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EX-99
CYBERIAN OUTPOST, INC.
AMENDED AND RESTATED*
1998 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN
1. DEFINITIONS.
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Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this Cyberian Outpost 1998 Employee,
Director and Consultant Stock Plan, have the following meanings:
Administrator means the Board of Directors, unless it has
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delegated power to act on its behalf to the Committee, in which
case the Administrator means the Committee.
Affiliate means a corporation which, for purposes of Section 424
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of the Code, is a parent or subsidiary of the Company, direct or
indirect.
Board of Directors means the Board of Directors of the Company.
------------------
Code means the United States Internal Revenue Code of 1986, as
amended.
Committee means the committee of the Board of Directors to which
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the Board of Directors has delegated power to act under or
pursuant to the provisions of the Plan.
Common Stock means shares of the Company's common stock, no par
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value per share.
Company means Cyberian Outpost Inc., a Delaware corporation.
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Disability or Disabled means permanent and total disability as
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defined in Section 22(e)(3) of the Code.
Fair Market Value of a Share of Common Stock means:
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(1) If the Common Stock is listed on a national securities
exchange or traded in the over-the-counter market and sales
prices are regularly reported for the Common Stock, the closing
or last price of the Common Stock on the Composite Tape or other
comparable reporting system for the trading day immediately
preceding the applicable date;
(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if sales
prices are not regularly reported for the Common Stock for the
trading day referred to in clause (1), and if bid and asked
prices for the Common Stock are regularly reported, the mean
between the bid and the asked price for the Common Stock at the
close of trading in the over-the-counter market for the trading
day on which Common Stock was traded immediately preceding the
applicable date; and
(3) If the Common Stock is neither listed on a national
securities exchange nor traded in the over-the-counter market,
such value as the Administrator, in good faith, shall determine.
ISO means an option meant to qualify as an incentive stock option
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under Section 422 of the Code.
________________________________
*Amended and Restated as of July 26, 2000.
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Key Employee means an employee of the Company or of an Affiliate
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(including, without limitation, an employee who is also serving
as an officer or director of the Company or of an Affiliate),
designated by the Administrator to be eligible to be granted one
or more Stock Rights under the Plan.
Non-Qualified Option means an option which is not intended to
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qualify as an ISO.
Option means an ISO or Non-Qualified Option granted under the
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Plan.
Option Agreement means an agreement between the Company and a
----------------
Participant delivered pursuant to the Plan, in such form as the
Administrator shall approve.
Participant means a Key Employee, director or consultant to whom
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one or more Stock Rights are granted under the Plan. As used
herein, "Participant" shall include "Participant's Survivors"
where the context requires.
Plan means this Amended and Restated Cyberian Outpost 1998
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Employee, Director and Consultant Stock Plan.
Shares means shares of the Common Stock as to which Stock Rights
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have been or may be granted under the Plan or any shares of
capital stock into which the Shares are changed or for which they
are exchanged within the provisions of Paragraph 3 of the Plan.
The Shares issued under the Plan may be authorized and unissued
shares or shares held by the Company in its treasury, or both.
Stock Grant means a grant by the Company of Shares under the
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Plan.
Stock Grant Agreement means an agreement between the Company and
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a Participant delivered pursuant to the Plan, in such form as the
Administrator shall approve.
Stock Right means a right to Shares of the Company granted
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pursuant to the Plan -- an ISO, a Non-Qualified Option or a Stock
Grant.
Survivors means a deceased Participant's legal representatives
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and/or any person or persons who acquired the Participant's
rights to a Stock Right by will or by the laws of descent and
distribution.
2. PURPOSES OF THE PLAN.
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The Plan is intended to encourage ownership of Shares by Key Employees
and directors of and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the success of the
Company or of an Affiliate. The Plan provides for the granting of ISOs,
Non-Qualified Options and Stock Grants.
3. SHARES SUBJECT TO THE PLAN.
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The number of Shares which may be issued from time to time pursuant to
this Plan shall be 6,086,000 shares of Common Stock or the equivalent of such
number of Shares after the Administrator, in its sole discretion, has
interpreted the effect of any stock split, stock dividend, combination,
recapitalization or similar transaction in accordance with Paragraph 23 of the
Plan.
If an Option ceases to be "outstanding", in whole or in part, or if the
Company shall reacquire any Shares issued pursuant to a Stock Grant, the Shares
which were subject to such Option and any Shares so reacquired by the Company
shall be available for the granting of other Stock Rights under the Plan. Any
Option shall be treated as "outstanding" until such Option is exercised in full,
or
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terminates or expires under the provisions of the Plan, or by agreement of the
parties to the pertinent Option Agreement.
4. ADMINISTRATION OF THE PLAN.
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The Administrator of the Plan will be the Board of Directors, except to
the extent the Board of Directors delegates its authority to the Committee, in
which case the Committee shall be the Administrator. Subject to the provisions
of the Plan, the Administrator is authorized to:
a. Interpret the provisions of the Plan or of any Option or Stock
Grant and to make all rules and determinations which it deems
necessary or advisable for the administration of the Plan;
b. Determine which employees of the Company or of an Affiliate shall
be designated as Key Employees and which of the Key Employees,
directors and consultants shall be granted Stock Rights;
c. Determine the number of Shares for which a Stock Right or Stock
Rights shall be granted, provided, however, that in no event
shall Stock Rights with respect to more than 3,000,000 shares be
granted to any Participant in any fiscal year; and
d. Specify the terms and conditions upon which a Stock Right or
Stock Rights may be granted;
provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Section 422 of the Code of those Options which are designated as
ISOs. Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Stock Right granted under
it shall be final, unless otherwise determined by the Board of Directors, if the
Administrator is the Committee.
5. ELIGIBILITY FOR PARTICIPATION.
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The Administrator will, in its sole discretion, name the Participants in
the Plan, provided, however, that each Participant must be a Key Employee,
director or consultant of the Company or of an Affiliate at the time a Stock
Right is granted. Notwithstanding the foregoing, the Administrator may authorize
the grant of a Stock Right to a person not then an employee, director or
consultant of the Company or of an Affiliate; provided, however, that the actual
grant of such Stock Right shall be conditioned upon such person becoming
eligible to become a Participant at or prior to the time of the delivery of the
Agreement evidencing such Stock Right. ISOs may be granted only to Key
Employees. Non-Qualified Options and Stock Grants may be granted to any Key
Employee, director or consultant of the Company or an Affiliate. The granting of
any Stock Right to any individual shall neither entitle that individual to, nor
disqualify him or her from, participation in any other grant of Stock Rights.
6. TERMS AND CONDITIONS OF OPTIONS.
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Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Administrator may provide that Options be
granted subject to such terms and conditions, consistent with the terms and
conditions specifically required under this Plan, as the Administrator may deem
appropriate including, without limitation, subsequent approval by the
shareholders of the Company of this Plan or any amendments thereto.
A. Non-Qualified Options: Each Option intended to be a Non-Qualified
---------------------
Option shall be subject to the terms and conditions which the
Administrator determines to be appropriate and in the best
interest of
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the Company, subject to the following minimum standards for any
such Non-Qualified Option:
a. Option Price: Each Option Agreement shall state the option
price (per share) of the Shares covered by each Option,
which option price shall be determined by the
Administrator but shall not be less than the par value per
share of Common Stock.
b. Each Option Agreement shall state the number of Shares to
which it pertains;
c. Each Option Agreement shall state the date or dates on
which it first is exercisable and the date after which it
may no longer be exercised, and may provide that the
Option rights accrue or become exercisable in installments
over a period of months or years, or upon the occurrence
of certain conditions or the attainment of stated goals or
events; and
d. Exercise of any Option may be conditioned upon the
Participant's execution of a Share purchase agreement in
form satisfactory to the Administrator providing for
certain protections for the Company and its other
shareholders, including requirements that:
i. The Participant's or the Participant's Survivors'
right to sell or transfer the Shares may be
restricted; and
ii. The Participant or the Participant's Survivors may
be required to execute letters of investment intent
and must also acknowledge that the Shares will bear
legends noting any applicable restrictions.
B. ISOs: Each Option intended to be an ISO shall be issued only to a
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Key Employee and be subject to at least the following terms and
conditions, with such additional restrictions or changes as the
Administrator determines are appropriate but not in conflict with
Section 422 of the Code and relevant regulations and rulings of
the Internal Revenue Service:
a. Minimum standards: The ISO shall meet the minimum
standards required of Non-Qualified Options, as described
in Paragraph 6(A) above, except clause (a) thereunder.
b. Option Price: Immediately before the Option is granted,
if the Participant owns, directly or by reason of the
applicable attribution rules in Section 424(d) of the
Code:
i. Ten percent (10%) or less of the total combined
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voting power of all classes of stock of the Company
or an Affiliate, the Option price per share of the
Shares covered by each Option shall not be less
than one hundred percent (100%) of the Fair Market
Value per share of the Shares on the date of the
grant of the Option.
ii. More than ten percent (10%) of the total combined
voting power of all classes of stock of the Company
or an Affiliate, the Option price per share of the
Shares covered by each Option shall not be less
than one hundred ten percent (110%) of the said
Fair Market Value on the date of grant.
c. Term of Option: For Participants who own
i. Ten percent (10%) or less of the total combined
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voting power of all classes of stock of the Company
or an Affiliate, each Option shall terminate not
more than ten
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(10) years from the date of the grant or at such
earlier time as the Option Agreement may provide.
ii. More than ten percent (10%) of the total combined
voting power of all classes of stock of the Company
or an Affiliate, each Option shall terminate not
more than five (5) years from the date of the grant
or at such earlier time as the Option Agreement may
provide.
d. Limitation on Yearly Exercise: The Option Agreements shall
restrict the amount of Options which may be exercisable in
any calendar year (under this or any other ISO plan of the
Company or an Affiliate) so that the aggregate Fair Market
Value (determined at the time each ISO is granted) of the
stock with respect to which ISOs are exercisable for the
first time by the Participant in any calendar year does
not exceed one hundred thousand dollars ($100,000),
provided that this subparagraph (d) shall have no force or
effect if its inclusion in the Plan is not necessary for
Options issued as ISOs to qualify as ISOs pursuant to
Section 422(d) of the Code.
7. TERMS AND CONDITIONS OF STOCK GRANTS.
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Each offer of a Stock Grant to a Participant shall state the date prior
to which the Stock Grant must be accepted by the Participant, and the principal
terms of each Stock Grant shall be set forth in a Stock Grant Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Stock Grant Agreement shall be in a form
approved by the Administrator and shall contain terms and conditions which the
Administrator determines to be appropriate and in the best interest of the
Company, subject to the following minimum standards:
(a) Each Stock Grant Agreement shall state the purchase price (per
share), if any, of the Shares covered by each Stock Grant, which
purchase price shall be determined by the Administrator but shall
not be less than the minimum consideration required by the
Delaware Law on the date of the grant of the Stock Grant;
(b) Each Stock Grant Agreement shall state the number of Shares to
which the Stock Grant pertains; and
(c) Each Stock Grant Agreement shall include the terms of any right
of the Company to reacquire the Shares subject to the Stock
Grant, including the time and events upon which such rights shall
accrue and the purchase price therefore, if any.
8. EXERCISE OF OPTIONS AND ISSUE OF SHARES.
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An Option (or any part or installment thereof) shall be exercised by
giving written notice to the Company at its principal executive office address,
together with provision for payment of the full purchase price in accordance
with this Paragraph for the Shares as to which the Option is being exercised,
and upon compliance with any other condition(s) set forth in the Option
Agreement. Such written notice shall be signed by the person exercising the
Option, shall state the number of Shares with respect to which the Option is
being exercised and shall contain any representation required by the Plan or the
Option Agreement. Payment of the purchase price for the Shares as to which such
Option is being exercised shall be made (a) in United States dollars in cash or
by check, or (b) at the discretion of the Administrator, through delivery of
shares of Common Stock having a Fair Market Value equal as of the date of the
exercise to the cash exercise price of the Option, or (c) at the discretion of
the Administrator, by having the Company retain from the shares otherwise
issuable upon exercise of the Option, a number of shares having a Fair Market
Value equal as of the date of exercise to the exercise price of the Option, or
(d) at the discretion of the Administrator, by delivery of the grantee's
personal recourse note bearing interest payable not less than annually at
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no less than 100% of the applicable Federal rate, as defined in Section 1274(d)
of the Code, or (e) at the discretion of the Administrator, in accordance with a
cashless exercise program established with a securities brokerage firm, and
approved by the Administrator, or (f) at the discretion of the Administrator, by
any combination of (a), (b), (c), (d) and (e) above. Notwithstanding the
foregoing, the Administrator shall accept only such payment on exercise of an
ISO as is permitted by Section 422 of the Code.
The Company shall then reasonably promptly deliver the Shares as to
which such Option was exercised to the Participant (or to the Participant's
Survivors, as the case may be). In determining what constitutes "reasonably
promptly," it is expressly understood that the issuance and delivery of the
Shares may be delayed by the Company in order to comply with any law or
regulation (including, without limitation, state securities or "blue sky" laws)
which requires the Company to take any action with respect to the Shares prior
to their issuance. The Shares shall, upon delivery, be evidenced by an
appropriate certificate or certificates for fully paid, non-assessable Shares.
The Administrator shall have the right to accelerate the date of
exercise of any installment of any Option; provided that the Administrator shall
not accelerate the exercise date of any installment of any Option granted to any
Key Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 26) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in Paragraph
6.B.d.
The Administrator may, in its discretion, amend any term or condition of
an outstanding Option provided (i) such term or condition as amended is
permitted by the Plan, (ii) any such amendment shall be made only with the
consent of the Participant to whom the Option was granted, or in the event of
the death of the Participant, the Participant's Survivors, if the amendment is
adverse to the Participant, and (iii) any such amendment of any ISO shall be
made only after the Administrator, after consulting the counsel for the Company,
determines whether such amendment would constitute a "modification" of any
Option which is an ISO (as that term is defined in Section 424(h) of the Code)
or would cause any adverse tax consequences for the holder of such ISO.
9. ACCEPTANCE OF STOCK GRANT AND ISSUE OF SHARES.
---------------------------------------------
A Stock Grant (or any part or installment thereof) shall be accepted by
executing the Stock Grant Agreement and delivering it to the Company at its
principal office address, together with provision for payment of the full
purchase price, if any, in accordance with this Paragraph for the Shares as to
which such Stock Grant is being accepted, and upon compliance with any other
conditions set forth in the Stock Grant Agreement. Payment of the purchase price
for the Shares as to which such Stock Grant is being accepted shall be made (a)
in United States dollars in cash or by check, or (b) at the discretion of the
Administrator, through delivery of shares of Common Stock having a fair market
value equal as of the date of acceptance of the Stock Grant to the purchase
price of the Stock Grant determined in good faith by the Administrator, or (c)
at the discretion of the Administrator, by delivery of the grantee's personal
recourse note bearing interest payable not less than annually at no less than
100% of the applicable Federal rate, as defined in Section 1274(d) of the Code,
or (d) at the discretion of the Administrator, by any combination of (a), (b)
and (c) above.
The Company shall then reasonably promptly deliver the Shares as to
which such Stock Grant was accepted to the Participant (or to the Participant's
Survivors, as the case may be), subject to any escrow provision set forth in the
Stock Grant Agreement. In determining what constitutes "reasonably promptly," it
is expressly understood that the issuance and delivery of the Shares may be
delayed by the Company in order to comply with any law or regulation (including,
without limitation, state securities or "blue sky" laws) which requires the
Company to take any action with respect to the Shares prior to their issuance.
The Administrator may, in its discretion, amend any term or condition of
an outstanding Stock Grant or Stock Grant Agreement provided (i) such term or
condition as amended is permitted by the Plan, and (ii) any such amendment shall
be made only
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with the consent of the Participant to whom the Stock Grant was made, if the
amendment is adverse to the Participant.
10. RIGHTS AS A SHAREHOLDER.
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No Participant to whom a Stock Right has been granted shall have rights
as a shareholder with respect to any Shares covered by such Stock Right, except
after due exercise of the Option or acceptance of the Stock Grant and tender of
the full purchase price, if any, for the Shares being purchased pursuant to such
exercise or acceptance and registration of the Shares in the Company's share
register in the name of the Participant.
11. ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.
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By its terms, a Stock Right granted to a Participant shall not be
transferable by the Participant other than (i) by will or by the laws of descent
and distribution, or (ii) as otherwise determined by the Administrator and set
forth in the applicable Option Agreement or Stock Grant Agreement. The
designation of a beneficiary of a Stock Right by a Participant shall not be
deemed a transfer prohibited by this Paragraph. Except as provided above, a
Stock Right shall only be exercisable or may only be accepted, during the
Participant's lifetime, by such Participant (or by his or her legal
representative) and shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Stock Right or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon a Stock Right, shall be null and void.
12. EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN FOR "CAUSE" OR
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DEATH OR DISABILITY.
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Except as otherwise provided in the pertinent Option Agreement in the
event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised an Option, the following rules apply:
a. A Participant who ceases to be an employee, director or
consultant of the Company or of an Affiliate (for any reason
other than termination for "cause", Disability, or death for
which events there are special rules in Paragraphs 13, 14, and
15, respectively), may exercise any Option granted to him or her
to the extent that the Option is exercisable on the date of such
termination of service, but only within such term as the
Administrator has designated in the pertinent Option Agreement.
b. Except as provided in Subparagraph (c) below, or Paragraph 14 or
15, in no event may an Option Agreement provide, if an Option is
intended to be an ISO, that the time for exercise be later than
three (3) months after the Participant's termination of
employment.
c. The provisions of this Paragraph, and not the provisions of
Paragraph 14 or 15, shall apply to a Participant who subsequently
becomes Disabled or dies after the termination of employment,
director status or consultancy, provided, however, in the case of
a Participant's Disability or death within three (3) months after
the termination of employment, director status or consultancy,
the Participant or the Participant's Survivors may exercise the
Option within one (1) year after the date of the Participant's
termination of employment, but in no event after the date of
expiration of the term of the Option.
d. Notwithstanding anything herein to the contrary, if subsequent to
a Participant's termination of employment, termination of
director status or termination of consultancy, but prior to the
exercise of an
<PAGE>
Option, the Board of Directors determines that, either prior or
subsequent to the Participant's termination, the Participant
engaged in conduct which would constitute "cause", then such
Participant shall forthwith cease to have any right to exercise
any Option.
e. A Participant to whom an Option has been granted under the Plan
who is absent from work with the Company or with an Affiliate
because of temporary disability (any disability other than a
permanent and total Disability as defined in Paragraph 1 hereof),
or who is on leave of absence for any purpose, shall not, during
the period of any such absence, be deemed, by virtue of such
absence alone, to have terminated such Participant's employment,
director status or consultancy with the Company or with an
Affiliate, except as the Administrator may otherwise expressly
provide.
f. Except as required by law or as set forth in the pertinent Option
Agreement, Options granted under the Plan shall not be affected
by any change of a Participant's status within or among the
Company and any Affiliates, so long as the Participant continues
to be an employee, director or consultant of the Company or any
Affiliate.
13. EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR "CAUSE".
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Except as otherwise provided in the pertinent Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated for
"cause" prior to the time that all his or her outstanding Options have been
exercised:
a. All outstanding and unexercised Options as of the time the
Participant is notified his or her service is terminated for
"cause" will immediately be forfeited.
b. For purposes of this Plan, "cause" shall include (and is not
limited to) dishonesty with respect to the Company or any
Affiliate, insubordination, substantial malfeasance or
non-feasance of duty, unauthorized disclosure of confidential
information, and conduct substantially prejudicial to the
business of the Company or any Affiliate. The determination of
the Administrator as to the existence of "cause" will be
conclusive on the Participant and the Company.
c. "Cause" is not limited to events which have occurred prior to a
Participant's termination of service, nor is it necessary that
the Administrator's finding of "cause" occur prior to
termination. If the Administrator determines, subsequent to a
Participant's termination of service but prior to the exercise of
an Option, that either prior or subsequent to the Participant's
termination the Participant engaged in conduct which would
constitute "cause", then the right to exercise any Option is
forfeited.
d. Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting definition
of "cause" for termination and which is in effect at the time of
such termination, shall supersede the definition in this Plan
with respect to such Participant.
14. EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.
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Except as otherwise provided in the pertinent Option Agreement, a
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:
a. To the extent exercisable but not exercised on the date of
Disability; and
<PAGE>
b. In the event rights to exercise the Option accrue periodically,
to the extent of a pro rata portion of any additional rights as
would have accrued had the Participant not become Disabled prior
to the end of the accrual period which next ends following the
date of Disability. The proration shall be based upon the number
of days of such accrual period prior to the date of Disability.
A Disabled Participant may exercise such rights only within a period of
not more than one (1) year after the date of the Participant's termination of
employment, directorship or consultancy, as the case may be, notwithstanding
that the Participant might have been able to exercise the Option as to some or
all of the Shares on a later date if the Participant had not become disabled and
had continued to be an employee, director or consultant or, if earlier, within
the originally prescribed term of the Option.
The Administrator shall make the determination both of whether
Disability has occurred and the date of its occurrence (unless a procedure for
such determination is set forth in another agreement between the Company and
such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.
15. EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
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Except as otherwise provided in the pertinent Option Agreement, in the
event of the death of a Participant while the Participant is an employee,
director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant's Survivors:
a. To the extent exercisable but not exercised on the date of death;
and
b. In the event rights to exercise the Option accrue periodically,
to the extent of a pro rata portion of any additional rights
which would have accrued had the Participant not died prior to
the end of the accrual period which next ends following the date
of death. The proration shall be based upon the number of days of
such accrual period prior to the Participant's death.
If the Participant's Survivors wish to exercise the Option, they must
take all necessary steps to exercise the Option within one (1) year after the
date of death of such Participant, notwithstanding that the decedent might have
been able to exercise the Option as to some or all of the Shares on a later date
if he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.
16. EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS.
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In the event of a termination of service (whether as an employee,
director or consultant) with the Company or an Affiliate for any reason before
the Participant has accepted a Stock Grant, such offer shall terminate.
For purposes of this Paragraph 16 and Paragraph 17 below, a Participant
to whom a Stock Grant has been offered under the Plan who is absent from work
with the Company or with an Affiliate because of temporary disability (any
disability other than a permanent and total Disability as defined in Paragraph 1
hereof), or who is on leave of absence for any purpose, shall not, during the
period of any such absence, be deemed, by virtue of such absence alone, to have
terminated such Participant's employment, director status or consultancy with
the Company or with an Affiliate, except as the Administrator may otherwise
expressly provide.
In addition, for purposes of this Paragraph 16 and Paragraph 17 below,
any change of employment or other service within or among the Company and any
Affiliates shall not be treated as a termination of employment, director status
or consultancy so long as the Participant continues to be an employee, director
or consultant of the Company or any Affiliate.
<PAGE>
17. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN FOR "CAUSE"
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OR DEATH OR DISABILITY.
----------------------
Except as otherwise provided in the pertinent Stock Grant Agreement, in
the event of a termination of service (whether as an employee, director or
consultant), other than termination for "cause," Disability, or death for which
events there are special rules in Paragraphs 18, 19, and 20, respectively,
before all Company rights of repurchase shall have lapsed, then the Company
shall have the right to repurchase that number of Shares subject to a Stock
Grant as to which the Company's repurchase rights have not lapsed.
18. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR "CAUSE".
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Except as otherwise provided in the pertinent Stock Grant Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated for
"cause":
a. All Shares subject to any Stock Grant shall be immediately
subject to repurchase by the Company at the purchase price, if
any, thereof.
b. For purposes of this Plan, "cause" shall include (and is not
limited to) dishonesty with respect to the employer,
insubordination, substantial malfeasance or non-feasance of duty,
unauthorized disclosure of confidential information, and conduct
substantially prejudicial to the business of the Company or any
Affiliate. The determination of the Administrator as to the
existence of "cause" will be conclusive on the Participant and
the Company.
c. "Cause" is not limited to events which have occurred prior to a
Participant's termination of service, nor is it necessary that
the Administrator's finding of "cause" occur prior to
termination. If the Administrator determines, subsequent to a
Participant's termination of service, that either prior or
subsequent to the Participant's termination the Participant
engaged in conduct which would constitute "cause," then the
Company's right to repurchase all of such Participant's Shares
shall apply.
d. Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting definition
of "cause" for termination and which is in effect at the time of
such termination, shall supersede the definition in this Plan
with respect to such Participant.
19. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.
---------------------------------------------------------------
Except as otherwise provided in the pertinent Stock Grant Agreement, the
following rules apply if a Participant ceases to be an employee, director or
consultant of the Company or of an Affiliate by reason of Disability: to the
extent the Company's rights of repurchase have not lapsed on the date of
Disability, they shall be exercisable; provided, however, that in the event such
rights of repurchase lapse periodically, such rights shall lapse to the extent
of a pro rata portion of the Shares subject to such Stock Grant as would have
lapsed had the Participant not become Disabled prior to the end of the vesting
period which next ends following the date of Disability. The proration shall be
based upon the number of days of such vesting period prior to the date of
Disability.
The Administrator shall make the determination both of whether
Disability has occurred and the date of its occurrence (unless a procedure for
such determination is set forth in another agreement between the Company and
such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.
<PAGE>
20. EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR
--------------------------------------------------------------
CONSULTANT.
----------
Except as otherwise provided in the pertinent Stock Grant Agreement, the
following rules apply in the event of the death of a Participant while the
Participant is an employee, director or consultant of the Company or of an
Affiliate: to the extent the Company's rights of repurchase have not lapsed on
the date of death, they shall be exercisable; provided, however, that in the
event such rights of repurchase lapse periodically, such rights shall lapse to
the extent of a pro rata portion of the Shares subject to such Stock Grant as
would have lapsed had the Participant not died prior to the end of the vesting
period which next ends following the date of death. The proration shall be based
upon the number of days of such vesting period prior to the Participant's death.
21. PURCHASE FOR INVESTMENT.
-----------------------
Unless the offering and sale of the Shares to be issued upon the
particular exercise or acceptance of a Stock Right shall have been effectively
registered under the Securities Act of 1933, as now in force or hereafter
amended (the "1933 Act"), the Company shall be under no obligation to issue the
Shares covered by such exercise unless and until the following conditions have
been fulfilled:
a. The person(s) who exercise(s) or accept(s) such Stock Right shall
warrant to the Company, prior to the receipt of such Shares, that
such person(s) are acquiring such Shares for their own respective
accounts, for investment, and not with a view to, or for sale in
connection with, the distribution of any such Shares, in which
event the person(s) acquiring such Shares shall be bound by the
provisions of the following legend which shall be endorsed upon
the certificate(s) evidencing their Shares issued pursuant to
such exercise or such grant:
"The shares represented by this certificate have been
taken for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, unless (1)
either (a) a Registration Statement with respect to such
shares shall be effective under the Securities Act of
1933, as amended, or (b) the Company shall have received
an opinion of counsel satisfactory to it that an exemption
from registration under such Act is then available, and
(2) there shall have been compliance with all applicable
state securities laws."
b. At the discretion of the Administrator, the Company shall have
received an opinion of its counsel that the Shares may be issued
upon such particular exercise or acceptance in compliance with
the 1933 Act without registration thereunder.
22. DISSOLUTION OR LIQUIDATION OF THE COMPANY.
-----------------------------------------
Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised and all
Stock Grants which have not been accepted will terminate and become null and
void; provided, however, that if the rights of a Participant or a Participant's
Survivors have not otherwise terminated and expired, the Participant or the
Participant's Survivors will have the right immediately prior to such
dissolution or liquidation to exercise or accept any Stock Right to the extent
that the Stock Right is exercisable or subject to acceptance as of the date
immediately prior to such dissolution or liquidation.
23. ADJUSTMENTS.
-----------
Upon the occurrence of any of the following events, a Participant's
rights with respect to any Stock Right granted to him or her hereunder shall be
adjusted as
<PAGE>
hereinafter provided, unless otherwise specifically provided in the pertinent
Option Agreement or Stock Grant Agreement:
A. Stock Dividends and Stock Splits. If (i) the shares of Common Stock
--------------------------------
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, or (ii) additional shares or new or different shares
or other securities of the Company or other non-cash assets are distributed with
respect to such shares of Common Stock, the number of shares of Common Stock
deliverable upon the exercise or acceptance of such Stock Right may be
appropriately increased or decreased proportionately, and appropriate
adjustments may be made in the purchase price per share to reflect such events.
The number of Shares subject to the limitation in Paragraph 4(c) shall also be
proportionately adjusted upon the occurrence of such events.
B. Consolidations or Mergers. If the Company is to be consolidated with
-------------------------
or acquired by another entity in a merger, sale of all or substantially all of
the Company's assets or otherwise (an "Acquisition"), the Administrator or the
board of directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board"), shall, as to outstanding Options, either (i)
make appropriate provision for the continuation of such Options by substituting
on an equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide that all
Options must be exercised (either to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this Subparagraph) at the end of which period the Options shall
terminate; or (iii) terminate all Options in exchange for a cash payment equal
to the excess of the Fair Market Value of the Shares subject to such Options
(either to the extent then exercisable or, at the discretion of the
Administrator, all Options being made fully exercisable for purposes of this
Subparagraph) over the exercise price thereof.
With respect to outstanding Stock Grants, the Administrator or the
Successor Board, shall either (i) make appropriate provisions for the
continuation of such Stock Grants by substituting on an equitable basis for the
Shares then subject to such Stock Grants either the consideration payable with
respect to the outstanding Shares of Common Stock in connection with the
Acquisition or securities of any successor or acquiring entity; or (ii) upon
written notice to the Participants, provide that all Stock Grants must be
accepted (to the extent then subject to acceptance) within a specified number of
days of the date of such notice, at the end of which period the offer of the
Stock Grants shall terminate; or (iii) terminate all Stock Grants in exchange
for a cash payment equal to the excess of the Fair Market Value of the Shares
subject to such Stock Grants over the purchase price thereof, if any. In
addition, in the event of an Acquisition, the Administrator may waive any or all
Company repurchase rights with respect to outstanding Stock Grants.
C. Recapitalization or Reorganization. In the event of a
----------------------------------
recapitalization or reorganization of the Company (other than a transaction
described in Subparagraph B above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, a Participant upon exercising or accepting a Stock Right shall be
entitled to receive for the purchase price, if any, paid upon such exercise or
acceptance the securities which would have been received if such Stock Right had
been exercised or accepted prior to such recapitalization or reorganization.
D. Modification of ISOs. Notwithstanding the foregoing, any adjustments
--------------------
made pursuant to Subparagraph A, B or C with respect to ISOs shall be made only
after the Administrator, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Administrator
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments, unless
the holder of an ISO specifically requests in writing that such adjustment be
made and such writing indicates that the holder has full knowledge of the
consequences of such "modification" on his or her income tax treatment with
respect to the ISO.
<PAGE>
24. ISSUANCES OF SECURITIES.
-----------------------
Except as expressly provided 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 Stock Rights. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company
prior to any issuance of Shares pursuant to a Stock Right.
25. FRACTIONAL SHARES.
-----------------
No fractional shares shall be issued under the Plan and the person
exercising a Stock Right shall receive from the Company cash in lieu of such
fractional shares equal to the Fair Market Value thereof.
26. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.
------------------------------------------------------------------
The Administrator, at the written request of any Participant, may in its
discretion take such actions as may be necessary to convert such Participant's
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior to the expiration of
such ISOs, regardless of whether the Participant is an employee of the Company
or an Affiliate at the time of such conversion. Such actions may include, but
not be limited to, extending the exercise period or reducing the exercise price
of the appropriate installments of such Options. At the time of such conversion,
the Administrator (with the consent of the Participant) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to
give any Participant the right to have such Participant's ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Administrator takes appropriate action. The Administrator, with the consent of
the Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such conversion.
27. WITHHOLDING.
-----------
In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be withheld
from the Participant's salary, wages or other remuneration in connection with
the exercise or acceptance of a Stock Right or in connection with a
Disqualifying Disposition (as defined in Paragraph 28) or upon the lapsing of
any right of repurchase, the Company may withhold from the Participant's
compensation, if any, or may require that the Participant advance in cash to the
Company, or to any Affiliate of the Company which employs or employed the
Participant, the amount of such withholdings unless a different withholding
arrangement, including the use of shares of Common Stock or a promissory note,
is authorized by the Administrator (and permitted by law). For purposes hereof,
the fair market value of the shares withheld for purposes of payroll withholding
shall be determined in the manner provided in Paragraph 1 above, as of the most
recent practicable date prior to the date of exercise. If the fair market value
of the shares withheld is less than the amount of payroll withholdings required,
the Participant may be required to advance the difference in cash to the Company
or the Affiliate employer. The Administrator in its discretion may condition the
exercise of an Option for less than the then Fair Market Value on the
Participant's payment of such additional withholding.
28. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
----------------------------------------------
Each Key Employee who receives an ISO must agree to notify the Company
in writing immediately after the Key Employee makes a Disqualifying Disposition
of any
<PAGE>
shares acquired pursuant to the exercise of an ISO. A Disqualifying Disposition
is any disposition (including any sale) of such shares before the later of (a)
two years after the date the Key Employee was granted the ISO, or (b) one year
after the date the Key Employee acquired Shares by exercising the ISO. If the
Key Employee has died before such stock is sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur thereafter.
29. TERMINATION OF THE PLAN.
-----------------------
The Plan will terminate on 10 years after adoption, the date which is
ten (10) years from the earlier of the date of its adoption and the date of its
-------
approval by the shareholders of the Company. The Plan may be terminated at an
earlier date by vote of the shareholders of the Company; provided, however, that
any such earlier termination shall not affect any Option Agreements or Stock
Grant Agreements executed prior to the effective date of such termination.
30. AMENDMENT OF THE PLAN AND AGREEMENTS.
------------------------------------
The Plan may be amended by the shareholders of the Company. The Plan may
also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Stock Rights granted under
the Plan or Stock Rights to be granted under the Plan for favorable federal
income tax treatment (including deferral of taxation upon exercise) as may be
afforded incentive stock options under Section 422 of the Code, and to the
extent necessary to qualify the shares issuable upon exercise or acceptance of
any outstanding Stock Rights granted, or Stock Rights to be granted, under the
Plan for listing on any national securities exchange or quotation in any
national automated quotation system of securities dealers. Any amendment
approved by the Administrator which the Administrator determines is of a scope
that requires shareholder approval shall be subject to obtaining such
shareholder approval. Any modification or amendment of the Plan shall not,
without the consent of a Participant, adversely affect his or her rights under a
Stock Right previously granted to him or her. With the consent of the
Participant affected, the Administrator may amend outstanding Option Agreements
and Stock Grant Agreements in a manner which may be adverse to the Participant
but which is not inconsistent with the Plan. In the discretion of the
Administrator, outstanding Option Agreements and Stock Grant Agreements may be
amended by the Administrator in a manner which is not adverse to the
Participant.
31. EMPLOYMENT OR OTHER RELATIONSHIP.
--------------------------------
Nothing in this Plan or any Option Agreement or Stock Grant Agreement
shall be deemed to prevent the Company or an Affiliate from terminating the
employment, consultancy or director status of a Participant, nor to prevent a
Participant from terminating his or her own employment, consultancy or director
status or to give any Participant a right to be retained in employment or other
service by the Company or any Affiliate for any period of time.
32. GOVERNING LAW.
-------------
This Plan shall be construed and enforced in accordance with the law of
the State of Delaware.
