CAVION TECHNOLOGIES, INC.
EQUITY INCENTIVE PLAN 1999
1. PURPOSE. Cavion Technologies, Inc. (the "Company") hereby
establishes its Equity Incentive Plan (the "Plan"). The purpose of the
Plan is to help the Company and its subsidiaries to attract and retain
competent employees, officers, directors, advisors and independent
contractors by providing them with an opportunity to participate in the
increased value of the Company which their effort, initiative, and skill
have helped produce.
2. GENERAL PROVISIONS.
(a) The Plan will be administered by the Compensation Committee
of the Board of Directors of the Company (the "Committee"). The Committee
shall be comprised of two or more directors designated by the Board of
Directors (the "Board"). If and to the extent that Securities Exchange Act
Rule 16b-3 or Internal Revenue Code Section 162 are applicable to the
Plan, Committee members shall qualify as "Non-Employee Directors" within
the meaning of Securities Exchange Act Rule 16b-3 and as "outside
directors" within the meaning of Treasury Regulation Section 1.162-
27(e)(3). (In the event Rule 16b-3 or Treasury Regulation Section 1.162-
27(e)(3) is amended, modified or repealed, the requirements for being a
member of the Committee shall reflect the then current requirements of the
successor rule or regulation, if any.) Options granted under the Plan are
intended to qualify for the "qualified performance based compensation"
exception to Internal Revenue Code Section 162(m). Notwithstanding the
foregoing, if it would be consistent with all applicable laws, including
without limitation Rule 16b-3 and Treasury Regulation Section 1.162-
27(e)(3), then the Plan may be administered by the Board of Directors, and
if so administered all subsequent references to the Committee shall be
read as referring to the Board of Directors.
(b) The Committee shall have full power to construe and
interpret the Plan and to establish and amend rules and regulations for
its administration. The Committee shall determine, in its sole discretion,
which participants under the Plan shall be granted restricted stock, stock
options or stock appreciation rights, the time or times at which stock,
options and rights are granted, as well as the number of shares and the
duration of the options or rights which are granted to participants;
provided, however, that no participant may be granted more than 250,000
options under the Plan in any three year period. The Committee shall also
determine any other terms and conditions relating to restricted stock,
options and rights granted under the Plan as the Committee may prescribe,
in its sole discretion. The Committee shall make all other determinations
and take all other actions which it deems necessary or advisable for the
administration of the Plan. All decisions, determinations and
interpretations made by the Committee shall be binding and conclusive on
all participants in the Plan and on their legal representatives, heirs and
beneficiaries.
(c) Any action of the Committee with respect to the Plan shall
be taken by majority vote or by the unanimous written consent of the
Committee members. The Committee may, in its discretion, delegate its
administrative duties with respect to the Plan to an officer or employees,
or to a committee composed of officers or employees, of the Company.
(d) The Board (with members of the Committee abstaining) shall
have the authority to make grants under the Plan to members of the
Committee and may also establish a formula by which grants will
automatically be made to members of the Committee. The Committee shall
have the authority to make grants hereunder to members of the Board other
than Committee members and may also establish a formula by which grants
will automatically be made to Board members.
3. ELIGIBILITY. Employees, officers, directors, advisors and
independent contractors of the Company and its subsidiaries shall be
eligible to participate in the Plan and to receive restricted stock,
options and rights hereunder, except where the Committee determines that a
particular subsidiary will not participate in the Plan. However, Incentive
Stock Options may only be granted to officers and directors who are
employees of the Company or its subsidiaries at all times during the
period beginning on the date of grant of the option and ending on the day
three months before the date of exercise.
4. SHARES SUBJECT TO PLAN. The aggregate number of shares of the
Company's Common Stock which may be issued to participants shall be
995,000 shares, subject to adjustment as provided in Section 9. These
shares may consist of shares of the Company's authorized but unissued
Class A Common Stock or shares of the Company's authorized and issued
Class A Common Stock reacquired by the Company and held in its treasury or
any combination thereof. To the extent that a participant pays for the
exercise of an option with shares of the Company's stock rather than cash,
the tendered shares shall be deemed to be added back to the Plan,
increasing the total number of shares subject to and reserved for the Plan
by that amount. If an option granted under the Plan is surrendered, or for
any other reason ceases to be exercisable in whole or in part, the shares
as to which the option ceases to be exercisable shall be available to be
granted to the same or other participants under the Plan, except to the
extent that an option is deemed surrendered by the exercise of a tandem
stock appreciation right and that right is paid by the Company in stock,
in which event the shares issued in satisfaction of the right shall not be
available for new options or rights under the Plan. Shares of restricted
stock that are forfeited under the Plan shall be deemed to be added back
to the Plan, increasing the total number of shares subject to and reserved
for the Plan by that amount.
5. STOCK OPTIONS.
(a) TYPE OF OPTIONS. Options granted may be either
Nonqualified Stock Options or Incentive Stock Options as determined by the
Committee in its sole discretion and as reflected in the Notice of Grant
issued by the Committee. "Incentive Stock Option" means an option
intended to qualify as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
"Nonqualified Stock Option" means an option not intended to qualify as an
Incentive Stock Option or an Incentive Stock Option which is converted to
a Nonqualified Stock Option, either under Section 8(b) hereof or by
operation of law.
(b) OPTION PRICE. The price at which options may be granted
under the Plan shall be determined by the Committee at the time of grant
as follows:
(i) For Incentive Stock Options the option price shall be
equal to 100% of the Fair Market Value of the stock (as defined below);
provided, however, that for Incentive Stock Options granted to any person
who, at the time such option is granted, owns (as defined in Section 422
of the Code) shares possessing more than 10% of the total combined voting
power of all classes of shares of the Company or its parent or subsidiary
corporation, the Option Price shall be 110% of the Fair Market Value.
(ii) For Nonqualified Stock Options the option price may be
less than the Fair Market Value of the stock, but in no event shall the
option price be less than fifty percent (50%) of the Fair Market Value.
However, any grant of a Nonqualified Stock Option at a price less than
Fair Market Value will not qualify for the "qualified performance based
compensation" exception to Internal Revenue Code Section 162(m).
(iii) "Fair Market Value" shall mean, if there is an
established market for the Company's Common Stock on a stock exchange, in
an over-the-counter market or otherwise, the mean of the highest and
lowest quoted selling prices on the valuation date. Unless otherwise
specified by the Committee at the time of grant (or in the formula
applicable to such grant), the valuation date for purposes of determining
the option price shall be the date of grant. The Committee (or the Board
of Directors with respect to grants to Committee members) may specify
that, instead of the date of grant, the valuation date shall be a
valuation period of up to ninety (90) days prior to the date of grant, and
Fair Market Value for purposes of such grant shall be the average over the
valuation period of the mean of the highest and lowest quoted selling
prices on each date on which sales were made in the valuation period. If
the Committee fails to specify a valuation period and there were no sales
on the date of grant then Fair Market Value shall be determined as if the
Committee had specified a thirty (30) day valuation period. If there is no
established market for the Company's Common Stock, or if there were no
sales during the applicable valuation period, the determination of Fair
Market Value shall be established by the Committee in its sole discretion,
considering the criteria set forth in Treas. Reg. Section 20.2031-2 or
successor regulations.
(c) EXERCISE OF OPTION. The right to purchase shares covered
by any option or options under the Plan shall be exercisable only in
accordance with the terms and conditions of the grant to the participant.
Such terms and conditions may include a time period or schedule over which
the options become exercisable, or "vested", and may provide that certain
conditions, such as continuous service or specified performance criteria
or goals, must be satisfied for such vesting. The determination as to
whether to impose any such vesting schedule or performance criteria, and
the terms of such schedule or criteria, shall be within the sole
discretion of the Committee. These terms and conditions may be different
for different participants.
The Committee may provide that an option will be
exercisable prior to vesting, and that upon exercise the participant will
receive restricted stock (as described in Section 7), subject to
restrictions reflecting any vesting period or conditions of the option
that are unfulfilled at the time of exercise.
Options shall be exercised when written notice of exercise
by the participant, and full payment for the shares with respect to which
the option is exercised, has been received by the Company at its principal
office. The exercise of options shall be paid for in cash or in shares of
the Company's Common Stock, or any combination thereof. Shares tendered
as payment for option exercises shall be valued at the Fair Market Value
of the shares on the date of exercise. The Committee may, in its
discretion, agree to a loan by the Company to one or more participants of
a portion of the exercise price (not to exceed the exercise price minus
the par value of the shares to be acquired, if any) for up to three (3)
years with interest payable at the prime rate quoted in the Wall Street
Journal on the date of exercise. The Board may approve such loans to
members of the Committee.
The Committee may also permit a participant to effect a net
exercise of an option without tendering any shares of the Company's stock
as payment for the option. In such an event, the participant will be
deemed to have paid for the exercise of the option with shares of the
Company's stock and shall receive from the Company a number of shares
equal to the difference between (i) the shares that would have been
tendered to pay the option price and withholding taxes, if any, and (ii)
the number of options exercised.
The Committee may also cause the Company to enter into
arrangements with one or more licensed stock brokerage firms whereby
participants may exercise options without payment therefor but with
irrevocable orders to such brokerage firm to immediately sell the number
of shares necessary to pay the option price and withholding taxes, if any,
and then to transmit the proceeds from such sales directly to the Company
in satisfaction of such obligations.
A participant shall have no rights as a shareholder with
respect to any shares of common stock subject to an option prior to the
date of exercise of the option.
(d) DURATION OF OPTIONS. Unless otherwise prescribed by the
Committee or the Plan, options granted hereunder shall expire ten (10)
years from the date of grant, subject to early termination as provided in
Section 8.
(e) INCENTIVE STOCK OPTION LIMITATIONS. In no event shall an
Incentive Stock Option be granted to any person who, at the time such
option is granted, owns (as defined in Section 422 of the Code) shares
possessing more than 10% of the total combined voting power of all classes
of shares of the Company or of its parent or subsidiary corporation,
unless the option price is at least 110% of the Fair Market Value of the
stock subject to the option, and such option is by its terms not
exercisable after the expiration of five (5) years from the date of grant.
The aggregate Fair Market Value (determined as of the time that option is
granted) of the shares with respect to which Incentive Stock Options are
exercisable for the first time by any individual employee during any
single calendar year under the Plan shall not exceed $100,000. In
addition, employees are advised that in order to receive the tax benefits
of an Incentive Stock Option, they must not resell or otherwise dispose of
the stock acquired upon exercise of the Incentive Stock Option until two
(2) years after the date the option was granted and one (1) year after it
was exercised.
6. STOCK APPRECIATION RIGHTS.
(a) GRANT. Stock appreciation rights may be granted by the
Committee under the Plan upon such terms and conditions as it may
prescribe. A stock appreciation right may be granted in connection with
an option (the "Related Option") previously granted or to be granted under
the Plan (a "Tandem Right"), or may be granted separately (a "Separate
Right"). Upon grant of a Separate Right, the Committee shall specify an
exercise price for the right. Upon exercise of a stock appreciation right,
the participant is entitled to receive the excess of Fair Market Value, on
the date of exercise, of the Company's Common Stock over the option price
of the Related Option (in the case of a Tandem Right), or over the
exercise price of the right (in the case of a Separate Right). Such excess
is hereafter called "the differential."
(b) EXERCISE OF STOCK APPRECIATION RIGHTS. Stock appreciation
rights shall be exercisable and payable in the following manner:
(i) A Separate Right shall be exercisable at the time or
times prescribed by the Committee. A Tandem Right shall be exercisable at
the same time or times that the Related Option could be exercised. Stock
appreciation rights shall be exercised when written notice of exercise by
the participant has been received by the Company at its principal office.
Upon receipt of such notice, the Company shall determine, in its sole
discretion, whether the participant's stock appreciation rights shall be
paid in cash or in shares of the Company's Common Stock or any combination
of cash and shares and thereupon shall, without deducting any transfer or
issue tax, deliver to the person exercising such right an amount of cash
or shares of the Company's Common Stock or a combination thereof with a
value equal to the differential minus withholding taxes, if any. No
fractional share of Common Stock shall be issued; rather, the Committee
shall determine whether cash shall be given in lieu of such fractional
share or whether such fractional share shall be disregarded.
(ii) The exercise of a Tandem Right shall automatically
result in the surrender of the Related Option by the participant on a
share for share basis. Likewise, the exercise of a stock option shall
automatically result in the surrender of the related Tandem Right.
(iii) The Committee may impose any other terms and
conditions it prescribes upon the exercise of a stock appreciation right,
which conditions may include a condition that the stock appreciation right
may only be exercised in accordance with rules and regulations adopted by
the Committee from time to time.
(c) LIMITATION ON PAYMENTS. Notwithstanding any other
provision of the Plan, the Committee may from time to time determine,
including at the time of exercise, the maximum amount of cash or stock
which may be given upon exercise of any stock appreciation right in any
year; provided, however, that all such amounts shall be paid in full no
later than the end of the year immediately following the year in which the
participant exercised such stock appreciation rights. Any determination
under this paragraph may be changed by the Committee from time to time
provided that no such change shall require the participant to return to
the Company any amount theretofore received or to extend the period within
which the Company is required to make full payment of the amount due as
the result of the exercise of the participant's stock appreciation rights.
(d) EXPIRATION OF STOCK APPRECIATION RIGHTS. Unless earlier
terminated under Section 8, each Tandem Right shall expire on the date on
which the Related Option expires or terminates, and each Separate Right
shall expire on the date prescribed by the Committee.
7. RESTRICTED STOCK.
(a) GRANT. The Committee may grant shares of the Company's
Common Stock to persons eligible for grants under the Plan, subject to
such restrictions, if any, as may be determined by the Committee,
including but not limited to that person's continuous employment by or
service to the Company for a specified period of time or the attainment of
specified performance goals or objectives by that person, a group of
persons or the Company as a whole. The determination as to whether to
impose any such vesting schedule or performance criteria, and the terms of
such schedule or criteria, shall be within the sole discretion of the
Committee. These terms and conditions may be different for different
participants.
(b) VOTING RIGHTS. A participant will have all voting,
dividend, liquidation and other rights with respect to the shares of
restricted stock in accordance with its terms upon becoming the holder of
record of such stock; provided, however, that the participant shall have
the right to sell or otherwise transfer such stock only to the extent that
vesting and performance criteria have been satisfied. Such limitations
may be enforced, in the sole discretion of the Committee, by placing a
restrictive legend on the stock certificates, or by making arrangements
for custody of the stock certificates.
8. EARLY TERMINATION.
(a) DEATH OR DISABILITY. If a participant's employment or
engagement by the Company terminates because of total disability (as
defined below) or because of retirement at 65 years of age or later, any
options or stock appreciation rights granted to such participant shall
expire three (3) months after such termination. If the participant dies
while employed or engaged by the Company, to the extent that the option
was exercisable at the time of the participant's death, such option may,
within one year after the participant's death, be exercised by the person
or persons to whom the participant's rights under the option pass by will
or by the applicable laws of descent and distribution; provided, however,
that an option or stock appreciation right may not be exercised after the
expiration date as originally granted. In the event of termination by
reason of death or total disability as described in this paragraph, all
employment period and other restrictions applicable to restricted stock
then held by the participant shall lapse, and such stock shall become
fully nonforfeitable.
An employee who is absent from work with the Company
because of total disability, as defined below, shall not by virtue of such
absence alone be deemed to have terminated such participant's employment
with the Company. All rights which such participant would have had to
exercise options or stock appreciation rights granted hereunder will be
suspended during the period of such absence and may be exercised
cumulatively by such participant upon return to the Company so long as
such rights are exercised prior to the expiration of the option or stock
appreciation right as originally granted. For purposes of the Plan,
"total disability" means disability, as a result of sickness or injury, to
the extent that the participant is prevented from engaging in any
substantial gainful activity and is eligible for and receives a disability
benefit under Title II of the Federal Social Security Act.
(b) OTHER TERMINATIONS. If a participant's employment or
engagement by the Company terminates for any other reason, whether
terminated by the participant or the Company, with or without cause, then
(i) all options granted to such participant under the Plan shall terminate
and no longer be exercisable as of the date of such termination, and (ii)
any restricted stock as to which the employment period or other
restrictions have not been satisfied shall be forfeited. The preceding
sentence will not apply if the participant becomes or remains a non-
employee officer, director, advisor or independent contractor. In that
event, any Incentive Stock Option held by the participant shall be
converted to a Nonqualified Stock Option on the date the participant's
employment or engagement terminates.
(c) WAIVER OF VESTING RESTRICTIONS. In any circumstance
described in this section, the Committee shall have the discretion to
waive any vesting restrictions on the participant's restricted stock,
options or rights, or the early termination thereof.
9. CAPITAL ADJUSTMENTS. If any changes are made to the shares of
Common Stock (whether by reason of reorganization, recapitalization, stock
dividend, stock split, combination of shares, exchange of shares, change
in corporate structure or otherwise), the Committee shall make the
adjustments it deems appropriate in: (i) the number of outstanding stock
options and stock appreciation rights, (ii) the option price thereof, and
(iii) the aggregate number of shares which may be made subject to stock
options or which may be granted to any one participant hereunder. If any
such adjustment results in a fractional share, the fraction shall be
disregarded.
10. NONTRANSFERABILITY. During a participant's lifetime, a right or
an option may be exercised only by the participant. Options and rights
granted under the Plan, restricted stock as to which the vesting and
performance criteria have not been satisfied, and the rights and
privileges conferred thereby, shall not be subject to execution,
attachment or similar process and may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by the applicable laws of descent and
distribution. Notwithstanding the foregoing, to the extent permitted by
applicable law (including Exchange Act Rule 16b-3), the Committee may, in
its sole discretion, (i) permit a recipient of a Nonqualified Stock Option
to designate in writing during the participant's lifetime a beneficiary to
receive and exercise the participant's Nonqualified Stock Options in the
event of such participant's death, (ii) grant Nonqualified Stock Options
that are transferable to the immediate family or a family trust of the
participant, and (iii) modify existing Nonqualified Stock Options to be
transferable to the immediate family or a family trust of the participant.
Any other attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of any option or right or unvested restricted stock under the
Plan, or of any right or privilege conferred thereby, contrary to the
provisions of the Plan shall be null and void.
11. RESALE OF SHARES PURCHASED. Except as provided in Section 7
with respect to restricted stock, all shares of stock acquired under the
Plan may be freely resold, subject to applicable state and federal
securities laws restricting their transfer. However, the Company may
impose various conditions to exercise of an option, including a
requirement that the person exercising such option represent and warrant
that, at the time of such exercise, the shares of Common Stock being
purchased are being purchased for investment and not with a view to resale
or distribution thereof. In addition, the resale of shares purchased upon
the exercise of Incentive Stock Options may cause the employee to lose
certain tax benefits if the employee fails to comply with the holding
period requirements described in Section 5(e) hereof.
12. ACCELERATION OF RIGHTS AND OPTIONS. If the Company or its
shareholders agree to dispose of all or substantially all of the assets or
stock of the Company (whether by sale, merger or other reorganization,
liquidation, or otherwise), any right or option granted pursuant to the
Plan shall become immediately and fully exercisable during the period from
the date of the agreement to the date the agreement is consummated (or, if
earlier, the date the right or option terminates in accordance with the
Plan). However, no option or right shall be accelerated under this section
if the shareholders of the Company immediately before the contemplated
transaction will own 50% or more of the total combined voting power of all
classes of voting stock of the surviving entity (whether the Company or
some other entity) immediately after the transaction. In the event the
contemplated transaction terminates without being consummated, the options
and rights granted pursuant to the Plan shall thereafter be treated as if
that agreement had never been entered into.
13. TAX WITHHOLDING. Each participant agrees that, if and to the
extent required by law, the Company shall withhold or require the payment
by the participant of any state, federal or local taxes resulting from the
exercise of an option or right or the grant or vesting of restricted
stock; provided, however, that to the extent permitted by law, the
Committee may in its discretion, permit some or all of such withholding
obligation to be satisfied by the delivery by the participant of, or the
retention by the Company of, shares of its Common Stock.
14. COMPLIANCE WITH SECURITIES LAWS. Shares shall not be issued
with respect to any option or right granted under the Plan unless the
exercise of that option and the issuance and delivery of the shares
pursuant thereto shall comply with all relevant provisions of state and
federal law, including without limitation the Securities Act of 1933, as
amended, the rules and regulations promulgated thereunder and the
requirements of any stock exchange or automated quotation system upon
which shares of the Company's stock may then be listed or traded, and
shall be further subject to the approval of counsel for the Company with
respect to such compliance. Each participant must consent to the
imposition of a legend on the certificate representing the shares of
Common Stock issued upon the exercise of the option or right restricting
their transferability as may be required by law, the option or right, or
the Plan.
15. REPORTS TO PARTICIPANTS. The Company shall furnish to each
participant a copy of the annual report, if any, sent to the Company's
shareholders. Upon written request, the Company shall furnish to each
participant a copy of its most recent annual report, if any, filed with
the Securities and Exchange Commission and each quarterly report to
shareholders issued since the end of the Company's most recent fiscal
year.
16. NO EMPLOYEE CONTRACT. The grant of restricted stock or an
option or right under the Plan shall not confer upon any participant any
right with respect to continuation of employment by, or the rendition of
advisory or consulting services to, the Company, nor shall it interfere in
any way with the Company's right to terminate the participant's employment
or services at any time.
17. NONEXCLUSIVITY OF THE PLAN. Approval of the Plan does not
create any limitations on the authority of the Company to adopt other
incentive or compensation arrangements of any nature, nor does it modify
any other compensation practice of the Company.
18. AMENDMENT, SUSPENSION, OR TERMINATION OF PLAN. The Committee
may at any time suspend or terminate the Plan and (except as described
below) may amend it from time to time in such respects as the Committee
may deem advisable in order that options and rights granted hereunder
shall conform to any change in the law, or in any other respect which the
Committee may deem to be in the best interests of the Company. However, no
such amendment shall, without the participant's consent, alter or impair
any of the rights or obligations under any option or stock appreciation
rights theretofore granted to a participant under the Plan. Further, no
such amendment shall, without shareholder approval: (a) increase the total
number of shares available for grants of options or rights under the Plan
(except as provided by Section 9 hereof); or (b) effect any change to the
Plan which is required by law (including without limitation the
regulations promulgated under Section 422 of the Code) to be approved by
the shareholders.
19. EFFECTIVE DATE. The effective date of the Plan shall be March
19, 1999. The Plan shall be submitted for ratification by the Company's
shareholders as required by applicable law (including as required to
qualify for the "qualified performance based compensation" exception to
Code Section 162(m)). Until the Plan has been ratified by the Company's
shareholders, all grants under the Plan also shall be subject to
shareholder ratification.
20. TERMINATION DATE. Unless the Plan shall have been previously
terminated by the Committee, the Plan shall terminate on March 18, 2009,
and no stock, option or right shall be granted after that date. Stock,
options and rights outstanding under the Plan at that date shall continue
to be governed by the provisions of the Plan.
