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Exhibit 99.1
CO SPACE, INC.
1999 STOCK INCENTIVE PLAN
(Originally adopted on June 28, 1999 and amended on
December 22, 1999, January 11, 2000 and March 30, 2000)
1. PURPOSE. This 1999 Stock Incentive Plan (the "Plan") is intended to
provide incentives: (a) to the officers and other employees of CO Space, Inc., a
Delaware corporation (the "Company"), and any present or future parent or
subsidiaries of the Company (collectively, "Related Corporations") by providing
them with opportunities to purchase stock in the Company pursuant to options
granted hereunder which qualify as "incentive stock options" under Section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code") ("ISO" or
"ISOs"); (b) to directors, officers, employees, consultants and advisors of the
Company and Related Corporations by providing them with opportunities to
purchase stock in the Company pursuant to options granted hereunder which do not
qualify as ISOs ("Non-Qualified Option" or "Non-Qualified Options"); (c) to
directors, officers, employees, consultants and advisors of the Company and
Related Corporations by providing them with opportunities to receive awards of
stock in the Company whether such stock awards are in the form of bonus shares,
deferred stock awards, or of performance share awards ("Awards"), and (d) to
directors, officers, employees, consultants and advisors of the Company and
Related Corporations by providing them with opportunities to make direct
purchases of restricted stock in the Company ("Restricted Stock Purchases").
Both ISOs and Non-Qualified Options are referred to hereafter individually as an
"Option" and collectively as "Options". Options, Awards and authorizations to
make Restricted Stock Purchases are referred to hereafter individually as a
"Stock Right" and collectively as "Stock Rights". As used herein, the terms
"parent" and "subsidiary" mean "parent corporation" and "subsidiary
corporation", respectively, as those terms are defined in Section 424 of the
Code.
2. ADMINISTRATION OF THE PLAN.
A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be administered by the
Board of Directors of the Company (the "Board"). The Board may appoint a
Compensation Committee or a Stock Incentive Plan Committee (as the case may be,
the "Committee") of two (2) or more of its members to administer the Plan and to
grant Stock Rights hereunder, provided such Committee is delegated such powers
in accordance with state law. (All references in this Plan to the "Committee"
shall mean the Board if no such Compensation Committee or Stock Incentive Plan
Committee has been so appointed). In the event the Company registers any class
of any equity security pursuant to Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Plan shall be administered in
accordance with the applicable rules
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set forth in Rule 16b-3 or any successor provisions of the Exchange Act ("Rule
16b-3"). From and after the date the Company becomes subject to Section 162(m)
of the Code with respect to compensation earned under this Plan, each member of
the Committee shall also be an "outside director" within the meaning of Section
162(m) of the Code and the regulations promulgated thereunder.
B. AUTHORITY OF BOARD OR COMMITTEE. Subject to the terms of the Plan, the
Committee shall have the authority to: (i) determine the employees of the
Company and Related Corporations (from among the class of employees eligible
under paragraph 3 to receive ISOs) to whom ISOs may be granted, and to determine
(from among the class of individuals and entities eligible under paragraph 3 to
receive Non-Qualified Options and Awards and to make Restricted Stock Purchases)
to whom Non-Qualified Options, Awards and authorizations to make Restricted
Stock Purchases may be granted; (ii) determine the time or times at which
Options or Awards may be granted or Restricted Stock Purchases made; (iii)
determine the exercise price of shares subject to each Option, which price shall
not be less than the minimum price specified in paragraph 6, and the purchase
price of shares subject to each Restricted Stock Purchase or Award; (iv)
determine whether each Option granted shall be an ISO or a Non-Qualified Option;
(v) determine (subject to paragraph 7) the time or times when each Option shall
become exercisable and the duration of the exercise period; (vi) determine
whether restrictions such as repurchase options are to be imposed on shares
subject to Options, Awards and Restricted Stock Purchases and the nature of such
restrictions, if any; (vii) impose such other terms and conditions with respect
to capital stock issued pursuant to Stock Rights not inconsistent with the terms
of this Plan as it deems necessary or desirable; and (viii) interpret the Plan
and prescribe and rescind rules and regulations relating to it.
If the Committee determines to issue a Non-Qualified Option, it shall take
whatever actions it deems necessary, under the Code and the regulations
promulgated thereunder, to ensure that such Option is not treated as an ISO. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Stock Right granted under it shall be final unless otherwise
determined by the Board. The Committee may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem best. No member of the
Board or the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Stock Right granted under it.
C. DELEGATION OF AUTHORITY TO GRANT AWARDS TO OFFICER. Without limiting the
foregoing, the Board, in its discretion, may also delegate to a single officer
of the Company who is a member of the Board (to the extent consistent with state
law) all or part of the Board's or Committee's authority and duties with respect
to the granting of Stock Rights to individuals who are not subject to the
reporting and other provisions of Section 16 of the Exchange Act or "covered
employees" within the meaning of Section 162(m) of the Code, subject to such
limitations as the Board or the Committee deems appropriate, including without
limitation as to the amount of Stock Rights that may be
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granted during the period of delegation, and guidelines as to the determination
of the exercise price of any Option, the purchase price of other Stock Rights
and the setting of vesting schedules or criteria. Such officer (the "Delegated
Officer") shall act as a one member committee of the Board, and shall in any
event be subject to the same limitations as are applicable to the Committee.
References to the Committee in this Plan shall also include the Delegated
Officer, but only to the extent consistent with the authorities and duties
delegated to the Delegated Officer by the Board. The Board may revoke or amend
the terms of a delegation at any time but such action shall not invalidate any
prior actions of the Delegated Officer that were consistent with the terms of
the Plan.
D. COMMITTEE ACTIONS. The Committee may select one of its members as its
chairman and shall hold meetings at such time and places as it may determine.
Acts by a majority of the Committee, acting at a meeting (whether held in person
or by teleconference), or acts reduced to or approved in writing by all of the
members of the Committee, shall be the valid acts of the Committee. From time to
time the Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new members
in substitution therefor, fill vacancies however caused, or remove all members
of the Committee and thereafter directly administer the Plan, subject to
compliance with paragraph 2A.
E. GRANT OF STOCK RIGHTS TO BOARD MEMBERS. Stock Rights may be granted to
members of the Board, subject to compliance with Rule 16b-3 when required by
paragraph 2A. All grants of Stock Rights to members of the Board shall in all
respects be made in accordance with the provisions of this Plan applicable to
other eligible persons.
3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted to any employee of
the Company or any Related Corporation. Those officers and directors of the
Company who are not employees may not be granted ISOs under the Plan.
Non-Qualified Options, and authorizations to make Restricted Stock Purchases may
be granted to any employee, officer or director (whether or not also an
employee) or consultant or advisor of the Company or any Related Corporation.
The Committee may take into consideration a recipient's individual circumstances
in determining whether to grant a Stock Right. Granting a Stock Right to any
individual or entity shall neither entitle that individual or entity to, nor
disqualify him from, participation in any other grant of Stock Rights.
4. STOCK. The stock subject to Stock Rights shall be authorized but
unissued shares of Common Stock of the Company, $.01 par value (the "Common
Stock"), or shares of Common Stock reacquired by the Company in any manner. The
aggregate number of shares which may be issued pursuant to the Plan is
5,500,000, subject to adjustment as provided in paragraph 13. Any such shares
may be issued pursuant to the exercise of ISOs or Non Qualified Options or
pursuant to Restricted Stock Purchases or Awards, so long as the aggregate
number of shares so issued does not exceed such number, as adjusted. Subject to
such overall limitation, shares of stock may be issued up to such maximum number
pursuant to any type or types of Stock Right; provided,
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however, that from and after the date grants under this Plan become subject to
Section 162(m) of the Code, Options with respect to no more than 1,000,000
shares of Common Stock, subject to adjustment as provided in paragraph 13, may
be granted to any one individual grantee during any one calendar year period.
5. GRANTING OF STOCK RIGHTS. Stock Rights may be granted under the Plan at
any time after June 29, 1999 and prior to June 28, 2009. The date of grant of a
Stock Right under the Plan will be the date specified by the Committee at the
time it grants the Stock Right or such date that is specified in the instrument
or agreement evidencing such Stock Right; provided, however, that such date
shall not be prior to the date on which the Committee acts to approve the grant.
The Committee shall have the right, with the consent of the optionee, to convert
an ISO granted under the Plan to a Non-Qualified Option pursuant to paragraph
17.
6. MINIMUM OPTION PRICE; ISO LIMITATIONS.
A. PRICE FOR ISOS. The exercise price per share specified in the agreement
relating to each ISO granted under the Plan shall not be less than the fair
market value per share of Common Stock on the date of such grant. In the case of
an ISO to be granted to an employee owning stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Related Corporation, the price per share specified in the
agreement relating to such ISO shall not be less than one hundred ten percent
(110%) of the fair market value per share of Common Stock on the date of grant.
B. $100,000 ANNUAL LIMITATION ON ISOS. Each eligible employee may be
granted ISOs only to the extent that, in the aggregate under this Plan and all
other incentive stock option plans of the Company and any Related Corporation,
such ISOs do not become exercisable for the first time by such employee during
any calendar year in a manner which would entitle the employee to purchase more
than $100,000 in fair market value (determined at the time the ISOs were
granted) of Common Stock in that year. Any Options granted to an employee in
excess of such amount will be granted as Non-Qualified Options.
C. DETERMINATION OF FAIR MARKET VALUE. If, at the time an Option is granted
under the Plan, the Company's Common Stock is publicly traded, "fair market
value" shall be determined as of the last business day for which the prices or
quotes discussed in this sentence are available prior to the date such Option is
granted and shall mean (i) the average (on that date) of the high and low prices
of the Common Stock on the principal national securities exchange on which the
Common Stock is traded, if the Common Stock is then traded on a national
securities exchange; or (ii) the last reported sale price (on that date) of the
Common Stock on the NASDAQ National Market List, if the Common Stock is not then
traded on a national securities exchange; or (iii) the closing bid price (or
average of bid prices) last quoted (on that date) by an established quotation
service for
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over-the-counter securities, if the Common Stock is not then traded on a
national securities exchange and is not reported on the NASDAQ National Market
List. However, if the Common Stock is not publicly traded at the time an Option
is granted under the Plan, "fair market value" shall be deemed to be the fair
value of the Common Stock as determined by the Committee after taking into
consideration all factors in good faith it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9, 10, and 13B, each Option shall expire on the date specified by or
shall have such duration as may be specified by the Committee and set forth in
the original stock option agreement granting such Option, but not more than ten
years from the date of grant. Notwithstanding the foregoing, in the case of ISOs
granted to an employee owning stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
Related Corporation, such ISOs shall expire not more than five years from the
date of grant. Non-Qualified Options shall expire on the date specified in the
agreement granting such Non-Qualified Options, subject to extension as
determined by the Committee. ISOs, or any part thereof, that have been converted
into Non-Qualified Options may be extended as provided in paragraph 17.
8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9 through
13, each Option granted under the Plan shall be exercisable as follows:
A. VESTING. Unless otherwise specified by the Committee and subject to
paragraphs 9 and 10 with respect to ISOs, Options granted to employees shall
vest in accordance with the following schedule: (a) as to 25% of the shares
subject to the Option, on the first anniversary of the date of grant of the
Option; and (b) as to the remaining 75% of the shares subject to the Option, in
12 equal quarterly installments beginning one calendar quarter after the date of
such anniversary (such quarterly vesting dates shall commence three months
following such first annual anniversary on the exact day of the month as the
date of such first annual anniversary, and continue at three month intervals
thereafter, except with respect to any month that does not have such date, in
which case the date in such month shall be the last day of such month). The
Committee may also specify such other conditions precedent as it deems
appropriate to the exercise of an Option.
B. FULL VESTING OF INSTALLMENTS. Once an installment becomes exercisable it
shall remain exercisable until expiration or termination of the Option, unless
otherwise specified by the Committee.
C. PARTIAL EXERCISE. Each Option or installment may be exercised at any
time or from time to time, in whole or in part, for up to the total number of
shares with respect to which it is then exercisable, provided that the Committee
may specify a certain
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minimum number or percentage of the shares issuable upon
exercise of any Option that must be purchased upon any exercise.
D. ACCELERATION OF VESTING. The Committee shall have the right to
accelerate the date of exercise of any installment of any Option, despite the
fact that such acceleration may (i) cause the application of Sections 280G and
4999 of the Code if a Change in Control Event, as defined below in paragraph
13B, occurs, or (ii) disqualify all or part of the Option as an ISO.
9. TERMINATION OF EMPLOYMENT. Subject to the provisions of paragraph 13B,
if an ISO optionee ceases to be employed by the Company and all Related
Corporations other than by reason of death or disability as defined in paragraph
10, no further installments of his ISOs shall become exercisable following the
date of such cessation of employment, and his ISOs shall terminate after the
passage of ninety (90) days from the date of termination of his employment, but
in no event later than on their specified expiration dates, except to the extent
that such ISOs (or unexercised installments thereof) have been converted into
Non-Qualified Options pursuant to paragraph 17. Nothing in the Plan shall be
deemed to give any grantee of any Stock Right the right to be retained in
employment or other service by the Company or any Related Corporation for any
period of time.
Notwithstanding anything contained in this paragraph 9 to the contrary, the
Board or Committee may establish rules in particular stock option agreements
with respect to Misconduct, as defined below, committed by a grantee of a Stock
Right.
10. DEATH; DISABILITY.
A. DEATH. If an ISO optionee ceases to be employed by the Company and all
Related Corporations by reason of his death, or if the employee dies within the
thirty (30) day period after the employee ceases to be employed by the Company
and all Related Corporations, any ISO of his may be exercised, to the extent of
the number of shares with respect to which he could have exercised it on the
date of his death, by his estate, personal representative or beneficiary who has
acquired the ISO by will or by the laws of descent and distribution, at any time
prior to the earlier of the specified expiration date of the ISO or one hundred
and eighty (180) days from the date of such optionee's death.
B. DISABILITY. If an ISO optionee ceases to be employed by the Company and
all Related Corporations by reason of his disability, he shall have the right to
exercise any ISO held by him on the date of termination of employment, to the
extent of the number of shares with respect to which he could have exercised it
on that date, at any time prior to the earlier of the specified expiration date
of the ISO or one (1) year from the date of the termination of the optionee's
employment. For the purposes of the Plan, the term "disability" shall mean
"permanent and total disability" as defined in Section 22(e)(3) of the Code or
successor statute.
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11. ASSIGNABILITY. Except for Non-Qualified Options which may be
transferred for estate planning purposes to the extent provided in the
instrument or agreement granting such Non-Qualified Options, no Stock Right
shall be assignable or transferable by the grantee except by will or by the laws
of descent and distribution, and during the lifetime of the grantee each Stock
Right shall be exercisable only by him. No Stock Right, nor the right to
exercise any portion thereof, shall be subject to execution, attachment, or
similar process, assignment, or any other alienation or hypothecation. Upon any
attempt so to transfer, assign, pledge, hypothecate, or otherwise dispose of any
Stock Right, or of any right or privilege conferred thereby, contrary to the
provisions thereof or hereof or upon the levy of any attachment or similar
process upon any Stock Right, right or privilege, such Stock Right and such
rights and privileges shall immediately become null and void. The foregoing
shall not be construed to restrict the ability to assign or transfer shares of
Common Stock issued upon the exercise or award of a Stock Right to the extent
that the instrument or agreement granting such Stock Right permits such
assignment or transfer.
12. TERMS AND CONDITIONS OF STOCK RIGHTS. Stock Rights shall be evidenced
by instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof to the extent applicable
and may contain such other provisions as the Committee deems advisable which are
not inconsistent with the Plan. Without limiting the foregoing, such provisions
may include transfer restrictions, rights of refusal, vesting provisions,
repurchase rights and drag-along rights with respect to shares of Common Stock
issuable upon exercise of Stock Rights, and such other restrictions applicable
to shares of Common Stock issuable upon exercise of Stock Rights as the
Committee may deem appropriate. In granting any Non-Qualified Option, the
Committee may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other
termination, cancellation or other provisions as the Committee may determine.
The Committee may from time to time confer authority and responsibility on one
or more of its own members and/or one or more officers of the Company to execute
and deliver such instruments. The proper officers of the Company are authorized
and directed to take any and all action necessary or advisable from time to time
to carry out the terms of such instruments.
13. ADJUSTMENTS. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to him hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
written agreement between the optionee and the Company relating to such Option:
A. STOCK DIVIDENDS AND STOCK SPLITS. If 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, the number of shares of Common Stock deliverable upon
the exercise of Options
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shall be appropriately increased or decreased proportionately, and appropriate
adjustments shall be made in the purchase price per share to reflect such
subdivision, combination or stock dividend.
B. ACQUISITIONS AND CHANGE IN CONTROL EVENTS.
If the Company is to be subject to or engage in (x) a merger (or reverse
merger), consolidation, or other similar event affecting the Company in which
outstanding shares of Common Stock are exchanged for cash, securities, and/or
other property of another entity, or (y) the sale or lease of all or
substantially all of the Company's assets to another person or entity (any such
event in such clauses (x) and (y) an "Acquisition"), the Committee or the Board
shall (i) provide that the entity that survives the Acquisition or purchases or
leases the Company's assets in the Acquisition or any affiliate of such entity
(the "Surviving Entity") shall assume the Options granted pursuant to this Plan
or substitute options to purchase securities of the Surviving Entity (or an
affiliate thereof) on an equitable basis, (ii) upon written notice to the
optionees, provide that all Options will become exercisable in full subject to
the consummation of the Acquisition as of a specified time prior to the
Acquisition and will terminate immediately prior to the consummation of such
Acquisition or within a specified period of time after the Acquisition, and will
not be exercisable after such termination, or (iii) in the event of an
Acquisition under the terms of which holders of Common Stock will receive upon
consummation thereof an amount of cash, securities and/or other property for
each share of Common Stock surrendered pursuant to such Acquisition (the amount
of cash plus the fair market value reasonably determined by the Committee of any
securities and/or other property received by holders of Common Stock in exchange
for each share of Common Stock shall be the "Acquisition Price"), provide that
all outstanding Options shall terminate upon consummation of such Acquisition
and that each optionee shall receive, in exchange for all vested shares of
Common Stock under such Option on the date of the Acquisition, a payment in cash
or in kind having a fair market value reasonably determined by the Committee or
the board of directors of the Surviving Entity equal to the amount (if any) by
which (A) the Acquisition Price multiplied by the number of such vested shares
of Common Stock exceeds (B) the aggregate exercise price of such shares. If the
Committee chooses under clause (iii) in the preceding sentence that all
outstanding Options shall terminate upon consummation of an Acquisition and that
each optionee shall receive a payment for the optionee's vested shares, with
respect to any optionee whose stock option agreement specifies that no shares
are vested until the first anniversary of the commencement of the optionee's
employment, if the consummation of the Acquisition occurs prior to such first
anniversary, then the number of vested shares under such Option shall be deemed
to be equal to the product of (x) the number of shares of stock subject to the
Option that otherwise would vest on the first anniversary and (y) the quotient
obtained by dividing the number of days the optionee was employed by the
Company, by 365. For purposes hereof, an Option shall be considered to be
assumed or substituted "on an equitable basis" (without limiting other ways in
which an Option may be assumed or substituted on an equitable basis hereunder)
if, following consummation of the Acquisition, the assumed or substituted option
confers the right to purchase, for each
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share of Common Stock subject to the Option immediately prior to the
consummation of the Acquisition, the consideration received as a result of
the Acquisition by the holders of Common Stock for each share of Common Stock
held immediately prior to the consummation of the Acquisition (and if holders
of Common Stock were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares
of Common Stock); provided, however, that if the consideration received as a
result of the Acquisition Event is not solely common stock of the Surviving
Entity (or an affiliate thereof), the Company may, with the consent of the
Surviving Entity, provide for the consideration to be received upon the
exercise of each share of Common Stock subject to the Option to consist
solely of common stock of the Surviving Entity (or an affiliate thereof)
having a fair market value as reasonably determined by the Committee or the
board of directors of the Surviving Entity equal to the Acquisition Price.
If a Change in Control Event, as defined below, occurs that either (a) does
not also constitute an Acquisition or (b) does constitute an Acquisition and
clause (i) of the preceding paragraph is elected, and the optionee's employment
with the Company or the Surviving Entity is terminated on or prior to the six
month anniversary of the date of the consummation of such Change in Control
Event either by the optionee for Good Reason, as defined below, or by the
Company or the Surviving Entity for reason(s) other than Misconduct, as defined
below, then all of the Options or assumed or substituted options granted in the
Surviving Entity shall accelerate and become immediately exercisable in full and
any repurchase provisions applicable to Common Stock issued upon exercise
thereof shall lapse, PROVIDED, however, that in particular stock option
agreements issued pursuant to this Plan, the Board may provide that the Options
or assumed or substituted options covered by such agreement shall become
immediately exercisable upon the consummation of such Change in Control Event
without regard to termination of employment, and that any repurchase provisions
applicable to Common Stock issued upon exercise thereof shall lapse.
A "Change in Control Event" shall occur upon the occurrence of (i) an
Acquisition after which holders of the Company's stock before the Acquisition do
not beneficially own, directly or indirectly, at least 50% of the combined
voting power of the then-outstanding securities of the Surviving Entity entitled
to vote generally in the election of directors immediately after the
consummation of the Acquisition, (ii) a single transaction or a series of
transactions pursuant to which any person (within the meaning of Section 13(d)
or Section 14(d)(2) of the Securities Exchange Act of 1934), excluding any
employee benefit plan sponsored by the Company, any affiliates of the Company
prior to such transaction or transactions, and AEW Capital Management, Alta
Communications, and Beacon Capital Partners (or any affiliates of such
entities), acquires the beneficial ownership, directly or indirectly, of at
least 50% of the combined voting power of the then-outstanding securities of the
Company or the Surviving Entity, as the case may be, entitled to vote generally
in the election of directors immediately after the consummation of the
transaction or transactions, except that any acquisitions of securities
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directly from the Company shall be disregarded for purposes of this clause (ii),
or (iii) the liquidation or dissolution of the Company.
If, in connection with a Change in Control Event, a tax under Section 4999
of the Code would be imposed on the grantee of any Stock Right (after taking
into account the exceptions set forth in Sections 280G(b)(4) and 280G(b)(5) of
the Code), and the grantee, on an after-tax basis (taking into account such tax)
would receive greater net compensation by not having any or all of such Stock
Rights accelerate, then at the discretion of the Committee, the number of Stock
Rights of any such grantee which shall become immediately exercisable,
realizable or vested as provided in this Section 13 (or such provision of any
other agreement or instrument governing such Stock Right that provides for such
an acceleration in connection with a Change in Control Event) may be reduced (or
delayed), to the extent necessary to maximize such net compensation. For
purposes of determining "net compensation" under this paragraph, the amount of
compensation considered to be realized by the grantee of any Stock Right as a
result of the acceleration of the vesting of such Stock Right shall be
determined in accordance with the principles set forth in the proposed Treasury
Regulations under Section 280G of the Code (or any final or temporary Treasury
Regulations replacing such proposed Treasury Regulations) for determining the
amount of any "parachute payment" resulting from the acceleration of vesting of
restricted stock, a stock option or any other unvested stock right.
"Misconduct" shall mean any one or more of the following: (a) the
commission of an act of embezzlement, fraud, dishonesty or deliberate disregard
of the rules or policies of the Company or any Related Corporation which results
in material loss, damage or injury to the Company or any Related Corporation,
whether directly or indirectly; (b) the unauthorized disclosure of any trade
secret or confidential information of the Company or any Related Corporation;
(c) the breach by the optionee of any agreement with the Company or any Related
Corporation, including without limitation any noncompetition agreement between
the optionee and the Company or any Related Corporation; or (d) the willful
failure by the optionee to perform his or her material responsibilities to the
Company or any Related Corporation.
"Good Reason" shall mean (i) any significant diminution in the optionee's
title, authority, or responsibilities from and after such Acquisition or Change
in Control Event, as the case may be, (ii) any reduction in the annual cash
compensation payable to the optionee from and after such Acquisition or Change
in Control Event, as the case may be or (iii) a change of more than 100 miles in
the optionee's permanent workplace without the optionee's consent.
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,
an optionee upon exercising an
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Option shall be entitled to receive for the purchase price paid upon such
exercise the securities he would have received if he had exercised his Option
prior to such recapitalization or reorganization and had been the owner of the
Common Stock receivable upon such exercise at such time.
D. MODIFICATION OF ISOS. Notwithstanding the foregoing, any adjustments
made pursuant to the foregoing subparagraphs A, B or C with respect to ISOs
shall be made only after the Committee, 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 of the Code or any
successor thereto) or would cause any adverse tax consequences for the holders
of such ISOs. If the Committee determines that such adjustments made with
respect to ISOs would constitute a modification of such ISOs, it may refrain
from making such adjustments.
E. ISSUANCES OF SECURITIES AND NON-STOCK DIVIDENDS. 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 Options. No adjustments shall be made for dividends paid in
cash or in property other than securities of the Company (and, in the case of
securities of the Company, such adjustments shall be made pursuant to the
foregoing subparagraph A).
F. FRACTIONAL SHARES. No fractional shares shall be issued under the Plan,
and the optionee shall receive from the Company cash in lieu of such fractional
shares.
G. ADJUSTMENTS. Upon the happening of any of the foregoing events described
in subparagraphs A, B or C above, the class and aggregate number of shares set
forth in paragraph 4 hereof that are subject to Stock Rights which previously
have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee or the board of directors of the Surviving Entity shall determine
the specific adjustments to be made under this paragraph 13 and its
determination shall be conclusive.
If any person or entity owning Common Stock obtained by exercise of a Stock
Right made hereunder receives shares or securities or cash in connection with a
corporate transaction described in subparagraphs A, B or C above as a result of
owning such Common Stock, except as otherwise provided in subparagraph B, such
shares or securities or cash shall be subject to all of the conditions and
restrictions applicable to the Common Stock with respect to which such shares or
securities or cash were issued, unless otherwise determined by the Committee or
the Board of Directors of the Surviving Entity.
H. POOLING-OF-INTERESTS ACCOUNTING. If the Company proposes to engage in an
Acquisition intended to be accounted for as a pooling-of-interests, and in the
event that
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the provisions of this Plan or of any agreement hereunder, or any actions of the
Board taken in connection with such Acquisition, are determined by the Company's
or the Surviving Entity's independent public accountants to cause such
Acquisition to fail to be accounted for as a pooling-of-interests, then such
provisions or actions may be amended or rescinded at the election of the
Committee, without the consent of any grantee, to be consistent with
pooling-of-interests accounting treatment for such Acquisition.
14. MEANS OF EXERCISING OPTIONS. An Option (or any part or installment
thereof) shall be exercised by giving written notice to the Company at its
principal office address. Such notice shall identify the Option being exercised
and specify the number of shares as to which such Option is being exercised,
accompanied by full payment of the purchase price therefor either (a) in United
States dollars in cash or by check, or (b) at the discretion of the Committee,
by delivery of an irrevocable and unconditional undertaking, satisfactory in
form and substance to the Company, by a creditworthy broker to deliver promptly
to the Company sufficient funds to pay the exercise price, or delivery to the
Company of a copy of irrevocable and unconditional instructions, satisfactory in
form and substance to the Company, to a creditworthy broker to deliver promptly
to the Company cash or a check sufficient to pay the exercise price, or (c) at
the discretion of the Committee 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, provided, however, that such shares of Common
Stock delivered must have been acquired by the holder of the Option more than
six months prior to the exercise of the Option, or (d) at the discretion of the
Committee, 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 (e) at the discretion of the
Committee, by any combination of (a), (b) (c) and (d) above. The holder of an
Option shall not have the rights of a shareholder with respect to the shares
covered by his Option until the date of issuance of a stock certificate to him
for the shares subject to the Option. Except as expressly provided above in
paragraph 13 with respect to changes in capitalization and stock dividends, no
adjustment shall be made for dividends or similar rights for which the record
date is before the date such stock certificate is issued.
15. TERM AND AMENDMENT OF PLAN. This Plan was originally adopted by the
Board on June 29, 1999 and will be presented to the stockholders of the Company
for approval on or prior to June 28, 2000. If the approval of stockholders is
not obtained by such date, any grants of ISOs under the Plan made prior to that
date will be rescinded. The Plan shall expire on June 28, 2009 (except as to
Options outstanding on that date). Subject to the provisions of paragraph 5
above, Options may be granted under the Plan prior to the date of stockholder
approval of the Plan.
The Board may terminate or amend the Plan in any respect at any time,
except that, without the approval of the stockholders obtained within 12 months
before or after the Board adopts a resolution authorizing any of the following
actions: (a) the total number of shares that may be issued under the Plan may
not be increased (except by
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adjustment pursuant to paragraph 13); (b) the provisions of paragraph 3
regarding eligibility for grants of ISOs may not be modified; (c) the provisions
of paragraph 6(B) regarding the exercise price at which shares may be offered
pursuant to ISOs may not be modified (except by adjustment pursuant to paragraph
13); and (d) the expiration date of the Plan may not be extended.
16. SECTION 162(m)
Notwithstanding anything herein to the contrary, no Stock Right shall
become exercisable, vested or realizable if such Stock Right is granted to an
employee that is a "covered employee" as defined in Section 162(m) of the Code
and the Committee has determined that such Stock Right should be structured so
that it is not "applicable employee remuneration" under such Section 162(m)
unless and until the terms of this Plan, including any amendment hereto, have
been approved by the Company's stockholders in the manner and to the extent
required under such Section 162(m).
17. AMENDMENT OF STOCK RIGHTS. The Board or Committee may amend, modify or
terminate any outstanding Stock Rights including, but not limited to,
substituting therefor another Stock Right of the same or a different type,
changing the date of exercise or realization, and converting an ISO to a
Non-Qualified Option, provided, that, except as otherwise provided in paragraphs
9 or 10, the grantee's consent to such action shall be required unless the Board
or Committee determines that the action, taking into account any related action,
would not materially and adversely affect the grantee.
18. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Restricted Stock Purchases
authorized under the Plan shall be used for general corporate purposes.
19. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
20. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the making of a Restricted Stock Purchase for less than
its fair market value, the granting of an Award, the making of a Disqualifying
Disposition (as defined in paragraph 21) or the vesting of restricted Common
Stock acquired on the exercise of a Stock Right hereunder, the Company, in
accordance with Section 3402(a) of the Code, may require the optionee or
purchaser to pay additional withholding taxes in respect of the amount that is
considered compensation includible in such person's gross income. The Committee
in its discretion may condition (i) the exercise of an Option, (ii) the making
of a Restricted Stock Purchase for less than its fair market value, (iii) the
granting
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of an Award, or (iv) the vesting of restricted Common Stock acquired by
exercising a Stock Right, on the grantee's payment of such additional
withholding taxes.
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. Each employee who
receives an ISO must agree to notify the Company in writing immediately after
the employee makes a Disqualifying Disposition of any Common Stock acquired
pursuant to the exercise of an ISO. A "Disqualifying Disposition" is any
disposition (including any sale) of such Common Stock before the later of
(a) two years after the date the employee was granted the ISO, or
(b) one year after the date the employee acquired Common Stock by
exercising the ISO. If the employee has died before such stock is sold, these
holding period requirements do not apply and no Disqualifying Disposition can
occur thereafter.
22. GOVERNING LAW; CONSTRUCTION. The validity and construction of the Plan
and the instruments evidencing Options shall be governed by the laws of the
state of Delaware. In construing this Plan, the singular shall include the
plural and the masculine gender shall include the feminine and neuter, unless
the context otherwise requires.
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