereunder, (A) if the Stock is publicly traded, the closing sale
price of a share of Stock on such date as reported in the Western Edition of the
Wall Street Journal, (B) the fair market value of a share of Stock as determined
in accordance with a method prescribed in the agreement evidencing any award
hereunder, (C) in the case of a Limited Stock Appreciation Right, the per share
"Change in Control Price" (as defined in the agreement evidencing such Limited
Stock Appreciation Right) of the Stock as
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of the date of exercise or (D) the fair market value of a share of Stock as
otherwise determined by the Administrator in the good faith exercise of its
discretion.
(12) "INCENTIVE STOCK OPTION" means any Stock Option intended to be
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
(13) "LIMITED STOCK APPRECIATION RIGHT" means a Stock Appreciation Right
that can be exercised only in the event of a "Change in Control" (as defined in
the award evidencing such Limited Stock Appreciation Right).
(14) "NON-EMPLOYEE DIRECTOR" means a director of the Company who is (i) not
an employee of the Company or of any Parent or Subsidiary and (ii) who first
becomes a director of the Company following the Effective Date (as defined in
Section 11 hereof), whether through election by the stockholders of the Company
or appointment by the Board to fill a vacancy.
(15) "NON QUALIFIED STOCK OPTION" means any Stock Option that is not an
Incentive Stock Option, including any Stock Option that provides (as of the time
such Stock Option is granted) that it will not be treated as an Incentive Stock
Option.
(16) "PARENT" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, if each of the corporations in
the chain (other than the Company) owns stock possessing 50% or more of the
combined voting power of all classes of stock in one of the other corporations
in the chain.
(17) "PARTICIPANT" means (i) any Eligible Recipient selected by the
Administrator, pursuant to the Administrator's authority in Section 2 below, to
receive grants of Stock Options, Stock Appreciation Rights, Limited Stock
Appreciation Rights, awards of Restricted Stock, Deferred Stock, or Performance
Shares or any combination of the foregoing, or (ii) any Non-Employee Director
who is eligible to receive grants of Stock Options pursuant to Section 5(9)
below.
(18) "PERFORMANCE SHARES" means shares of Stock that are subject to
restrictions based upon the attainment of specified performance objectives
granted pursuant to Section 7 below.
(19) "REGISTRATION STATEMENT" means the registration statement on Form S-1
filed with the Securities and Exchange Commission for the initial underwritten
public offering of the Company's Stock.
(20) "RESTRICTED STOCK" means shares of Stock subject to certain
restrictions granted pursuant to Section 7 below.
(21) "STOCK" means the common stock, par value $0.001 per share, of the
Company.
(22) "STOCK APPRECIATION RIGHT" means the right pursuant to an award granted
under Section 6 below to receive an amount equal to the excess, if any, of
(A) the Fair Market Value, as of the date such Stock Appreciation Right or
portion thereof is surrendered, of the shares of Stock covered by such right or
such portion thereof, over (B) the aggregate exercise price of such right or
such portion thereof.
(23) "STOCK OPTION" means an option to purchase shares of Stock granted
pursuant to Section 5 below.
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(24) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations (other than the last corporation) in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
SECTION 2. ADMINISTRATION.
The Plan shall be administered in accordance with the requirements of
Section 162(m) of the Code (but only to the extent necessary and desirable to
maintain qualification of awards under the Plan under Section 162(m) of the
Code) and, to the extent applicable, Rule 16b-3 under the Exchange Act
("Rule 16b-3"), by the Board or, at the Board's sole discretion, by the
Committee, which shall be appointed by the Board, and which shall serve at the
pleasure of the Board.
Pursuant to the terms of the Plan, the Administrator shall have the power
and authority to grant to Eligible Recipients pursuant to the terms of the Plan:
(a) Stock Options, (b) Stock Appreciation Rights or Limited Stock Appreciation
Rights, (c) awards of Restricted Stock, Deferred Stock or Performance Shares or
(d) any combination of the foregoing; PROVIDED, HOWEVER, that automatic,
nondiscretionary grants of Stock Options shall be made to Non-Employee Directors
pursuant to and in accordance with the terms of Section 5(9) below. Except as
otherwise provided in Section 5(9) below, the Administrator shall have the
authority:
(a) to select those Eligible Recipients who shall be Participants;
(b) to determine whether and to what extent Stock Options, Stock
Appreciation Rights, Limited Stock Appreciation Rights, awards of Restricted
Stock, Deferred Stock or Performance Shares or a combination of any of the
foregoing, are to be granted hereunder to Participants;
(c) to determine the number of shares of Stock to be covered by each award
granted hereunder;
(d) to determine the terms and conditions, not inconsistent with the terms
of the Plan, of each award granted hereunder (including, but not limited to,
(x) the restrictions applicable to awards of Restricted Stock or Deferred Stock
and the conditions under which restrictions applicable to such awards of
Restricted Stock or Deferred Stock shall lapse, and (y) the performance goals
and periods applicable to awards of Performance Shares);
(e) to determine the terms and conditions, not inconsistent with the terms
of the Plan, which shall govern all written instruments evidencing Stock
Options, Stock Appreciation Rights, Limited Stock Appreciation Rights, awards of
Restricted Stock, Deferred Stock or Performance Shares or any combination of the
foregoing granted hereunder; and
(f) to reduce the option price of any Stock Option to the then current Fair
Market Value if the Fair Market Value of the Stock covered by such Stock Option
has declined since the date such Stock Option was granted.
The Administrator shall have the authority, in its sole discretion, to
adopt, alter and repeal such administrative rules, guidelines and practices
governing the Plan as it shall from time to time deem advisable; to interpret
the terms and provisions of the Plan and any award issued under the Plan (and
any agreements relating thereto); and to otherwise supervise the administration
of the Plan.
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All decisions made by the Administrator pursuant to the provisions of the
Plan shall be final, conclusive and binding on all persons, including the
Company and the Participants.
SECTION 3. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for issuance
under the Plan shall be 4,381,500 shares, plus an annual increase to be added on
the first day of the Company's fiscal year (beginning 2001) equal to the lesser
of (i) 2,000,000 shares or (ii) five percent (5%) of the number of outstanding
shares on the last day of the immediately preceding fiscal year. Such shares may
consist, in whole or in part, of authorized and unissued shares or treasury
shares. The aggregate number of shares of Stock as to which Stock Options, Stock
Appreciation Rights, and awards of Restricted Stock, Deferred Stock and
Performance Shares may be granted to any Participant during any calendar year
may not, subject to adjustment as provided in this Section 3, exceed 80% of the
shares of Stock reserved for the purposes of the Plan.
Consistent with the provisions of Section 162(m) of the Code, as from time
to time applicable, to the extent that (i) a Stock Option expires or is
otherwise terminated without being exercised, or (ii) any shares of Stock
subject to any award of Restricted Stock, Deferred Stock or Performance Shares
granted hereunder are forfeited, such shares of Stock shall again be available
for issuance in connection with future awards granted under the Plan. If any
shares of Stock have been pledged as collateral for indebtedness incurred by a
Participant in connection with the exercise of a Stock Option and such shares of
Stock are returned to the Company in satisfaction of such indebtedness, such
shares of Stock shall again be available for issuance in connection with future
awards granted under the Plan.
In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend or other change in corporate structure affecting the Stock, an
equitable substitution or proportionate adjustment shall be made in (i) the
aggregate number of shares of Stock reserved for issuance under the Plan,
(ii) the kind, number and option price of shares of Stock subject to outstanding
Stock Options granted under the Plan, and (iii) the kind, number and purchase
price of shares of Stock subject to outstanding awards of Restricted Stock,
Deferred Stock and Performance Shares granted under the Plan, in each case as
may be determined by the Administrator, in its sole discretion. Such other
substitutions or adjustments shall be made as may be determined by the
Administrator, in its sole discretion. An adjusted option price shall also be
used to determine the amount payable by the Company upon the exercise of any
Stock Appreciation Right or Limited Stock Appreciation Right related to any
Stock Option. In connection with any event described in this paragraph, the
Administrator may provide, in its sole discretion, for the cancellation of any
outstanding awards and payment in cash or other property therefor.
SECTION 4. ELIGIBILITY.
Eligible Recipients shall be eligible to be granted Stock Options, Stock
Appreciation Rights, Limited Stock Appreciation Rights, awards of Restricted
Stock, Deferred Stock or Performance Shares or any combination of the foregoing
hereunder. The Participants under the Plan shall be selected from time to time
by the Administrator, in its sole discretion, from among the Eligible
Recipients, and the Administrator shall determine, in its sole discretion, the
number of shares of Stock covered by each such award.
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone or in addition to other awards granted
under the Plan. Any Stock Option granted under the Plan shall be in such form as
the Administrator may from time to time approve, and the provisions of Stock
Option awards need not be the same with respect to each Participant.
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Participants who are granted Stock Options shall enter into a subscription
and/or award agreement with the Company, in such form as the Administrator shall
determine, which agreement shall set forth, among other things, the option price
of the Stock Option, the term of the Stock Option and provisions regarding
exercisability of the Stock Option granted thereunder.
The Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options.
The Administrator shall have the authority to grant to any officer or
employee of the Company or of any Parent or Subsidiary (including directors who
are also officers of the Company) Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options (in each case with or without Stock
Appreciation Rights or Limited Stock Appreciation Rights). Directors who are not
also officers of the Company or of any Parent or Subsidiary, consultants or
advisors to the Company or to any Parent or Subsidiary may only be granted
Non-Qualified Stock Options (with or without Stock Appreciation Rights or
Limited Stock Appreciation Rights). To the extent that any Stock Option does not
qualify as an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option. More than one Stock Option may be granted to the
same Participant and be outstanding concurrently hereunder.
Stock Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable:
(1) OPTION PRICE. The option price per share of Stock purchasable under a
Stock Option shall be determined by the Administrator in its sole discretion at
the time of grant but shall not, (i) in the case of Incentive Stock Options, be
less than 100% of the Fair Market Value of the Stock on such date, (ii) in the
case of Non-Qualified Stock Options intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, be less than
100% of the Fair Market Value of the Stock on such date and (iii) in any event,
be less than the par value (if any) of the Stock. If a Participant owns or is
deemed to own (by reason of the attribution rules applicable under
Section 424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Company or of any Parent or Subsidiary and an Incentive
Stock Option is granted to such Participant, the option price of such Incentive
Stock Option (to the extent required at the time of grant by the Code shall be
no less than 110% of the Fair Market Value of the Stock on the date such
Incentive Stock Option is granted.
(2) OPTION TERM. The term of each Stock Option shall be fixed by the
Administrator, but no Stock Option shall be exercisable more than ten years
after the date such Stock Option is granted; PROVIDED, HOWEVER, that if an
employee owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Company or of any Parent or Subsidiary and an Incentive
Stock Option is granted to such employee, the term of such Incentive Stock
Option (to the extent required by the Code at the time of grant) shall be no
more than five years from the date of grant.
(3) EXERCISABILITY. Stock Options shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the
Administrator at or after the time of grant. The Administrator may provide at
the time of grant, in its sole discretion, that any Stock Option shall be
exercisable only in installments, and the Administrator may waive such
installment exercise provisions at any time, in whole or in part, based on such
factors as the Administrator may determine, in its sole discretion, including
but not limited to in connection with any "change in control" of the Company (as
defined in the agreement evidencing such Stock Option).
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(4) METHOD OF EXERCISE. Subject to paragraph (3) of this Section 5, Stock
Options may be exercised in whole or in part at any time during the option
period, by giving written notice of exercise to the Company specifying the
number of shares of Stock to be purchased, accompanied by payment in full of the
purchase price in cash or its equivalent, as determined by the Administrator. As
determined by the Administrator, in its sole discretion, payment in whole or in
part may also be made (i) by means of any cashless exercise procedure approved
by the Administrator, (ii) in the form of unrestricted Stock already owned by
the Participant which, (x) in the case of unrestricted Stock acquired upon
exercise of an option, have been owned by the Participant for more than six
months on the date of surrender, and (y) has a Fair Market Value on the date of
surrender equal to the aggregate option price of the Stock as to which such
Stock Option shall be exercised, or (iii) in the case of the exercise of a
Non-Qualified Stock Option, in the form of Restricted Stock or Performance
Shares subject to an award hereunder (based, in each case, on the Fair Market
Value of the Stock on the date the Stock Option is exercised); PROVIDED,
HOWEVER, that in the case of an Incentive Stock Option, the right to make
payment in the form of already owned shares of Stock may be authorized only at
the time of grant. If payment of the option price of a Non-Qualified Stock
Option is made in whole or in part in the form of Restricted Stock or
Performance Shares, the shares of Stock received upon the exercise of such Stock
Option shall be restricted in accordance with the original terms of the
Restricted Stock award or Performance Shares award in question, except that the
Administrator may direct that such restrictions shall apply only to that number
of shares of Stock equal to the number of shares surrendered upon the exercise
of such Stock Option. A Participant shall generally have the rights to dividends
and any other rights of a stockholder with respect to the Stock subject to the
Stock Option only after the Participant has given written notice of exercise,
has paid in full for such shares, and, if requested, has given the
representation described in paragraph (2) of Section 10 below.
The Administrator may require the surrender of all or a portion of any Stock
Option granted under the Plan as a condition precedent to the grant of a new
Stock Option. Subject to the provisions of the Plan, such new Stock Option shall
be exercisable at the price, during such period and on such other terms and
conditions as are specified by the Administrator at the time the new Stock
Option is granted. Consistent with the provisions of Section 162(m), to the
extent applicable, upon their surrender, Stock Options shall be canceled and the
shares of Stock previously subject to such canceled Stock Options shall again be
available for future grants of Stock Options and other awards hereunder.
(5) LOANS. The Company or any Parent or Subsidiary may make loans
available to Stock Option holders in connection with the exercise of
outstanding Stock Options, as the Administrator, in its sole discretion, may
determine. Such loans shall (i) be evidenced by promissory notes entered into
by the Stock Option holders in favor of the Company or any Parent or
Subsidiary, (ii) be subject to the terms and conditions set forth in this
Section 5(5) and such other terms and conditions, not inconsistent with the
Plan, as the Administrator shall determine, (iii) bear interest at the
applicable Federal interest rate or such other rate as the Administrator
shall determine, and (iv) be subject to Board approval (or to approval by the
Administrator to the extent the Board may delegate such authority). In no
event may the principal amount of any such loan exceed the sum of (x) the
option price less the par value (if any) of the shares of Stock covered by
the Stock Option, or portion thereof, exercised by the holder, and (y) any
Federal, state, and local income tax attributable to such exercise. The
initial term of the loan, the schedule of payments of principal and interest
under the loan, the extent to which the loan is to be with or without
recourse against the holder with respect to principal and/or interest and the
conditions upon which the loan will become payable in the event of the
holder's termination of service to the Company or to any Parent or Subsidiary
shall be determined by the Administrator. Unless the Administrator determines
otherwise, when a loan is made, shares of Stock having
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a Fair Market Value at least equal to the principal amount of the loan shall
be pledged by the holder to the Company as security for payment of the unpaid
balance of the loan, and such pledge shall be evidenced by a pledge
agreement, the terms of which shall be determined by the Administrator, in
its sole discretion; PROVIDED, HOWEVER, that each loan shall comply with all
applicable laws, regulations and rules of the Board of Governors of the
Federal Reserve System and any other governmental agency having jurisdiction.
(6) NON-TRANSFERABILITY OF OPTIONS. Except under the laws of descent and
distribution, the Participant shall not be permitted to sell, transfer, pledge
or assign any Stock Option, and all Stock Options shall be exercisable, during
the Participant's lifetime, only by the Participant; PROVIDED, HOWEVER, that the
Participant shall be permitted to transfer one or more Non-Qualified Stock
Options to a trust controlled by the Participant during the Participant's
lifetime for estate planning purposes.
(7) TERMINATION OF EMPLOYMENT OR SERVICE. If a Participant's employment with
or service as a director, consultant or advisor to the Company or to any Parent
or Subsidiary terminates by reason of his or her death, Disability or for any
other reason, the Stock Option may thereafter be exercised to the extent
provided in the agreement evidencing such Stock Option, or as otherwise
determined by the Administrator.
(8) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent that the
aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of shares of Stock with respect to which Incentive Stock
Options granted to a Participant under this Plan and all other option plans of
the Company or of any Parent or Subsidiary become exercisable for the first time
by the Participant during any calendar year exceeds $100,000 (as determined in
accordance with Section 422(d) of the Code), the portion of such Incentive Stock
Options in excess of $100,000 shall be treated as Non-Qualified Stock Options.
(9) AUTOMATIC GRANTS OF STOCK OPTIONS TO NON-EMPLOYEE DIRECTORS. The Company
shall grant Non-Qualified Stock Options to Non-Employee Directors pursuant to
this subsection (9), which grants shall be automatic and nondiscretionary and
otherwise subject to the terms and conditions set forth in this subsection
(9) and the terms of the Plan ("Automatic Non-Employee Director Options"). Each
Non-Employee Director shall be automatically granted a Non-Qualified Stock
Option to purchase 15,000 shares of Stock (an "Initial Option"), and thereafter
shall be automatically granted a Non-Qualified Stock Option to purchase 5,000
shares of Stock (the "Annual Options") on the date immediately following the
Company's annual meeting of stockholders; PROVIDED, HOWEVER, that he or she
is then a director of the Company and, PROVIDED, FURTHER, that as of such date,
such director shall have served on the Board for at least the preceding six
(6) months.
The term of each Automatic Non-Employee Director Option shall be five
(5) years, and the option price per share of Stock purchasable under an
Automatic Non-Employee Director Option shall be no less than 100% of the Fair
Market Value of the Stock on the date of grant, PROVIDED, HOWEVER, in no event
shall the option price per share of Stock purchasable under an Automatic
Non-Employee Director Option be less than the par value (if any) of the Stock.
Each Automatic Non-Employee Director Option shall be fully vested and
immediately exercisable as of the date of grant.
In the event that the number of shares of Stock available for grant under
the Plan is not sufficient to accommodate the Automatic Non-Employee Director
Options, then the remaining shares of Stock available for Automatic Non-Employee
Director Options shall be granted to Non-Employee Directors on a pro-rata basis.
No further grants shall be made until such time, if any, as additional shares of
Stock become available for grant under the Plan through action of the Board
and/or the stockholders of the Company to increase the number of shares of Stock
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that may be issued under the Plan or through cancellation or expiration of
awards previously granted hereunder.
SECTION 6. STOCK APPRECIATION RIGHTS AND LIMITED STOCK APPRECIATION RIGHTS.
Stock Appreciation Rights and Limited Stock Appreciation Rights may be
granted either alone ("Free Standing Rights") or in conjunction with all or part
of any Stock Option granted under the Plan ("Related Rights"). In the case of a
Non-Qualified Stock Option, Related Rights may be granted either at or after the
time of the grant of such Stock Option. In the case of an Incentive Stock
Option, Related Rights may be granted only at the time of the grant of the
Incentive Stock Option. The Administrator shall determine the Eligible
Recipients to whom, and the time or times at which, grants of Stock Appreciation
Rights or Limited Stock Appreciation Rights shall be made; the number of shares
of Stock to be awarded, the exercise price (or, in the case of a Limited Stock
Appreciation Right, the "Change in Control" price), and all other conditions of
Stock Appreciation Rights and Limited Stock Appreciation Rights. The provisions
of Stock Appreciation Rights and Limited Stock Appreciation Rights need not be
the same with respect to each Participant.
Stock Appreciation Rights and Limited Stock Appreciation Rights granted
under the Plan shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Administrator shall deem desirable:
(1) AWARDS. The prospective recipient of a Stock Appreciation Right or
Limited Stock Appreciation Right shall not have any rights with respect to such
award, unless and until such recipient has executed an agreement evidencing the
award (a "Stock Appreciation Right Agreement" or "Limited Stock Appreciation
Right Agreement," as appropriate) and delivered a fully executed copy thereof to
the Company, within a period of sixty days (or such other period as the
Administrator may specify) after the award date. Participants who are granted
Stock Appreciation Rights or Limited Stock Appreciation Rights shall have no
rights as stockholders of the Company with respect to the grant or exercise of
such rights.
(2) EXERCISABILITY.
(a) Stock Appreciation Rights that are Free Standing Rights ("Free
Standing Stock Appreciation Rights") shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Administrator at or after grant; PROVIDED, HOWEVER, that no Free Standing
Stock Appreciation Right shall be exercisable during the first six months of
its term, except that this additional limitation shall not apply in the
event of a Participant's death or Disability prior to the expiration of such
six-month period.
(b) Stock Appreciation Rights that are Related Rights ("Related Stock
Appreciation Rights") shall be exercisable only at such time or times and to
the extent that the Stock Options to which they relate shall be exercisable
in accordance with the provisions of Section 5 above and this Section 6 of
the Plan; PROVIDED, HOWEVER, that a Related Stock Appreciation Right granted
in connection with an Incentive Stock Option shall be exercisable only if
and when the Fair Market Value of the Stock subject to the Incentive Stock
Option exceeds the option price of such Stock Option; PROVIDED, FURTHER,
that no Related Stock Appreciation Right shall be exercisable during the
first six months of its term, except that this additional limitation shall
not apply in the event of a Participant's death or Disability prior to the
expiration of such six-month period.
(c) Limited Stock Appreciation Rights shall only be exercised within the
30-day period following a "Change in Control" (as defined by the
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Administrator in the Limited Stock Appreciation Right Agreement evidencing
such right) and, with respect to Limited Stock Appreciation Rights that are
Related Rights ("Related Limited Stock Appreciation Rights"), only to the
extent that the Stock Options to which they relate shall be exercisable in
accordance with the provisions of Section 5 above and this Section 6 of the
Plan.
(3) PAYMENT UPON EXERCISE.
(a) Upon the exercise of a Free Standing Stock Appreciation Right, the
Participant shall be entitled to receive up to, but not more than, an amount
in cash or that number of shares of Stock (or any combination of cash and
shares of Stock) equal in value to the excess of the Fair Market Value of
one share of Stock as of the date of exercise over the price per share
specified in the Free Standing Stock Appreciation Right (which price shall
be no less than 100% of the Fair Market Value of the Stock on the date of
grant) multiplied by the number of shares of Stock in respect of which the
Free Standing Stock Appreciation Right is being exercised, with the
Administrator having the right to determine the form of payment.
(b) A Related Right may be exercised by a Participant by surrendering
the applicable portion of the related Stock Option. Upon such exercise and
surrender, the Participant shall be entitled to receive up to, but not more
than, an amount in cash or that number of shares of Stock (or any
combination of cash and shares of Stock) equal in value to the excess of the
Fair Market Value of one share of Stock as of the date of exercise over the
option price per share specified in the related Stock Option multiplied by
the number of shares of Stock in respect of which the Related Stock
Appreciation Right is being exercised, with the Administrator having the
right to determine the form of payment. Stock Options which have been so
surrendered, in whole or in part, shall no longer be exercisable to the
extent the Related Rights have been so exercised.
(c) Upon the exercise of a Limited Stock Appreciation Right, the
Participant shall be entitled to receive an amount in cash equal in value to
the excess of the "Change in Control Price" (as defined in the agreement
evidencing such Limited Stock Appreciation Right) of one share of Stock
as of the date of exercise over (A) the option price per share specified
in the related Stock Option, or (B) in the case of a Limited Stock
Appreciation Right which is a Free Standing Stock Appreciation Right, the
price per share specified in the Free Standing Stock Appreciation Right,
such excess to be multiplied by the number of shares in respect of which
the Limited Stock Appreciation Right shall have been exercised.
(4) NON-TRANSFERABILITY.
(a) Free Standing Stock Appreciation Rights shall be transferable only
when and to the extent that a Stock Option would be transferable under
paragraph (6) of Section 5 of the Plan.
(b) Related Stock Appreciation Rights shall be transferable only when
and to the extent that the underlying Stock Option would be transferable
under paragraph (6) of Section 5 of the Plan.
(c) Limited Stock Appreciation Rights shall be transferable only when
and to the extent that a Stock Option would be transferable under
paragraph (6) of Section 5 of the Plan.
(5) TERMINATION OF EMPLOYMENT OR SERVICE.
(a) In the event of the termination of employment or service of a
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Participant who has been granted one or more Free Standing Stock
Appreciation Rights, such rights shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the
Administrator at or after grant.
(b) In the event of the termination of employment or service of a
Participant who has been granted one or more Related Stock Appreciation
Rights, such rights shall be exercisable at such time or times and subject
to such terms and conditions as set forth in the related Stock Options.
(c) In the event of the termination of employment or service of a
Participant who has been granted one or more Limited Stock Appreciation
Rights, such rights shall be exercisable at such time or times and subject
to such terms and conditions as shall be determined by the Administrator at
or after grant.
(6) TERM.
(a) The term of each Free Standing Stock Appreciation Right shall be
fixed by the Administrator, but no Free Standing Stock Appreciation Right
shall be exercisable more than ten years after the date such right is
granted.
(b) The term of each Related Stock Appreciation Right shall be the term
of the Stock Option to which it relates, but no Related Stock Appreciation
Right shall be exercisable more than ten years after the date such right is
granted.
(c) The term of each Limited Stock Appreciation Right shall be fixed by
the Administrator, but no Limited Stock Appreciation Right shall be
exercisable more than ten years after the date such right is granted.
SECTION 7. RESTRICTED STOCK, DEFERRED STOCK AND PERFORMANCE SHARES.
Awards of Restricted Stock, Deferred Stock or Performance Shares may be
issued either alone or in addition to other awards granted under the Plan. The
Administrator shall determine the Eligible Recipients to whom, and the time or
times at which, awards of Restricted Stock, Deferred Stock or Performance Shares
shall be made; the number of shares to be awarded; the price, if any, to be paid
by the Participant for the acquisition of Restricted Stock, Deferred Stock or
Performance Shares; the Restricted Period (as defined in paragraph (2) of this
Section 7) applicable to awards of Restricted Stock or Deferred Stock; the
performance objectives applicable to awards of Deferred Stock or Performance
Shares; and all other conditions of the awards of Restricted Stock, Deferred
Stock and Performance Shares. Subject to the requirements of Section 162(m) of
the Code, as applicable, the Administrator may also condition the grant of the
award of Restricted Stock, Deferred Stock or Performance Shares upon the
exercise of Stock Options, or upon such other criteria as the Administrator may
determine, in its sole discretion. The provisions of the awards of Restricted
Stock, Deferred Stock or Performance Shares need not be the same with respect to
each Participant. In the sole discretion of the Administrator, loans may be made
to Participants in connection with the purchase of Restricted Stock under
substantially the same terms and conditions as provided in paragraph (5) of
Section 5 of the Plan with respect to the exercise of Stock Options.
(1) AWARDS AND CERTIFICATES. The prospective recipient of awards of
Restricted Stock, Deferred Stock or Performance Shares shall not have any rights
with respect to any such award, unless and until such recipient has executed an
agreement evidencing the award (a "Restricted Stock Award Agreement," "Deferred
Stock Award Agreement" or "Performance Shares Award Agreement," as appropriate)
and delivered a fully executed copy thereof to the Company, within a period of
sixty days (or such other period as the Administrator may specify) after the
award date. Except as otherwise provided below in this Section 7(2), (i) each
Participant who is granted an award of Restricted Stock or Performance Shares
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shall be issued a stock certificate in respect of such shares of Restricted
Stock or Performance Shares; and (ii) such certificate shall be registered in
the name of the Participant, and shall bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to any such award.
The Company may require that the stock certificates evidencing Restricted
Stock or Performance Shares granted hereunder be held in the custody of the
Company until the restrictions thereon shall have lapsed, and that, as a
condition of any award of Restricted Stock or Performance Shares, the
Participant shall have delivered a stock power, endorsed in blank, relating to
the Stock covered by such award.
With respect to awards of Deferred Stock, at the expiration of the
Restricted Period, stock certificates in respect of such shares of Deferred
Stock shall be delivered to the Participant, or his legal representative, in a
number equal to the number of shares of Stock covered by the Deferred Stock
award.
(2) RESTRICTIONS AND CONDITIONS. The awards of Restricted Stock, Deferred
Stock and Performance Shares granted pursuant to this Section 7 shall be subject
to the following restrictions and conditions:
(a) Subject to the provisions of the Plan and the Restricted Stock Award
Agreement, Deferred Stock Award Agreement or Performance Shares Award
Agreement, as appropriate, governing any such award, during such period as
may be set by the Administrator commencing on the date of grant (the
"Restricted Period"), the Participant shall not be permitted to sell,
transfer, pledge or assign shares of Restricted Stock, Deferred Stock
or Performance Shares awarded under the Plan; PROVIDED, HOWEVER, that
the Administrator may, in its sole discretion, provide for the lapse of
such restrictions in installments and may accelerate or waive such
restrictions in whole or in part based on such factors and such
circumstances as the Administrator may determine, in its sole discretion,
including, but not limited to, the attainment of certain performance related
goals, the Participant's termination of employment or service as a director,
consultant or advisor to the Company or any Parent or Subsidiary, the
Participant's death or Disability or the occurrence of a "Change in Control"
as defined in the Restricted Stock Award Agreement, Deferred Stock Award
Agreement or Performance Shares Award Agreement, as appropriate, evidencing
such award.
(b) Except as provided in paragraph (3)(a) of this Section 7, the
Participant shall generally have the rights of a stockholder of the Company
with respect to Restricted Stock or Performance Shares during the Restricted
Period. The Participant shall generally not have the rights of a stockholder
with respect to Stock subject to awards of Deferred Stock during the
Restricted Period; PROVIDED, HOWEVER, that dividends declared during the
Restricted Period with respect to the number of shares of Stock covered by
Deferred Stock shall be paid to the Participant. Certificates for shares of
unrestricted Stock shall be delivered to the Participant promptly after, and
only after, the Restricted Period shall expire without forfeiture in respect
of such awards of Restricted Stock, Deferred Stock or Performance Shares
except as the Administrator, in its sole discretion, shall otherwise
determine.
(c) The rights of Participants granted awards of Restricted Stock,
Deferred Stock or Performance Shares upon termination of employment or
service as a director, consultant or advisor to the Company or to any Parent
or Subsidiary terminates for any reason during the Restricted Period shall
be set forth in the Restricted Stock Award Agreement, Deferred Stock Award
Agreement or Performance Shares Award Agreement, as appropriate, governing
such awards.
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SECTION 8. AMENDMENT AND TERMINATION.
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made that would impair the rights of a
Participant under any award theretofore granted without such Participant's
consent, or that, without the approval of the stockholders (as described below),
would:
(1) except as provided in Section 3 of the Plan, increase the total number
of shares of Stock reserved for issuance under the Plan;
(2) change the class of officers, directors, employees, consultants and
advisors eligible to participate in the Plan; or
(3) extend the maximum option period under paragraph (2) of Section 5 of the
Plan.
Notwithstanding the foregoing, stockholder approval under this Section 8
shall only be required at such time and under such circumstances as stockholder
approval would be required under Section 162(m) of the Code or other applicable
law, rule or regulation with respect to any material amendment to an employee
benefit plan of the Company.
The Administrator may amend the terms of any award theretofore granted,
prospectively or retroactively, but, subject to Section 3 of Plan, no such
amendment shall impair the rights of any Participant without his or her consent.
SECTION 9. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company.
SECTION 10. GENERAL PROVISIONS.
(1) Shares of Stock shall not be issued pursuant to the exercise of any
award granted hereunder unless the exercise of such award and the issuance and
delivery of such shares of Stock pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act and the requirements of any stock exchange upon which
the Stock may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(2) The Administrator may require each person acquiring shares of Stock
hereunder to represent to and agree with the Company in writing that such person
is acquiring the shares of Stock without a view to distribution thereof. The
certificates for such shares of Stock may include any legend which the
Administrator deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed, and any applicable Federal or state securities
law, and the Administrator may cause a legend or legends to be placed on any
such certificates to make appropriate reference to such restrictions.
(3) Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval,
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of the Plan shall
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not confer upon any Eligible Recipient any right to continued employment or
service with the Company or any Parent or Subsidiary, as the case may be, nor
shall it interfere in any way with the right of the Company or any Parent or
Subsidiary to terminate the employment or service of any of its Eligible
Recipients at any time.
(4) Each Participant shall, no later than the date as of which the value of
an award first becomes includible in the gross income of the Participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfac-tory to the Administrator regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld with respect to such
award. The obligations of the Company under the Plan shall be conditional on the
making of such payments or arrangements, and the Company shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the Participant.
(5) No member of the Board or the Administrator, nor any officer or employee
of the Company acting on behalf of the Board or the Administrator, shall be
personally liable for any action, determination, or interpretation taken or made
in good faith with respect to the Plan, and all members of the Board or the
Administrator and each and any officer or employee of the Company acting on
their behalf shall, to the extent permitted by law, be fully indemnified and
protected by the Company in respect of any such action, determination or
interpretation.
SECTION 11. STOCKHOLDER APPROVAL; EFFECTIVE DATE OF PLAN.
(1) The grant of any award hereunder shall be contingent upon stockholder
approval of the Plan being obtained within 12 months before or after the date
the Board adopts the Plan.
(2) Subject to the approval of the Plan by the stockholders of the Company
within twelve (12) months before or after the date the Plan is adopted by the
Board, the Plan shall be effective as of the first trading day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective (the "Effective Date").
SECTION 12. TERM OF PLAN.
No Stock Option, Stock Appreciation Right, Limited Stock Appreciation Right,
or awards of Restricted Stock, Deferred Stock or Performance Shares shall be
granted pursuant to the Plan on or after the tenth anniversary of the Effective
Date, but awards theretofore granted may extend beyond that date.
