As filed with the Securities and Exchange Commission on December 8, 1999
Registration No. 333-____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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AGENCY.COM LTD.
(Exact name of registrant as specified in its charter)
Delaware 13-3808969
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
665 Broadway, 9th Floor
New York, New York 10012
(Address of principal executive offices) (Zip Code)
--------
AGENCY.COM LTD.
1999 STOCK OPTION/STOCK ISSUANCE PLAN
1999 EMPLOYEE STOCK PURCHASE PLAN
QUADRIS CONSULTING, INC. 1998 EQUITY INCENTIVE PLAN
INTERACTIVE SOLUTIONS INCORPORATED 1996 STOCK OPTION PLAN
INTERACTIVE TRAFFIC INC. 1999 STOCK INCENTIVE PLAN
(Full title of the Plans)
--------
Chan Suh
Chairman, President and Chief Executive Officer
AGENCY.COM LTD.
665 Broadway
New York, New York 10012
(Name and address of agent for service)
(212) 358-8220
(Telephone number, including area code, of agent for service)
--------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share Price(2) Fee
---------- ------------- --------- ----------- ------------
<S> <C> <C> <C> <C>
1999 Stock Option/Stock Issuance Plan
Common Stock, $0.001 par value 9,676,178 shares $ 26.00(2) $ 251,580,628(2) $66,417.29
1999 Employee Stock Purchase Plan
Common Stock, $0.001 par value 1,000,000 shares $ 26.00(2) $ 26,000,000(2) $ 6,864
Quadris Consulting, Inc. 1998
Equity Incentive Plan
Common Stock, $0.001 par value 618,079 shares $0.41703632(3) $257,761.5152(3) $ 68.05
Interactive Solutions Incorporated
1996 Stock Option Plan
Common Stock, $0.001 par value 538,916 shares $ 1.205(3) $ 649,393.76(3) $ 171.44
Interactive Traffic Inc. 1999 Stock
Incentive Plan
Common Stock, $0.001 par value 158,709 shares $2.54227624(3) $403,482.1197(3) $ 106.52
Aggregate Registration Fee $73,627.30
=============================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the AGENCY.COM Ltd. 1999 Stock
Option/Stock Issuance Plan, the AGENCY.COM Ltd. 1999 Employee Stock
Purchase Plan, the Quadris Consulting, Inc. 1998 Equity Incentive Plan,
the Interactive Solutions Incorporated 1996 Stock Option Plan and the
Interactive Traffic Inc. 1999 Stock Incentive Plan by reason of any stock
dividend, stock split, recapitalization or other similar transaction
effected without the Registrant's receipt of consideration which results
in an increase in the number of the outstanding shares of Registrant's
Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the highest proposed
selling price per share of Registrant's Common Stock.
(3) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the weighted average
exercise price of the outstanding options.
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference
AGENCY.COM Ltd. (the "Registrant") hereby incorporates by reference
into this Registration Statement the following documents previously filed with
the Securities and Exchange Commission (the "Commission"):
(a) The Registrant's Registration Statement No. 333-86433 on Form S-1
filed with the Commission on September 2, 1999, as amended on Form
S-1/A filed with the Commission on October 13, 1999, November 10,
1999, November 12, 1999, November 24, 1999, December 1, 1999,
December 2, 1999, December 3, 1999, December 6, 1999 and December 8,
1999;
(b) The Registrant's Registration Statement No. 000-28293 on Form 8-A12G
filed with the Commission on November 29, 1999 pursuant to Section
12(g) of the Securities Exchange Act of 1934 (the "Exchange Act"),
in which there is described the terms, rights, and provisions
applicable to the Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), after the date of this Registration Statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which de-registers all securities
then remaining unsold shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any subsequently filed document which also is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Directors and Officers
The Registrant's Amended and Restated Certificate of Incorporation
in effect as of the date hereof (the "Certificate") provides that, except to the
extent prohibited by the Delaware General Corporation Law, as amended (the
"DGCL"), the Registrant's directors shall not be personally liable to the
Registrant or its stockholders for monetary damages for any breach of fiduciary
duty as directors of the Registrant. Under the DGCL, the directors have a
fiduciary duty to the Registrant which is not eliminated by this provision of
the Certificate and, in appropriate circumstances, equitable remedies such as
injunctive or other forms of nonmonetary relief will remain available. In
addition, each director will continue to be subject to liability under the DGCL
for breach of the director's duty of loyalty to the Registrant, for acts or
omissions which are found by a court of competent jurisdiction to be not in good
faith or involving intentional misconduct, for knowing violations of law, for
actions leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are prohibited by
the DGCL. This provision also does not affect the directors' responsibilities
under any other laws, such as the Federal securities laws or state or Federal
environmental laws. The Registrant has applied for liability insurance for its
officers and directors.
<PAGE>
Section 145 of the DGCL empowers a corporation to indemnify its
directors and officers and to purchase insurance with respect to liability
arising out of their capacity or status as directors and officers, provided that
this provision shall not eliminate or limit the liability of a director: (i) for
any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) arising under
Section 174 of the DGCL, or (iv) for any transaction from which the director
derived an improper personal benefit. The DGCL provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's bylaws, any agreement, a vote of stockholders or otherwise. The
Certificate eliminates the personal liability of directors to the fullest extent
permitted by Section 102(b)(7) of the DGCL and provides that the Registrant may
fully indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding
(whether civil, criminal, administrative or investigative) by reason of the fact
that such person is or was a director or officer of the Registrant, or is or was
serving at the request of the Registrant as a director or officer of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
At present, there is no pending litigation or proceeding involving
any director, officer, employee or agent as to which indemnification will be
required or permitted under the Certificate. The Registrant is not aware of any
threatened litigation or proceeding that may result in a claim for such
indemnification.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
Exhibit Number Exhibit
- -------------- -------
4 Instruments Defining the Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 000-28293 on
Form 8-A12G, together with the exhibits thereto, which are
incorporated herein by reference pursuant to Item 3(b) to this
Registration Statement.
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Arthur Andersen LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-6 of this
Registration Statement.
99.1 AGENCY.COM Ltd. 1999 Stock Option/Stock Issuance Plan (As
Amended and Restated on October 13, 1999).
99.2 AGENCY.COM Ltd. 1999 Employee Stock Purchase Plan.
99.3 Quadris Consulting, Inc. 1998 Equity Incentive Plan.
99.4 Interactive Solutions Incorporated 1996 Stock Option Plan.
99.5 Interactive Traffic Inc. 1999 Stock Incentive Plan
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this Registration Statement: (i) to include any prospectus required by
Section 10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts or
events arising after the effective date of this Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 Act each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and (3) to remove
from registration by means of a post-
<PAGE>
effective amendment any of the securities being registered which remain unsold
at the termination of the Registrant's 1999 Stock Option/Stock Issuance Plan or
the 1999 Employee Stock Purchase Plan, or the Quadris Consulting, Inc. 1998
Equity Incentive Plan, or the Interactive Solutions Incorporated 1996 Stock
Option Plan or the Interactive Traffic Inc. 1999 Stock Incentive Plan.
B. The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnification provisions summarized in Item 6 or
otherwise, the Registrant has been advised that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8, and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York on this
8th day of December, 1999.
AGENCY.COM LTD.
By: /s/ Chan Suh
----------------------------------------
Chan Suh
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That each person whose signature appears below constitutes and
appoints Chan Suh, President and Chief Executive Officer, and Kenneth Trush,
Executive Vice President and Chief Financial Officer, and each of them, as such
person's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for such person and in such person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as such person might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his or her
substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated:
Signature Title Date
- --------- ----- ----
/s/ Chan Suh President, Chief Executive December 8, 1999
- --------------------- Officer and Chairman of the
Chan Suh Board of Directors (Principal
Executive Officer)
/s/ Kyle Shannon Chief Creative Officer and December 8, 1999
- --------------------- Director
Kyle Shannon
/s/ Kenneth Trush Executive Vice President, December 8, 1999
- --------------------- Treasurer and Director
Kenneth Trush
/s/ Charles Dickson Executive Vice President and December 8, 1999
- --------------------- Chief Financial Officer
Charles Dickson (principal financial and
accounting officer)
/s/ Gerald Bruce Redditt Director December 8, 1999
- ---------------------
Gerald Bruce Redditt
/s/ John D. Wren Director December 8, 1999
- ---------------------
John D. Wren
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
AGENCY.COM LTD.
<PAGE>
EXHIBIT INDEX
Exhibit Number Exhibit
- -------------- -------
4 Instruments Defining the Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 000-28293 on
Form 8-A12G, together with the exhibits thereto, which are
incorporated herein by reference pursuant to Item 3(b) to this
Registration Statement.
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Arthur Andersen LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-6 of this
Registration Statement.
99.1 AGENCY.COM Ltd. 1999 Stock Option/Stock Issuance Plan (As
Amended and Restated on October 13, 1999).
99.2 AGENCY.COM Ltd. 1999 Employee Stock Purchase Plan.
99.3 Quadris Consulting, Inc. 1998 Equity Incentive Plan.
99.4 Interactive Solutions Incorporated 1996 Stock Option Plan.
99.5 Interactive Traffic Inc. 1999 Stock Incentive Plan.
EXHIBIT 5
OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP
December 8, 1999
AGENCY.COM Ltd.
665 Broadway, 9th Floor
New York, New York 10012
Re: AGENCY.COM Ltd.- Registration Statement on Form S-8
Dear Ladies and Gentlemen:
We have acted as counsel to AGENCY.COM Ltd., a Delaware Corporation
(the "Company"), in connection with the registration on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as amended, of (i)
9,676,178 shares of Common Stock under the Company's 1999 Stock Option/Stock
Issuance Plan (the "Option Plan"), (ii) 1,000,000 shares of Common Stock under
the Company's 1999 Employee Stock Purchase Plan (the "Purchase Plan"), (iii) an
aggregate of 618,079 shares of Common Stock and related stock options under the
Quadris Consulting, Inc. 1998 Equity Incentive Plan (the "Quadris Plan"), (iv)
an aggregate of 538,916 shares of Common Stock and related stock options under
the Interactive Solutions Incorporated 1996 Stock Option Plan (the "Interactive
Plan"), and (v) an aggregate of 158,709 shares of Common Stock and related stock
options under the Interactive Traffic Inc. 1999 Stock Incentive Plan (the
"I-Traffic Plan"). All of such shares are collectively referred to herein as the
"Shares".
This opinion is being furnished in accordance with the requirements
of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the establishment of the
Option Plan and the Purchase Plan, and in connection with the assumption of the
Quadris Plan, the Interactive Plan and the I-Traffic Plan . Based on such
review, we are of the opinion that, if, as and when the Shares have been issued
and sold (and the consideration therefor received) pursuant to the provisions of
option agreements duly authorized under the Option Plan, the Quadris Plan, the
Interactive Plan and the I-Traffic Plan, and in accordance with the stock
purchase agreements under the Purchase Plan, and in accordance with the
Registration Statement, such Shares will be duly authorized, legally issued,
fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit 5 to the
Registration Statement.
This opinion letter is rendered as of the date first written above
and we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
Option Plan, the Purchase Plan , the Quadris Plan, the Interactive Plan or the
I-Trafic Plan, or the Shares.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
BROBECK, PHLEGER & HARRISON LLP
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-8 of our report dated
November 10, 1999 included in AGENCY.COM Ltd. and subsidiaries Registration
Statement on Form S-1 (File No. 333-86433) previously filed with the Securities
and Exchange Commission and to all references to our firm included in this
Registration Statement.
Arthur Andersen
New York, New York
December 8, 1999
EXHIBIT 99.1
AGENCY.COM LTD.
1999 Stock Option/Stock Issuance Plan
(As Amended and Restated on October 13, 1999)
<PAGE>
AGENCY.COM, LTD.
1999 STOCK OPTION/STOCK ISSUANCE PLAN
(as Amended and Restated on October 13, 1999)
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1999 Stock Option Plan is intended to promote the interests of
Agency.Com Ltd., a New York corporation, by providing eligible persons with the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in
the service of the Corporation.
Capitalized terms shall have the meanings assigned to such terms in
the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into three separate equity programs:
(i) the Discretionary Option Grant Program under which
eligible persons may, at the discretion of the Plan Administrator, be
granted options to purchase shares of Common Stock,
(ii) the Stock Issuance Program under which eligible persons
may, at the discretion of the Plan Administrator, be issued shares of
Common Stock directly, either through the immediate purchase of such
shares or as a bonus for services rendered the Corporation (or any Parent
or Subsidiary), and
(iii) the Automatic Option Grant Program under which eligible
non-employee Board members shall automatically receive options at periodic
intervals to purchase shares of Common Stock.
B. The provisions of Articles One and Five shall apply to all equity
programs under the Plan and shall govern the interests of all persons under the
Plan.
III. ADMINISTRATION OF THE PLAN
A. Prior to the Section 12 Registration Date, the Discretionary
Option Grant and Stock Issuance Programs shall be administered by the Board
unless otherwise determined by the Board. Beginning with the Section 12
Registration Date, the following provisions shall govern the administration of
the Plan:
<PAGE>
(i) The Board shall have the authority to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to
Section 16 Insiders but may delegate such authority in whole or in part to
the Primary Committee.
(ii) Administration of the Discretionary Option Grant and
Stock Issuance Programs with respect to all other persons eligible to
participate in those programs may, at the Board's discretion, be vested in
the Primary Committee or a Secondary Committee, or the Board may retain
the power to administer those programs with respect to all such persons.
(iii) Administration of the Automatic Option Grant Program
shall be self-executing in accordance with the terms of that program.
B. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full power and authority
subject to the provisions of the Plan:
(i) to establish such rules as it may deem appropriate for
proper administration of the Plan, to make all factual determinations, to
construe and interpret the provisions of the Plan and the awards
thereunder and to resolve any and all ambiguities thereunder;
(ii) to determine, with respect to awards made under the
Discretionary Option Grant and Stock Issuance Programs, which eligible
persons are to receive such awards, the time or times when such awards are
to be made, the number of shares to be covered by each such award, the
vesting schedule (if any) applicable to the award, the status of a granted
option as either an Incentive Option or a Non-Statutory Option and the
maximum term for which the option is to remain outstanding;
(iii) to amend, modify or cancel any outstanding award with
the consent of the holder or accelerate the vesting of such award; and
(iv) to take such other discretionary actions as permitted
pursuant to the terms of the applicable program.
Decisions of each Plan Administrator within the scope of its administrative
functions under the Plan shall be final and binding on all parties.
C. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.
D. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable
2
<PAGE>
for any act or omission made in good faith with respect to the Plan or any
options or stock issuances under the Plan.
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option
Grant and Stock Issuance Programs are as follows:
(i) Employees,
(ii) non-employee members of the Board or the board of
directors of any Parent or Subsidiary, and
(iii) consultants and other independent advisors who provide
services to the Corporation (or any Parent or Subsidiary).
B. Only non-employee Board members shall be eligible to participate
in the Automatic Option Grant Program.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
initially reserved for issuance over the term of the Plan shall not exceed
9,676,178(1) shares. Such authorized share reserve consists of (i) the number of
shares which remain available for issuance, as of the Plan Effective Date, under
the Predecessor Plans as last approved by the Corporation's stockholders,
including the shares subject to the outstanding options to be incorporated into
the Plan and the additional shares which would otherwise be available for future
grant, plus (ii) an increase of 8,478,266 shares authorized by the Board and
approved by the Corporation's stockholders on February 22, 1999, plus (iii) an
increase of 75,000 shares authorized by the Board on October 13, 1999 subject to
stockholder approval.
B. The number of shares of Common Stock available for issuance under
the Plan shall automatically increase on the first trading day of each calendar
year during the term of the Plan, beginning with the 2000 calendar year, by an
amount equal to three percent (3%) of the shares of Common Stock outstanding on
the last trading day of the immediately preceding calendar year, but in no event
shall any such annual increase exceed 1,500,000 shares.
C. No one person participating in the Plan may receive options,
separately exercisable stock appreciation rights and direct stock issuances for
more than 1,100,000 shares of Common Stock in the aggregate per calendar year,
beginning with the 1999 calendar year.
D. Shares of Common Stock subject to outstanding options (including
options incorporated into this Plan from the Predecessor Plans) shall be
available for subsequent
- ----------
(1) All share numbers reflect the two for one stock split effected on
June 28, 1999.
3
<PAGE>
issuance under the Plan to the extent those options expire, terminate or are
cancelled for any reason prior to exercise in full. Unvested shares issued under
the Plan and subsequently repurchased by the Corporation, at the original
exercise or issue price paid per share, pursuant to the Corporation's repurchase
rights under the Plan shall be added back to the number of shares of Common
Stock reserved for issuance under the Plan and shall accordingly be available
for reissuance through one or more subsequent options or direct stock issuances
under the Plan. However, should the exercise price of an option under the Plan
be paid with shares of Common Stock or should shares of Common Stock otherwise
issuable under the Plan be withheld by the Corporation in satisfaction of the
withholding taxes incurred in connection with the exercise of an option or the
vesting of a stock issuance under the Plan, then the number of shares of Common
Stock available for issuance under the Plan shall be reduced by the gross number
of shares for which the option is exercised or which vest under the stock
issuance, and not by the net number of shares of Common Stock issued to the
holder of such option or stock issuance. Shares of Common Stock underlying one
or more stock appreciation rights exercised under the Plan shall not be
available for subsequent issuance.
E. If any change is made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the number and/or class of securities by which the share reserve is
to increase each calendar year pursuant to the automatic share increase
provisions of the Plan, (iii) the number and/or class of securities for which
any one person may be granted options, separately exercisable stock appreciation
rights and direct stock issuances under the Plan per calendar year, (iv) the
number and/or class of securities for which grants are subsequently to be made
under the Automatic Option Grant Program to new and continuing non-employee
Board members, (iv) the number and/or class of securities and the exercise price
per share in effect under each outstanding option under the Plan and (v) the
number and/or class of securities and price per share in effect under each
outstanding option incorporated into this Plan from the Predecessor Plans. Such
adjustments to the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.
4
<PAGE>
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. Exercise Price.
1. The exercise price per share shall be fixed by the Plan
Administrator at the time of the option grant.
2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section II of
Article Five and the documents evidencing the option, be payable in cash or
check made payable to the Corporation. Should the Common Stock be registered
under Section 12 of the 1934 Act at the time the option is exercised, then the
exercise price may also be paid as follows:
(i) shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date,
or
(ii) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant to which
the Optionee shall concurrently provide irrevocable instructions to (a) a
Corporation-approved brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to be
withheld by the Corporation by reason of such exercise and (b) the
Corporation to deliver the certificates for the purchased shares directly
to such brokerage firm in order to complete the sale.
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Exercise and Term of Options. Each option shall be exercisable at
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option. However, no option shall have a term in excess of ten (10) years
measured from the option grant date.
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C. Cessation of Service.
1. The following provisions shall govern the exercise of any
options outstanding at the time of the Optionee's cessation of Service or death:
(i) Any option outstanding at the time of the Optionee's
cessation of Service for any reason shall remain exercisable for such
period of time thereafter as shall be determined by the Plan Administrator
and set forth in the documents evidencing the option, but no such option
shall be exercisable after the expiration of the option term.
(ii) Any option exercisable in whole or in part by the
Optionee at the time of death may be subsequently exercised by his or her
Beneficiary.
(iii) During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more than the
number of vested shares for which the option is exercisable on the date of
the Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term,
the option shall terminate and cease to be outstanding for any vested
shares for which the option has not been exercised. However, the option
shall, immediately upon the Optionee's cessation of Service, terminate and
cease to be outstanding to the extent the option is not otherwise at that
time exercisable for vested shares.
(iv) Should the Optionee's Service be terminated for
Misconduct or should the Optionee engage in Misconduct while his or her
options are outstanding, then all such options shall terminate immediately
and cease to be outstanding.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding:
(i) to extend the period of time for which the option is
to remain exercisable following the Optionee's cessation of Service to
such period of time as the Plan Administrator shall deem appropriate, but
in no event beyond the expiration of the option term, and/or
(ii) to permit the option to be exercised, during the
applicable post-Service exercise period, for one or more additional
installments in which the Optionee would have vested had the Optionee
continued in Service.
D. Stockholder Rights. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee
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cease Service while holding such unvested shares, the Corporation shall have the
right to repurchase, at the exercise price paid per share, any or all of those
unvested shares. The terms upon which such repurchase right shall be exercisable
(including the period and procedure for exercise and the appropriate vesting
schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase right.
F. Limited Transferability of Options. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. Non-Statutory Options shall be
subject to the same restrictions, except that a Non-Statutory Option may, to the
extent permitted by the Plan Administrator, be assigned in whole or in part
during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for Optionee and/or one
or more such family members. The terms applicable to the assigned portion shall
be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Six shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options when
issued under the Plan shall not be subject to the terms of this Section II.
A. Eligibility. Incentive Options may only be granted to Employees.
B. Exercise Price. The exercise price per share shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the option grant date.
C. Dollar Limitation. The aggregate Fair Market Value of the shares
of Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any other
option plan of the Corporation or any Parent or Subsidiary) may for the first
time become exercisable as Incentive Options during any one calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. 10% Stockholder. If any Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.
III. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. Each option outstanding at the time of a Change in Control but
not otherwise fully-vested shall automatically accelerate so that each such
option shall, immediately
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prior to the effective date of the Change in Control, become exercisable for all
of the shares of Common Stock at the time subject to that option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
However, an outstanding option shall not so accelerate if and to the extent: (i)
such option is, in connection with the Change in Control, assumed or otherwise
continued in full force and effect by the successor corporation (or parent
thereof) pursuant to the terms of the Change in Control, (ii) such option is
replaced with a cash incentive program of the successor corporation which
preserves the spread existing at the time of the Change in Control on the shares
of Common Stock for which the option is not otherwise at that time exercisable
and provides for subsequent payout in accordance with the same vesting schedule
applicable to those option shares or (iii) the acceleration of such option is
subject to other limitations imposed by the Plan Administrator at the time of
the option grant.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Change in Control, except to
the extent: (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) or otherwise continue in full force and effect
pursuant to the terms of the Change in Control or (ii) such accelerated vesting
is precluded by other limitations imposed by the Plan Administrator at the time
the repurchase right is issued.
C. Immediately following the consummation of the Change in Control,
all outstanding options shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof) or otherwise
expressly continued in full force and effect pursuant to the terms of the Change
in Control.
D. Each option which is assumed in connection with a Change in
Control shall be appropriately adjusted, immediately after such Change in
Control, to apply to the number and class of securities which would have been
issuable to the Optionee in consummation of such Change in Control had the
option been exercised immediately prior to such Change in Control. Appropriate
adjustments to reflect such Change in Control shall also be made to (i) the
exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the same, (ii)
the maximum number and/or class of securities available for issuance over the
remaining term of the Plan and (iii) the maximum number and/or class of
securities for which any one person may be granted options, separately
exercisable stock appreciation rights and direct stock issuances under the Plan
per calendar year.
E. The Plan Administrator may at any time provide that one or more
options will automatically accelerate in connection with a Change in Control,
whether or not those options are assumed or otherwise continued in full force
and effect pursuant to the terms of the Change in Control. Any such option shall
accordingly become exercisable, immediately prior to the effective date of such
Change in Control, for all of the shares of Common Stock at the time subject to
that option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. In addition, the Plan Administrator may at any time
provide that one or more of the Corporation's repurchase rights shall not be
assignable in connection with such Change in Control and shall terminate upon
the consummation of such Change in Control.
F. The Plan Administrator may at any time provide that one or more
options will automatically accelerate upon an Involuntary Termination of the
Optionee's Service within a
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designated period (not to exceed eighteen (18) months) following the effective
date of any Change in Control in which those options do not otherwise
accelerate. Any options so accelerated shall remain exercisable for fully-vested
shares until the earlier of (i) the expiration of the option term or (ii) the
expiration of the one (1) year period measured from the effective date of the
Involuntary Termination. In addition, the Plan Administrator may at any time
provide that one or more of the Corporation's repurchase rights shall
immediately terminate upon such Involuntary Termination.
G. The Plan Administrator may at any time provide that one or more
options will automatically accelerate in connection with a Hostile Take-Over.
Any such option shall become exercisable, immediately prior to the effective
date of such Hostile Take-Over, for all of the shares of Common Stock at the
time subject to that option and may be exercised for any or all of those shares
as fully-vested shares of Common Stock. In addition, the Plan Administrator may
at any time provide that one or more of the Corporation's repurchase rights
shall terminate automatically upon the consummation of such Hostile Take-Over.
Alternatively, the Plan Administrator may condition such automatic acceleration
and termination upon an Involuntary Termination of the Optionee's Service within
a designated period (not to exceed eighteen (18) months) following the effective
date of such Hostile Take-Over. Each option so accelerated shall remain
exercisable for fully-vested shares until the expiration or sooner termination
of the option term.
H. The portion of any Incentive Option accelerated in connection
with a Change in Control or Hostile Take Over shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
($100,000) limitation is not exceeded. To the extent such dollar limitation is
exceeded, the accelerated portion of such option shall be exercisable as a
Non-Statutory Option under the Federal tax laws.
IV. STOCK APPRECIATION RIGHTS
The Plan Administrator may, subject to such conditions as it may
determine, grant to selected Optionees stock appreciation rights which will
allow the holders of those rights to elect between the exercise of the
underlying option for shares of Common Stock and the surrender of that option in
exchange for a distribution from the Corporation in an amount equal to the
excess of (a) the Option Surrender Value of the number of shares for which the
option is surrendered over (b) the aggregate exercise price payable for such
shares. The distribution may be made in shares of Common Stock valued at Fair
Market Value on the option surrender date, in cash, or partly in shares and
partly in cash, as the Plan Administrator shall in its sole discretion deem
appropriate.
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ARTICLE THREE
STOCK ISSUANCE PROGRAM
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance
Program through direct and immediate issuances without any intervening options.
Shares of Common Stock may also be issued under the Stock Issuance Program
pursuant to share right awards which entitle the recipients to receive those
shares upon the attainment of designated performance goals or Service
requirements. Each such award shall be evidenced by one or more documents which
comply with the terms specified below.
A. Purchase Price.
1. The purchase price per share of Common Stock subject to
direct issuance shall be fixed by the Plan Administrator.
2. Subject to the provisions of Section II of Article Five,
shares of Common Stock may be issued under the Stock Issuance Program for any of
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any
Parent or Subsidiary).
B. Vesting/Issuance Provisions.
1. The Plan Administrator may issue shares of Common Stock
which are fully and immediately vested upon issuance or which are to vest in one
or more installments over the Participant's period of Service or upon attainment
of specified performance objectives. Alternatively, the Plan Administrator may
issue share right awards which shall entitle the recipient to receive a
specified number of vested shares of Common Stock upon the attainment of one or
more performance goals or Service requirements established by the Plan
Administrator.
2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to his or her unvested
shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.
3. The Participant shall have full stockholder rights with
respect to the issued shares of Common Stock, whether or not the Participant's
interest in those shares is
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vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock, or should the performance
objectives not be attained with respect to one or more such unvested shares of
Common Stock, then those shares shall be immediately surrendered to the
Corporation for cancellation, and the Participant shall have no further
stockholder rights with respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for consideration paid in cash
or cash equivalent (including the Participant's purchase-money indebtedness),
the Corporation shall repay to the Participant the cash consideration paid for
the surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable to the
surrendered shares.
5. The Plan Administrator may waive the surrender and
cancellation of one or more unvested shares of Common Stock (or other assets
attributable thereto) which would otherwise occur upon the cessation of the
Participant's Service or the non-attainment of the performance objectives
applicable to those shares. Such waiver shall result in the immediate vesting of
the Participant's interest in the shares of Common Stock as to which the waiver
applies. Such waiver may be effected at any time, whether before or after the
Participant's cessation of Service or the attainment or non-attainment of the
applicable performance objectives.
6. Outstanding share right awards shall automatically
terminate, and no shares of Common Stock shall actually be issued in
satisfaction of those awards, if the performance goals or Service requirements
established for such awards are not attained. The Plan Administrator, however,
shall have the authority to issue shares of Common Stock in satisfaction of one
or more outstanding share right awards as to which the designated performance
goals or Service requirements are not attained.
II. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. All of the Corporation's outstanding repurchase rights shall
terminate automatically, and all the shares of Common Stock subject to those
terminated rights shall immediately vest in full, in the event of any Change in
Control, except to the extent (i) those repurchase rights are assigned to the
successor corporation (or parent thereof) or otherwise continue in full force
and effect pursuant to the terms of the Change in Control or (ii) such
accelerated vesting is precluded by other limitations imposed by the Plan
Administrator at the time the repurchase right is issued.
B. The Plan Administrator may at any time provide for the automatic
termination of one or more of those outstanding repurchase rights and the
immediate vesting of the shares of Common Stock subject to those terminated
rights upon (i) a Change in Control or Hostile Take-Over or (ii) an Involuntary
Termination of the Participant's Service within a designated period (not to
exceed eighteen (18) months) following the effective date of any Change in
Control or Hostile Take-Over in which those repurchase rights are assigned to
the successor corporation (or parent thereof) or otherwise continue in full
force and effect.
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III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held
in escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends on
the certificates evidencing those unvested shares.
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ARTICLE FOUR
AUTOMATIC OPTION GRANT PROGRAM
I. OPTION TERMS
A. Grant Dates. Options shall be made on the dates specified below:
1. Each individual serving as a non-employee Board member on
the Underwriting Date shall automatically be granted at that time a
Non-Statutory Option to purchase Fifty Thousand (50,000) shares of Common Stock,
provided that individual has not previously been in the employ of the
Corporation or any Parent or Subsidiary and provided further that such
individual has neither received options to purchase, in the aggregate, more than
Forty Thousand (40,000) shares of Common Stock in the twelve (12)-month period
preceding the Underwriting Date nor is a 30% Percent Stockholder.
2. Each individual who is first elected or appointed as a
non-employee Board member at any time after the Underwriting Date shall
automatically be granted, on the date of such initial election or appointment, a
Non-Statutory Option to Fifty Thousand (50,000) shares of Common Stock, provided
that individual has not previously been in the employ of the Corporation or any
Parent or Subsidiary, and provided that such individual has neither received
options to purchase, in the aggregate, more than Forty Thousand (40,000) shares
of Common Stock in the twelve (12)-month period preceding the Underwriting Date
nor is a 30% Percent Stockholder.
3. On the date of each Annual Stockholders Meeting held after
the Underwriting Date, each individual who is to continue to serve as a
non-employee Board member, whether or not that individual is standing for
re-election to the Board, shall automatically be granted a Non-Statutory Option
to purchase Fifteen Thousand (15,000) shares of Common Stock, provided such
individual has served as a non-employee Board member for at least six (6) months
and provided such individual is not a 30% Percent Stockholder or affiliate.
B. Exercise Price.
1. The exercise price per share shall be equal to one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.
2. The exercise price shall be payable in one or more of the
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
C. Option Term. Each option shall have a term of ten (10) years
measured from the option grant date.
D. Exercise and Vesting of Options. Each option shall be immediately
exercisable for any or all of the option shares. However, any shares purchased
under the option
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shall be subject to repurchase by the Corporation, at the exercise price paid
per share, upon the Optionee's cessation of Board service prior to vesting in
those shares. Each initial Fifty Thousand (50,000) share option shall vest, and
the Corporation's repurchase right shall lapse, in a series of four (4)
successive equal annual installments upon the Optionee's completion of each year
of Board service over the four (4)-year period measured from the grant date.
Each annual Fifteen Thousand (15,000) share option shall vest, and the
Corporation's repurchase right shall lapse, upon the Optionee's completion of
one (1) year of Board service measured from the grant date.
E. Cessation of Board Service. The following provisions shall govern
the exercise of any options outstanding at the time of the Optionee's cessation
of Board service:
(i) Any option outstanding at the time of the Optionee's
cessation of Board service for any reason shall remain exercisable for a
twelve (12)-month period following the date of such cessation of Board
service, but in no event shall such option be exercisable after the
expiration of the option term.
(ii) Any option exercisable in whole or in part by the
Optionee at the time of death may be subsequently exercised by his or her
Beneficiary.
(iii) Following the Optionee's cessation of Board service, the
option may not be exercised in the aggregate for more than the number of
shares in which the Optionee was vested on the date of such cessation of
Board service. Upon the expiration of the applicable exercise period or
(if earlier) upon the expiration of the option term, the option shall
terminate and cease to be outstanding for any vested shares for which the
option has not been exercised. However, the option shall, immediately upon
the Optionee's cessation of Board service, terminate and cease to be
outstanding for any and all shares in which the Optionee is not otherwise
at that time vested.
(iv) However, should the Optionee cease to serve as a Board
member by reason of death or Permanent Disability, then all shares at the
time subject to the option shall immediately vest so that such option may,
during the twelve (12)-month exercise period following such cessation of
Board service, be exercised for all or any portion of those shares as
fully-vested shares of Common Stock.
II. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Change in Control or Hostile Take-Over, the
shares of Common Stock at the time subject to each outstanding option but not
otherwise vested shall automatically vest in full so that each such option may,
immediately prior to the effective date of such Change in Control the Hostile
Take-Over, be exercised for all or any portion of those shares as fully-vested
shares of Common Stock. Each such option accelerated in connection with a Change
in Control shall terminate upon the Change in Control, except to the extent
assumed by
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the successor corporation (or parent thereof) or otherwise continued in full
force and effect pursuant to the terms of the Change in Control. Each such
option accelerated in connection with a Hostile Take-Over shall remain
exercisable until the expiration or sooner termination of the option term.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Change in Control or Hostile
Take-Over.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each of
his or her outstanding options. The Optionee shall in return be entitled to a
cash distribution from the Corporation in an amount equal to the excess of (i)
the Option Surrender Value of the shares of Common Stock at the time subject to
each surrendered option (whether or not the Optionee is otherwise at the time
vested in those shares) over (ii) the aggregate exercise price payable for such
shares. Such cash distribution shall be paid within five (5) days following the
surrender of the option to the Corporation.
D. Each option which is assumed in connection with a Change in
Control shall be appropriately adjusted to apply to the number and class of
securities which would have been issuable to the Optionee in consummation of
such Change in Control had the option been exercised immediately prior to such
Change in Control. Appropriate adjustments shall also be made to the exercise
price payable per share under each outstanding option, provided the aggregate
exercise price payable for such securities shall remain the same.
III. REMAINING TERMS
The remaining terms of each option granted under the Automatic
Option Grant Program shall be the same as the terms in effect for options made
under the Discretionary Option Grant Program.
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ARTICLE FIVE
MISCELLANEOUS
I. NO IMPAIRMENT OF AUTHORITY
Outstanding awards shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
II. FINANCING
The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price under the Discretionary Option Grant Program or the
purchase price of shares issued under the Stock Issuance Program by delivering a
full-recourse, interest bearing promissory note payable in one or more
installments. The terms of any such promissory note (including the interest rate
and the terms of repayment) shall be established by the Plan Administrator in
its sole discretion. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased shares plus (ii) any Federal,
state and local income and employment tax liability incurred by the Optionee or
the Participant in connection with the option exercise or share purchase.
III. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock
upon the exercise of options or the issuance or vesting of such shares under the
Plan shall be subject to the satisfaction of all applicable Federal, state and
local income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan with the right to use shares of Common Stock in satisfaction of all or part
of the Taxes incurred by such holders in connection with the exercise of their
options or the vesting of their shares. Such right may be provided to any such
holder in either or both of the following formats:
Stock Withholding: The election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the Taxes
(not to exceed one hundred percent (100%)) designated by the holder.
Stock Delivery: The election to deliver to the Corporation, at
the time the Non-Statutory Option is exercised or the shares vest, one or more
shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the Taxes) with
an aggregate Fair Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.
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IV. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan became effective immediately upon the Plan Effective
Date and was approved by the stockholders on February 22, 1999. On June 17,
1999, the Corporation amended and restated the plan to limit the availability of
option grants under the Automatic Option Grant Program to those individuals who
are not a 30% Stockholder. On October 13, 1999 the Board amended and restated
the Plan to increase the number of shares available for issuance under the Plan
by 75,000 shares, subject to Stockholder approval. No options shall be granted
on the basis of the 75,000 share increase unless and until Stockholder approval
of the increase is obtained.
B. The Plan shall serve as the successor to the Predecessor Plans,
and no further options or direct stock issuances shall be made under the
Predecessor Plans after the Section 12 Registration Date. All options
outstanding under the Predecessor Plans on the Section 12 Registration Date
shall be incorporated into the Plan at that time and shall be treated as
outstanding options under the Plan. However, each outstanding option so
incorporated shall continue to be governed solely by the terms of the documents
evidencing such option, and no provision of the Plan shall be deemed to affect
or otherwise modify the rights or obligations of the holders of such
incorporated options with respect to their acquisition of shares of Common
Stock.
C. One or more provisions of the Plan, including (without
limitation) the option/vesting acceleration provisions of Article Two relating
to Changes in Control, may, in the Plan Administrator's discretion, be extended
to one or more options incorporated from the Predecessor Plans which do not
otherwise contain such provisions.
D. The Plan shall terminate upon the earliest of (i) January 31,
2009, (ii) the date on which all shares available for issuance under the Plan
shall have been issued as fully-vested shares or (iii) the termination of all
outstanding options in connection with a Change in Control. Upon such plan
termination, all outstanding options and unvested stock issuances shall
thereafter continue to have force and effect in accordance with the provisions
of the documents evidencing such grants or issuances.
V. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects. However, no such amendment
or modification shall adversely affect the rights and obligations with respect
to stock options or unvested stock issuances at the time outstanding under the
Plan unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.
B. Options to purchase shares of Common Stock may be granted under
the Discretionary Option Grant Program and shares of Common Stock may be issued
under the Stock Issuance Program that are in each instance in excess of the
number of shares then available for issuance under the Plan, provided any excess
shares actually issued under those programs
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shall be held in escrow until there is obtained stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock available
for issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess issuances are made, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees and the Participants the exercise or purchase price paid
for any excess shares issued under the Plan and held in escrow, together with
interest (at the applicable Short Term Federal Rate) for the period the shares
were held in escrow, and such shares shall thereupon be automatically cancelled
and cease to be outstanding.
VI. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.
VII. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any stock option
under the Plan and the issuance of any shares of Common Stock (i) upon the
exercise of any granted option or (ii) under the Stock Issuance Program shall be
subject to the Corporation's procurement of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the stock options
granted under it and the shares of Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
VIII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the
Participant any right to continue in Service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.
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APPENDIX
The following definitions shall be in effect under the Plan:
A. Automatic Option Grant Program shall mean the automatic option grant
program in effect under the Plan.
B. Beneficiary shall mean, in the event the Plan Administrator implements
a beneficiary designation procedure, the person designated by an Optionee or
Participant, pursuant to such procedure, to succeed to such person's rights
under any outstanding awards held by him or her at the time of death. In the
absence of such designation or procedure, the Beneficiary shall be the personal
representative of the estate of the Optionee or Participant or the person or
persons to whom the award is transferred by will or the laws of descent and
distribution.
C. Board shall mean the Corporation's Board of Directors.
D. Change in Control shall mean a change in ownership or control of the
Corporation effected through any of the following transactions:
(i) a merger, consolidation or reorganization approved by the
Corporation's stockholders, unless securities representing more than fifty
percent (50%) of the total combined voting power of the voting securities of the
successor corporation are immediately thereafter beneficially owned, directly or
indirectly and in substantially the same proportion, by the persons who
beneficially owned the Corporation's outstanding voting securities immediately
prior to such transaction,
(ii) any stockholder-approved transfer or other disposition of
all or substantially all of the Corporation's assets, or
(iii) the acquisition, directly or indirectly by any person or
related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's stockholders which
the Board recommends such stockholders accept.
E. Code shall mean the Internal Revenue Code of 1986, as amended.
F. Common Stock shall mean the Corporation's common stock.
G. Corporation shall mean Agency.com, Ltd., a Delaware corporation, and
its successors.
H. Discretionary Option Grant Program shall mean the discretionary option
grant program in effect under the Plan.
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I. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
J. Exercise Date shall mean the date on which the Corporation shall have
received written notice of the option exercise.
K. Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per share
of Common Stock on the date in question, as such price is reported on the Nasdaq
National Market or any successor system. If there is no closing selling price
for the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such quotation
exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange determined
by the Plan Administrator to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
(iii) For purposes of any options made on the Underwriting Date, the
Fair Market Value shall be deemed to be equal to the price per share at which
the Common Stock is to be sold in the initial public offering pursuant to the
Underwriting Agreement.
(iv) For purposes of any options made prior to the Underwriting
Date, the Fair Market Value shall be determined by the Plan Administrator, after
taking into account such factors as it deems appropriate.
L. Hostile Take-Over shall mean:
(i) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's stockholders which
the Board does not recommend such stockholders to accept, or
(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the Board
members ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least a
majority of
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the Board members described in clause (A) who were still in office at the time
the Board approved such election or nomination.
M. Incentive Option shall mean an option which satisfies the requirements
of Code Section 422.
N. Involuntary Termination shall mean the termination of the Service of
any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a change
in his or her position with the Corporation or Parent or Subsidiary employing
the individual which materially reduces his or her duties and responsibilities
or the level of management to which he or she reports, (B) a reduction in his or
her level of compensation (including base salary, fringe benefits and target
bonus under any performance based bonus or incentive programs) by more than
fifteen percent (15%) or (C) a relocation of such individual's place of
employment by more than fifty (50) miles, provided and only if such change,
reduction or relocation is effected by the Corporation without the individual's
consent.
O. Misconduct shall mean the commission of any act of fraud, embezzlement
or dishonesty by the Optionee or Participant, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary), or any intentional wrongdoing by such person,
whether by omission or commission, which adversely affects the business or
affairs of the Corporation (or any Parent or Subsidiary) in a material manner.
This shall not limit the grounds for the dismissal or discharge of any person in
the Service of the Corporation (or any Parent or Subsidiary).
P. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
Q. Non-Statutory Option shall mean an option not intended to satisfy the
requirements of Code Section 422.
R. Option Surrender Value shall mean the Fair Market Value per share of
Common Stock on the date the option is surrendered to the Corporation or, in the
event of a Hostile Take-Over, effected through a tender offer, the highest
reported price per share of Common Stock paid by the tender offeror in effecting
such Hostile Take-Over, if greater. However, if the surrendered option is an
Incentive Option, the Option Surrender Value shall not exceed the Fair Market
Value per share.
S. Optionee shall mean any person to whom an option is granted under the
Discretionary Option Grant, Salary Investment Option Grant or Automatic Option
Grant Program.
T. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty
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percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
U. Participant shall mean any person who is issued shares of Common Stock
under the Stock Issuance Program.
V. Permanent Disability or Permanently Disabled shall mean the inability
of the Optionee or the Participant to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment expected
to result in death or to be of continuous duration of twelve (12) months or
more. However, solely for purposes of the Automatic Option Grant Program,
Permanent Disability or Permanently Disabled shall mean the inability of the
non-employee Board member to perform his or her usual duties as a Board member
by reason of any medically determinable physical or mental impairment expected
to result in death or to be of continuous duration of twelve (12) months or
more.
W. Plan shall mean the Corporation's 1999 Stock Option/Stock Issuance
Plan, as set forth in this document.
X. Plan Administrator shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to one or more classes of eligible persons, to the extent such entity is
carrying out its administrative functions under those programs with respect to
the persons under its jurisdiction. However, the Primary Committee shall have
the plenary authority to make all factual determinations and to construe and
interpret any and all ambiguities under the Plan to the extent such authority is
not otherwise expressly delegated to any other Plan Administrator.
Y. Plan Effective Date shall mean February 19, 1999, the date on which the
Plan was adopted by the Board.
Z. Predecessor Plans shall mean the Corporation's pre-existing 1996 Stock
Option Plan and 1997 Stock Option Plan in effect immediately prior to the Plan
Effective Date hereunder.
AA. Primary Committee shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders.
AB. Secondary Committee shall mean a committee of one (1) or more Board
members appointed by the Board to administer the Discretionary Option Grant and
Stock Issuance Programs with respect to eligible persons other than Section 16
Insiders.
AC. Section 12 Registration Date shall mean the date on which the Common
Stock is first registered under Section 12(g) of the 1934 Act.
AD. Section 16 Insider shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
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AE. Service shall mean the performance of services for the Corporation (or
any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant or stock issuance.
AF. Stock Exchange shall mean either the American Stock Exchange or the
New York Stock Exchange.
AG. Stock Issuance Program shall mean the stock issuance program in effect
under the Plan.
AH. Subsidiary shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
AI. Taxes shall mean the Federal, state and local income and employment
tax liabilities incurred by the holder of Non-Statutory Options or unvested
shares of Common Stock in connection with the exercise of those options or the
vesting of those shares.
AJ. 10% Stockholder shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
AK. 30% Stockholder shall mean a non-employee Board member who, directly
or indirectly, owns stock (as determined under Code Section 424(d)) possessing
at least thirty percent (30%) of the total combined voting power of the
outstanding securities of the Corporation (or any Parent or Subsidiary) or is
affiliated with or is a representative of such a thirty percent (30%) or greater
stockholder.
AL. Underwriting Agreement shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
AM. Underwriting Date shall mean the date on which the Underwriting
Agreement is executed and priced in connection with an initial public offering
of the Common Stock.
A-5
EXHIBIT 99.2
AGENCY.COM LTD.
1999 EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
AGENCY.COM, LTD.
1999 EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the
interests of Agency.com, Ltd., a Delaware corporation, by providing eligible
employees with the opportunity to acquire a proprietary interest in the
Corporation through participation in a payroll-deduction based employee stock
purchase plan designed to qualify under Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares of Common
Stock purchased on the open market. The maximum number of shares of Common Stock
which may be issued in the aggregate under the Plan shall initially be limited
to One Million (1,000,000) shares.
B. On the first business day of each calendar year, beginning with
the year 2000, the share reserve shall be automatically increased by the number
of shares of Common Stock issued under the Plan in the immediately preceding
calendar year; however, in no event shall such annual increases exceed Two
Hundred Thousand (200,000) shares.
C. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and class of securities issuable under
the Plan, (ii) the maximum number and class of securities by which the share
reserve is to increase automatically each year, (iii) the maximum number and
class of securities purchasable per Participant on any one Purchase Date and
(iv) the number and class of securities and the price per share in effect under
each outstanding purchase right in order to prevent the dilution or enlargement
of benefits thereunder.
<PAGE>
IV. PURCHASE PERIODS
A. Shares of Common Stock shall be offered for purchase under the
Plan through a series of successive purchase periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.
B. Each purchase period shall have a duration of six (6) months.
Purchase periods shall run from the first business day in May to the last
business day in October each year and from the first business day in November to
the last business day in April of the following year. However, the first
purchase period shall commence at the Effective Time and terminate on the last
business day in April 2000.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee at the Effective Time
may enter a purchase period under the Plan on the start date of such period,
provided he or she is an Eligible Employee on that date.
B. Each individual who becomes an Eligible Employee after the
Effective Time may join the Plan on the start date of any purchase period
provided such individual has completed at least six (6) months of service as an
employee to the Corporation or any Corporate Affiliate prior to such start date
and is an Eligible Employee on such date.
C. To participate in the Plan for a particular purchase period, the
Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization) and file such forms with the Plan Administrator (or its
designate) on or before the start date of the purchase period.
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for purposes
of acquiring shares of Common Stock under the Plan may be any multiple of one
percent (1%) of the Cash Earnings paid to the Participant during each purchase
period, up to a maximum of fifteen percent (15%). The deduction rate so
authorized shall continue in effect from purchase period to purchase period,
except to the extent changed by the Participant. The Participant may not
increase his or her rate of payroll deduction during a purchase period. However,
the Participant may, at any time during the purchase period, reduce his or her
rate of payroll deduction to become effective as soon as possible after filing
the appropriate form with the Plan Administrator. The Participant may not,
however, effect more than one (1) such reduction per purchase period.
B. Payroll deductions shall begin on the first pay day following the
start date of the purchase period and shall (unless sooner terminated by the
Participant) continue through the pay day ending with or immediately prior to
the last day of the purchase period. The amounts so collected shall be credited
to the Participant's book account under the Plan, but no
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<PAGE>
interest shall be paid on the balance from time to time outstanding in such
account. The amounts collected from the Participant shall not be required to be
held in any segregated account or trust fund and may be commingled with the
general assets of the Corporation and used for general corporate purposes.
C. Payroll deductions shall automatically cease upon the termination
of the Participant's purchase right in accordance with the provisions of the
Plan.
D. The Participant's acquisition of Common Stock under the Plan on
any Purchase Date shall neither limit nor require the Participant's acquisition
of Common Stock on any subsequent Purchase Date.
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. A Participant shall be granted a
separate purchase right on the start date of each purchase period in which he or
she participates. The purchase right shall provide the Participant with the
right to purchase shares of Common Stock on the Purchase Date upon the terms set
forth below. The Participant shall execute a stock purchase agreement embodying
such terms and such other provisions (not inconsistent with the Plan) as the
Plan Administrator may deem advisable.
Under no circumstances shall purchase rights be granted under the
Plan to any Eligible Employee if such individual would, immediately after the
grant, own (within the meaning of Code Section 424(d)) or hold outstanding
options or other rights to purchase, stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Corporation or any Corporate Affiliate.
B. Exercise of the Purchase Right. Each purchase right shall be
automatically exercised on the Purchase Date, and shares of Common Stock shall
accordingly be purchased on behalf of each Participant (other than Participants
whose payroll deductions have previously been refunded pursuant to the
Termination of Purchase Right provisions below) on each such Purchase Date. The
purchase shall be effected by applying the Participant's payroll deductions for
the purchase period ending on such Purchase Date to the purchase of whole shares
of Common Stock at the purchase price in effect for that purchase period.
C. Purchase Price. The purchase price per share at which Common
Stock will be purchased on the Participant's behalf on each Purchase Date shall
be equal to eighty-five percent (85%) of the lower of (i) the Fair Market Value
per share of Common Stock on the start date of the purchase period or (ii) the
Fair Market Value per share of Common Stock on that Purchase Date.
D. Number of Purchasable Shares. The number of shares of Common
Stock purchasable by a Participant on each Purchase Date shall be the number of
whole shares obtained by dividing the amount collected from the Participant
through payroll deductions during the purchase period ending with that Purchase
Date by the purchase price in effect for the
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<PAGE>
Participant for that Purchase Date. However, the maximum number of shares of
Common Stock purchasable per Participant on any one Purchase Date shall not
exceed 1,000 shares.
E. Excess Payroll Deductions. Any payroll deductions not applied to
the purchase of shares of Common Stock on any Purchase Date because they are not
sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable by the Participant on the
Purchase Date shall be promptly refunded.
F. Termination of Purchase Right. The following provisions shall
govern the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the last day of
the purchase period, terminate his or her outstanding purchase right by
filing the appropriate form with the Plan Administrator (or its
designate), and no further payroll deductions shall be collected from the
Participant with respect to the terminated purchase right. Any payroll
deductions collected during the purchase period in which such termination
occurs shall be refunded as soon as possible.
(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin the purchase
period for which the terminated purchase right was granted. In order to
resume participation in any subsequent purchase period, such individual
must re-enroll in the Plan (by making a timely filing of the prescribed
enrollment forms) on or before the start date of the new purchase period.
(iii) Should the Participant cease to remain an Eligible
Employee for any reason (including death, disability or change in status)
while his or her purchase right remains outstanding, then that purchase
right shall immediately terminate, and all of the Participant's payroll
deductions for the purchase period in which the purchase right so
terminates shall be immediately refunded. However, should the Participant
cease to remain in active service by reason of an approved unpaid leave of
absence, then the Participant shall have the right, exercisable up until
the last business day of the purchase period in which such leave
commences, to (a) withdraw all of the payroll deductions collected to date
on his or her behalf for that purchase period or (b) have such funds held
for the purchase of shares on his or her behalf on the next scheduled
Purchase Date. In no event shall any further payroll deductions be
collected on the Participant's behalf during such leave. Upon the
Participant's return to active service (i) within ninety (90) days
following the commencement of such leave or, (ii) prior to the expiration
of any longer period for which such Participant's right to reemployment
with the Corporation is guaranteed by either statute or contract, his or
her payroll deductions under the Plan shall automatically resume at the
rate in effect at the time the leave began. However, should the
Participant's leave of absence exceed ninety (90) days and his or her
re-employment rights not be
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<PAGE>
guaranteed by either statute or contract, then the Participant's status as
an Eligible Employee will be deemed to terminate on the ninety-first
(91st) day of that leave, and such Participant's purchase right for the
purchase period in which that leave began shall thereupon terminate. An
individual who returns to active employment following such a leave shall
be treated as a new Employee for purposes of the Plan and must, in order
to resume participation in the Plan, re-enroll in the Plan (by making a
timely filing of the prescribed enrollment forms) on or before the start
date of the new purchase period.
G. Change in Control. Each outstanding purchase right shall
automatically be exercised, immediately prior to the effective date of any
Change in Control by applying the payroll deductions of each Participant for the
purchase period in which such Change in Control occurs to the purchase of whole
shares of Common Stock at a purchase price per share equal to eighty-five
percent (85%) of the lower of (i) the Fair Market Value per share of Common
Stock on the start date of the purchase period in which such Change in Control
occurs or (ii) the Fair Market Value per share of Common Stock immediately prior
to the effective date of such Change in Control. However, the applicable
limitation on the number of shares of Common Stock purchasable per Participant
shall continue to apply to any such purchase.
The Corporation shall use its best efforts to provide at least ten
(10)-days prior written notice of the occurrence of any Change in Control, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Change in Control.
H. Proration of Purchase Rights. Should the total number of shares
of Common Stock to be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.
I. Assignability. The purchase right shall be exercisable only by
the Participant and shall not be assignable or transferable by the Participant.
J. Stockholder Rights. A Participant shall have no stockholder
rights with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant's behalf in accordance
with the provisions of the Plan and the Participant has become a holder of
record of the purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when aggregated with (i) rights to purchase Common
Stock accrued under any other purchase right granted under this Plan and (ii)
similar rights accrued under other employee stock purchase plans (within the
meaning of Code Section 423) of the Corporation or any Corporate Affiliate,
would
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<PAGE>
otherwise permit such Participant to purchase more than Twenty-Five Thousand
Dollars ($25,000) worth of stock of the Corporation or any Corporate Affiliate
(determined on the basis of the Fair Market Value per share on the date or dates
such rights are granted) for each calendar year such rights are at any time
outstanding.
B. For purposes of applying such accrual limitations to the purchase
rights granted under the Plan, the following provisions shall be in effect:
(i) The right to acquire Common Stock under each outstanding
purchase right shall accrue on the Purchase Date in effect for the period
on which such right is granted.
(ii) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has already
accrued in the same calendar year the right to acquire Common Stock under
one (1) or more other purchase rights at a rate equal to Twenty-Five
Thousand Dollars ($25,000) worth of Common Stock (determined on the basis
of the Fair Market Value per share on the date or dates of grant) for each
calendar year such rights were at any time outstanding.
C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular purchase period, then the payroll
deductions which the Participant made during that purchase period with respect
to such purchase right shall be promptly refunded.
D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on _________, 1999 and shall
become effective on the Effective Date, provided no purchase rights granted
under the Plan shall be exercised, and no shares of Common Stock shall be issued
hereunder, until (i) the Plan shall have been approved by the stockholders of
the Corporation and (ii) the Corporation shall have complied with all applicable
requirements of the 1933 Act (including the registration of the shares of Common
Stock issuable under the Plan on a Form S-8 registration statement filed with
the Securities and Exchange Commission), all applicable listing requirements of
any stock exchange (or the Nasdaq National Market, if applicable) on which the
Common Stock is listed for trading and all other applicable requirements
established by law or regulation. In the event such stockholder approval is not
obtained, or such compliance is not effected, within twelve (12) months after
the date on which the Plan is adopted by the Board, the Plan shall terminate and
have no further force or effect, and all sums collected from Participants during
the initial purchase period hereunder shall be refunded.
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<PAGE>
B. Unless sooner terminated by the Board, the Plan shall terminate
upon the earliest of (i) the last business day in October 2009, (ii) the date on
which all shares available for issuance under the Plan shall have been sold
pursuant to purchase rights exercised under the Plan or (iii) the date on which
all purchase rights are exercised in connection with a Corporate Transaction. No
further purchase rights shall be granted or exercised, and no further payroll
deductions shall be collected, under the Plan following such termination.
X. AMENDMENT/TERMINATION OF THE PLAN
A. The Board may alter, amend, suspend or terminate the Plan at any
time to become effective immediately following the close of any purchase period.
However, the Plan may be amended or terminated immediately upon Board action, if
and to the extent necessary to assure that the Corporation will not recognize,
for financial reporting purposes, any compensation expense in connection with
the shares of Common Stock offered for purchase under the Plan, should the
financial accounting rules applicable to the Plan at the Effective Time be
subsequently revised so as to require the recognition of compensation expense in
the absence of such amendment or termination.
B. In no event may the Board effect any of the following amendments
or revisions to the Plan without the approval of the Corporation's stockholders:
(i) increase the number of shares of Common Stock issuable under the Plan or the
maximum number of shares purchasable per Participant on any one Purchase Date,
except for permissible adjustments in the event of certain changes in the
Corporation's capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock purchasable
under the Plan or (iii) modify eligibility requirements for participation in the
Plan.
XI. GENERAL PROVISIONS
A. Nothing in the Plan shall confer upon the Participant any right
to continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.
B. All costs and expenses incurred in the administration of the Plan
shall be paid by the Corporation; however, each Plan Participant shall bear all
costs and expenses incurred by such individual in the sale or other disposition
of any shares purchased under the Plan.
C. The provisions of the Plan shall be governed by the laws of the
State of New York without resort to that State's conflict-of-laws rules.
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Schedule A
Corporations Participating in
Employee Stock Purchase Plan
As of the Effective Time
AGENCY.COM, LTD.
[Add Subsidiaries]
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
B. Cash Earnings shall mean the (i) regular base salary paid to a
Participant by one or more Participating Companies during such individual's
period of participation in one or more offering periods under the Plan plus (ii)
all overtime payments, bonuses, profit-sharing distributions and other
incentive-type payments received during such period. Such Cash Earnings shall be
calculated before deduction of (A) any income or employment tax withholdings or
(B) any and all contributions made by the Participant to any Code Section 401(k)
salary deferral plan or Code Section 125 cafeteria benefit program now or
hereafter established by the Corporation or any Corporate Affiliate. However,
Cash Earnings shall not include any contributions made on the Participant's
behalf by the Corporation or any Corporate Affiliate to any employee benefit or
welfare plan now or hereafter established (other than Code Section 401(k) or
Code Section 125 contributions).
C. Change in Control shall mean any of the following transactions
effecting a change in ownership or control of the Corporation:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete liquidation
or dissolution of the Corporation, or
(iii) the acquisition, directly or indirectly, by any person
or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than
fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation's stockholders.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
E. Common Stock shall mean the Corporation's common stock.
A-1
<PAGE>
F. Corporate Affiliate shall mean any parent or subsidiary
corporation of the Corporation (as determined in accordance with Code Section
424), whether now existing or subsequently established.
G. Corporation shall mean Agency.com, Ltd., a Delaware corporation,
and any corporate successor to all or substantially all of the assets or voting
stock Agency.com, Ltd. which shall by appropriate action adopt the Plan.
H. Effective Time shall mean the time at which the Underwriting
Agreement is executed and the Common Stock priced for the initial public
offering. Any Corporate Affiliate which becomes a Participating Corporation
after such Effective Time shall designate a subsequent Effective Time with
respect to its employee-Participants.
I. Eligible Employee shall mean any person who is employed by a
Participating Corporation on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section
3401(a).
J. Fair Market Value per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(iii) For purposes of the initial purchase period which begins
at the Effective Time, the Fair Market Value shall be deemed to be equal
to the price per share at which the Common Stock is sold in the initial
public offering.
K. 1933 Act shall mean the Securities Act of 1933, as amended.
L. 1934 Act shall mean the Securities Exchange Act of 1934, as
amended.
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<PAGE>
M. Participant shall mean any Eligible Employee of a Participating
Corporation who is actively participating in the Plan.
N. Participating Corporation shall mean the Corporation and such
Corporate Affiliate or Affiliates as may be authorized from time to time by the
Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan are listed in attached Schedule A.
O. Plan shall mean the Corporation's 1999 Employee Stock Purchase
Plan, as set forth in this document.
P. Plan Administrator shall mean the committee of two (2) or more
Board members appointed by the Board to administer the Plan.
Q. Purchase Date shall mean the last business day of each purchase
period. The initial Purchase Date shall be April 28, 2000.
R. Stock Exchange shall mean either the American Stock Exchange or
the New York Stock Exchange.
A-3
EXHIBIT 99.3
QUADRIS CONSULTING, INC. 1998 EQUITY INCENTIVE PLAN
<PAGE>
QUADRIS CONSULTING, INC.
1998 EQUITY INCENTIVE PLAN
Section 1. Purpose
The purpose of the Quadris Consulting, Inc. 1998 Equity Incentive
Plan (the "Plan") is to attract and retain key employees to provide an incentive
for them to assist Quadris Consulting, Inc. (the "Company") to achieve
long-range performance goals, and to enable them to participate in the long-term
growth of the Company.
Section 2. Definitions
(a) "Affiliate" means any business entity in which the Company owns
directly or indirectly 50% or more of the total combined voting power or has a
significant financial interest as determined by the Committee.
(b) "Award" means any Option, Stock Appreciation Right, Performance
or Award Share, or Restricted Stock awarded under the Plan.
(c) "Award Share" means a share of Common Stock awarded to an
employee without payment therefor.
(d) "Board" means the Board of Directors of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Committee" means a committee of not less than three members of
the Board appointed by the Board to administer the Plan. Alternatively, if the
Board so designates, the President of the Company shall serve as the sole member
of the Committee.
(g) "Common Stock" or "Stock" means the Common Stock, par value
$.001 per share, of the Company.
(h) "Company" means Quadris Consulting, Inc.
(i) "Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Board, to receive amounts due or
exercise rights of the Participant in the event of the Participant's death. In
the absence of an effective designation by a Participant, Designated Beneficiary
shall mean the Participant's estate.
(j) "Fair Market Value" means, with respect to Common Stock or any
other property, the fair market value of such property as determined by the
Board in good faith or in the manner established by the Board from time to time.
<PAGE>
(k) "Incentive Stock Option" means an option to purchase shares of
Common Stock awarded to a Participant under Section 6 which is intended to meet
the requirements of Section 422 of the Code or any successor provision.
(1) "Nonstatutory Stock Option" means an option to purchase shares
of Common Stock awarded to a Participant under Section 6 which is not intended
to be an Incentive Stock Option.
(m) "Option" means an Incentive Stock Option or a Nonstatutory Stock
Option.
(n) "Participant" means a person selected by the Board to receive an
Award under the Plan.
(o) "Performance Cycle" or "Cycle" means the period of time selected
by the Board during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.
(p) "Performance Shares" mean shares of Common Stock which may be
earned by the achievement of performance goals awarded to a Participant under
Section 8.
(q) "Restricted Period" means the period of time selected by the
Board during which an award of Restricted Stock may be forfeited to the Company.
(r) "Restricted Stock" means shares of Common Stock subject to
forfeiture awarded to a Participant under Section 9.
(s) "Stock Appreciation Right" or "SAR" means a right to receive any
excess in value of shares of Common Stock over the exercise price awarded to a
Participant under Section 7.
(t) "Stock Unit" means an award of Common Stock or units that are
valued in whole or in part by reference to, or otherwise based on, the value of
Common Stock, awarded to a Participant under Section 10.
Section 3. Administration
The Plan shall be administered by the Board. The Board shall have
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the operation of the Plan as it shall from time to time
consider advisable, and to interpret the provisions of the Plan. The Board's
decisions shall be final and binding. To the extent permitted by applicable law,
the Board may delegate to the Committee the power to make Awards to Participants
and all determinations under the Plan with respect thereto.
Section 4. Eligibility
All employees, other than a person who has irrevocably elected not
to be eligible, are eligible to be Participants in the Plan.
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<PAGE>
Section 5. Stock Available for Awards
(a) Subject to adjustment under subsection (b), Awards may be made
under the Plan of Options to acquire not in excess of 1,500,000 shares of
Company Common Stock. Other Awards may be made as the Board may determine,
provided that a maximum of 1,500,000 shares of Common Stock may be issued under
this Plan. If any Award in respect of shares of Common Stock expires or is
terminated unexercised or is forfeited for any reason or settled in a manner
that results in fewer shares outstanding than were initially awarded, including
without limitation the surrender of shares in payment for the Award or any tax
obligation thereon, the shares subject to such Award or so surrendered, as the
case may be, to the extent of such expiration, termination, forfeiture or
decrease, shall again be available for award under the Plan, subject, however,
in the case of Incentive Stock Options, to any limitation required under the
Code. Common Stock issued through the assumption or substitution of outstanding
grants from an acquired company shall not reduce the shares available for Awards
under the Plan. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(b) In the event that any stock dividend, extraordinary cash
dividend, creation of a class of equity securities, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination, exchange
of shares, warrants or rights offering to purchase Common Stock at a price
substantially below fair market value, or other similar transaction affects the
Common Stock such that an adjustment is required in order to preserve the
benefits or potential benefits intended to be made available under the Plan,
then the Board, subject, in the case of Incentive Stock Options, to any
limitation required under the Code, shall equitably adjust any or all of (i) the
number and kind of shares in respect of which Awards may be made under the Plan,
(ii) the number and kind of shares subject to outstanding Awards, and (iii) the
award, exercise or conversion price with respect to any of the foregoing, and if
considered appropriate, the Board may make provision for a cash payment with
respect to an outstanding Award, provided that the number of shares subject to
any Award shall always be a whole number.
(c) In the event of a consolidation or merger of the Company with
another corporation, or the sale or exchange of all or substantially all of the
assets of the Company, or a reorganization or liquidation of the Company.. the
Participant shall be entitled to receive, upon exercise and payment in
accordance with the terms of the Option, the same shares, securities or property
as he would have been entitled to receive upon the occurrence of such event if
he had been, immediately prior to such event, the holder of the number of shares
of Common Stock purchasable under the Option, or if another corporation shall be
the survivor, such corporation shall substitute therefor substantially
equivalent shares, securities or property of such other corporation; provided,
however, that in lieu of the foregoing the Board may upon written notice to the
Participant accelerate or waive any deferred exercise period.
Section 6. Stock Options
(a) Subject to the provisions of the Plan, the Board may award
Incentive Stock Options and Nonstatutory Stock Options and determine the number
of shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The terms
and conditions of Incentive Stock Options shall be subject to
3
<PAGE>
and comply with Section 422 of the Code, or any successor provision, and any
regulations thereunder.
(b) The Board shall establish the option price at the time each
Option is awarded, which price shall not be less than 100% of the Fair Market
Value of the Common Stock on the date of award with respect to Incentive Stock
Options.
(c) Each Option shall be exercisable at such times and subject to
such terms and conditions as the Board may specify in the applicable Award or
thereafter. The Board may impose such conditions with respect to the exercise of
Options, including conditions relating to applicable federal or state securities
laws, as it considers necessary or advisable.
(d) No shares shall be delivered pursuant to any exercise of an
Option until payment in full of the option price therefor is received by the
Company. Such payment may be made in whole or in part in cash or shares of
Common Stock owned by the Participant, including Restricted Stock, valued at
their Fair Market Value on the date of delivery, or, to the extent permitted by
the Board at or after the award of the Option, by delivery of a note or such
other lawful consideration as the Board may determine.
(e) The Board may provide for the automatic award of an Option upon
the delivery of shares to the Company in payment of an Option for up to the
number of shares so delivered.
(f) In the case of Incentive Stock Options the following additional
conditions shall apply:
(i) Such options shall be granted only to employees of the
Company, and shall not be granted to any person who owns stock that possesses
more than ten (10%) percent of the total combined voting power of all classes of
stock of the Company or of its parent or subsidiary corporation (as those terms
are defined in section 422(b) of the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder), unless, at the time of such grant,
the exercise price of such option is at least 110% of the fair market value of
the stock that is subject to such option and the option shall not be exercisable
more than five years after the date of grant;
(ii) Such options shall not be granted more than ten years
from the date hereof and shall not be exercisable more than ten years from the
date of grant;
(iii) Such options shall, by their terms, be transferable by
the optionee only by will or the laws of descent and distribution, and shall be
exercisable only by such employee during his lifetime.
(iv) Notwithstanding anything to the contrary contained
herein, the aggregate fair market value (determined at the time the Option is
granted) of the stock as to which Incentive Stock Options may be exercisable for
the first time by a Participant during any calendar year (under this Plan or any
other incentive stock option plan of the Company or any Affiliate) shall not
exceed $100,000.
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<PAGE>
Section 7. Stock Appreciation Rights
Subject to the provisions of the Plan, the Board may award SARs in
tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised.
Section 8. Performance Shares
(a) Subject to the provisions of the Plan, the Board may award
Performance Shares and determine the number of such shares for each Performance
Cycle and the duration of each Performance Cycle. There may be more than one
Performance Cycle in existence at any one time, and the duration of Performance
Cycles may differ from each other. The payment value of Performance Shares shall
be equal to the Fair Market Value of the Common Stock on the date the
Performance Shares are earned or, in the discretion of the Board, on the date
the Board determines that the Performance Shares have been earned.
(b) The Board shall establish performance goals for each Cycle, for
the purpose of determining the extent to which Performance Shares awarded for
such Cycle are earned, on the basis of such criteria and to accomplish such
objectives as the Board may from time to time select. During any Cycle, the
Board may adjust the performance goals for such Cycle as it deems equitable in
recognition of unusual or non-recurring events affecting the Company, changes in
applicable tax laws or accounting principles, or such other factors as the Board
may determine.
(c) As soon as practicable after the end of a Performance Cycle, the
Board shall determine the number of Performance Shares which have been earned on
the basis of performance in relation to the established performance goals. The
payment values of earned Performance Shares shall be distributed to the
Participant or, if the Participant has died, to the Participant's Designated
Beneficiary, as soon as practicable thereafter. The Board shall determine, at or
after the time of award, whether payment values will be settled in whole or in
part in cash or other property, including Common Stock or Awards.
Section 9. Restricted Stock
(a) Subject to the provisions of the Plan, the Board may award
shares of Restricted Stock and determine the duration of the Restricted Period
during which, and the conditions under which, the shares may be forfeited to the
Company and the other terms and conditions of such Awards. Shares of Restricted
Stock may be issued for no cash consideration or such minimum consideration as
may be required by applicable law.
(b) Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as permitted by the Board,
during the Restricted Period. Shares of Restricted Stock shall be evidenced in
such manner as the Board may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the Participant
and unless otherwise determined by the Board, deposited by the Participant,
together with a stock power endorsed in blank, with the Company. At the
expiration of the Restricted
5
<PAGE>
Period, the Company shall deliver such certificates to the Participant or if the
Participant has died, to the Participant's Designated Beneficiary.
Section 10. Stock Units
(a) Subject to the provisions of the Plan, the Board may award Stock
Units subject to such terms, restrictions, conditions, performance criteria,
vesting requirements and payment rules as the Board shall determine.
(b) Shares of Common Stock awarded in connection with a Stock Unit
Award shall be issued for no cash consideration or such minimum consideration as
may be required by applicable law. Such shares of Common Stock may be designated
as Award Shares by the Board.
Section 11. Termination of Employment.
Except as otherwise expressly provided herein, or in the terms of any
Award made under this Plan:
(a) If the Participant's employment with the Company or a parent or
Affiliate corporation of the Company issuing or assuming a stock option in a
transaction to which Section 424(a) of the Code applies, is terminated for (i)
"cause" as defined in Section 11(f) of this Plan, or (ii) for conviction of a
felony, all of the Participant's rights with respect to all Awards provided for
in this Plan shall terminate as of the date of such termination and the
Participant shall forfeit all Awards and unexercised Options.
(b) If, before the date of expiration of the Option, the Participant
shall be retired in good standing from the employ of the Company for reasons of
age under the then established rules of the Company, Participant may exercise
the vested portion of the Option and other Awards granted under this plan within
ninety (90) days after the date of such retirement. Authorized leaves of absence
or absence on military or government service shall not constitute severance of
the employment relationship between the Company and the Participant for purposes
of this Plan. The unvested portion of any Option or other Awards granted to such
Participant shall terminate upon retirement. The vested portion of any Awards
granted to such participant shall terminate upon expiration of such ninety (90)
day period.
(c) In the event a Participant's employment with the Company is
terminated for reason of disability (within the meaning of Section 22(e)(3) of
the Code), the Participant may exercise in whole or in part any rights which are
available to the Participant under this Plan at the time of termination within
twelve (12) months from the date of termination. All Awards granted to such
participant shall terminate upon expiration of such twelve (12) month period.
(d) In the event of the death of a Participant, those entitled to do
so by the Participant's will or the laws of descent and distribution shall have
the right, at any time within twelve (12) months after the date of death, to
exercise in whole or in part any rights which were available to the Participant
at the time of his death. All Awards granted to such Participant shall terminate
upon expiration of such twelve (12) month period.
6
<PAGE>
(e) In the event a Participant's employment with the Company is
terminated by the Company without "cause", other than by reason of death or
disability, or by the Participant for any reason the Participant shall continue
to have all the rights provided for in this Plan with respect to all Awards
whether exercisable before or after the date of termination for a period of
thirty (30) days after termination. All Awards granted to such Participant shall
terminate upon expiration of such thirty (30) day period.
(f) For purposes hereof, "cause" shall mean a Participant's willful
gross neglect or willful gross misconduct in carrying out his duties to the
Company as an employee (including but not limited to acts such as embezzlement
and willful disclosure of proprietary information to a third party without the
Company's knowledge or consent), resulting in material economic harm to the
Company. For purposes hereof, no act, or failure to act, on the Participant's
part shall be considered "willful" unless done, or omitted to be done, by the
Participant, not in good faith and without reasonable belief that the
Participant's action or omission was in the best interests of the Company.
(g) For purposes of this Section, a Participant shall be considered
employed by the Company if such employment is with a parent, sister or Affiliate
corporation of the Company.
(h) Nonstatutory Stock Options shall be exercisable following a
Participant's termination of employment to the extent provided above with
respect to Incentive Stock Options unless otherwise set forth in the Option
Agreement for such Nonstatutory Stock Options.
Section 12. General Provisions Applicable to Awards
(a) Documentation. Each Award under the Plan shall be evidenced by a
writing delivered to the Participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Board considers necessary or advisable to achieve
the purposes of the Plan or comply with applicable tax and regulatory laws and
accounting principles.
(b) Board Discretion. Each type of Award may be made alone, in
addition to or in relation to any other type of Award. The terms of each type of
Award need not be identical, and the Board need not treat Participants
uniformly. Except as otherwise provided by the Plan or a particular Award, any
determination with respect to an Award may be made by the Board at the time of
award or at any time thereafter.
(c) Settlement. The Board may permit a Participant to defer all or
any portion of a payment under the Plan, including the crediting of interest on
deferred amounts denominated in cash' and dividend equivalents on amounts
denominated in Common Stock.
(d) Dividends and Cash Awards. In the discretion of the Board, any
Award under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable currently or deferred with or without interest, and (ii)
cash payments in lieu of or in addition to an Award.
7
<PAGE>
(e) Change in Control. In order to preserve a Participant's rights
under an Award in the event of a change in control of the Company, the Board in
its discretion may, at the time an Award is made or at any time thereafter, take
one or more of the following actions: (i) provide for the acceleration of any
time period relating to the exercise or realization of the Award, (ii) provide
for the purchase of the Award upon the Participant's request for an amount of
cash or other property that could have been received upon the exercise or
realization of the Award had the Award been currently exercisable or payable,
(iii) adjust the terms of the Award to reflect the change in control, (iv) cause
the Award to be assumed, or new rights substituted therefor, by another entity,
or (v) make such other provision as the Board may reasonably consider equitable
and in the best interests of the Company.
(f) Withholding. The Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in respect of Awards under the Plan no later than the date of the
event creating the tax liability. In the Board's discretion, such tax
obligations may be paid in whole or in part in shares of Common Stock, including
shares retained from the Award creating the tax obligation, valued at their Fair
Market Value on the date of delivery. At the request of a Participant, the
Company and its Affiliates shall, to the extent permitted by law, deduct any
such tax obligations from any payment of any kind otherwise due to the
Participant.
(g) Foreign Nationals. Awards may be made to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Board considers
necessary or advisable to achieve the purposes of the Plan or comply with
applicable laws.
(h) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the same or
a different type, changing the date of exercise or realization and convening an
Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Board
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
Section 13. Miscellaneous
(a) No Right To Employment. No person shall have any claim or right
to be granted an Award, and the grant of an Award shall not be construed as
giving a Participant the right to continued employment. The Company expressly
reserves the right at any time to dismiss a Participant free from any liability
or claim under the Plan, except as expressly provided in the applicable Award.
(b) No Rights As Shareholder. Subject to the provisions of (he
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a shareholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the holder thereof. A Participant to whom
Common Stock is awarded shall be considered the holder of the Stock at the time
of the Award except as otherwise provided in the applicable Award.
8
<PAGE>
(c) Effective Date. Subject to the approval of the shareholders of
the Company, the Plan shall be effective on December 31, 1998. Prior to such
approval, Awards may be made under the Plan expressly subject to such approval.
(d) Amendment of Plan. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, provided that no amendment shall be
made without shareholder approval if such approval is necessary to comply with
any applicable tax requirement.
(e) Governing Law. The provisions of the Plan shall be governed by
and interpreted in accordance with the laws of the State of Delaware.
9
EXHIBIT 99.4
INTERACTIVE SOLUTIONS INCORPORATED 1996 STOCK OPTION PLAN
<PAGE>
Interactive Solutions Incorporated
1996 STOCK OPTION PLAN
<PAGE>
Interactive Solutions Incorporated
1996 STOCK OPTION PLAN
TABLE OF CONTENTS
Page
1. PURPOSE................................................................1
2. ADMINISTRATION OF THE PLAN.............................................1
3. OPTION SHARES..........................................................1
4. AUTHORITY TO GRANT OPTIONS.............................................2
5. WRITTEN AGREEMENT......................................................2
6. ELIGIBILITY............................................................2
7. OPTION PRICE...........................................................3
8. DURATION OF OPTIONS....................................................3
9. RESTRICTION ON EXERCISE OF OPTIONS.....................................4
10. EXERCISE OF OPTIONS...................................................4
11. NONTRANSFERABILITY OF OPTIONS.........................................4
12. TERMINATION OF EMPLOYMENT OR INVOLVEMENT OF
OPTIONEE WITH THE COMPANY.............................................4
13. REQUIREMENTS OF LAW...................................................5
14. NO RIGHTS AS STOCKHOLDER..............................................6
15. EMPLOYMENT OBLIGATION.................................................6
16. FORFEITURE AS A RESULT OF TERMINATION FOR CAUSE.......................6
17. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE............................7
18. AMENDMENT OR TERMINATION OF PLAN......................................8
19. EFFECTIVE DATE AND DURATION OF THE PLAN...............................9
<PAGE>
Interactive Solutions Incorporated
1996 STOCK OPTION PLAN
1. PURPOSE
The purpose of this 1996 Stock Option Plan (the "Plan") is to encourage
directors, consultants and key employees of Interactive Solutions Incorporated
(the "Company") and its Subsidiaries (as hereinafter defined) to continue their
association with the Company, by providing favorable opportunities for such
persons to participate in the ownership of the Company and in its future growth
through the granting of stock options (the "Options") which may either be
options designed to qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") (an
"ISO") or options not intended to qualify for any special tax treatment under
the Code (a "NQO"). The term "Subsidiary" as used in the Plan means a
corporation of which the Company owns, directly or indirectly through an
unbroken chain of ownership, fifty percent (50%) or more of the total combined
voting power of all classes of stock. A person to whom an Option has been
granted pursuant to the Plan is hereinafter referred to as an "Optionee".
2. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board of Directors of the Company
(the "Board of Directors") or by a committee appointed by the Board of Directors
(the "Committee"), which shall have the authority to adopt, amend or rescind
such rules and regulations as, in its opinion, may be advisable in the
administration of the Plan. Unless the Board of Directors otherwise provides for
the method by which the appointed committee shall operate, the Committee shall
select one of its members as Chairman and shall hold meetings at such times and
places as it may determine. A majority of the Committee shall constitute a
quorum and acts of the Committee at which a quorum is present, or acts reduced
to or approved in writing by all the members of the Committee, shall be the
valid acts of the Committee. Hereinafter, all references in this Plan to the
"Committee" shall mean the Board of Directors if no Committee has been
appointed. All questions of interpretation and application of such rules and
regulations, of the Plan or of Options granted thereunder shall be subject to
determination, which shall be final and binding, of a majority of the Committee.
The Plan shall be administered in such a manner as to permit those Options
granted hereunder and specially designated under Section 4 hereof to qualify as
"incentive stock options" as described in Section 422A of the Code.
3. OPTION SHARES
The stock subject to Options under the Plan shall be shares of the
Company's Common Stock, per value $0.01 per share (the "Stock"). At no time
shall the number of shares of Stock with respect to which outstanding Options
have been granted plus the number of shares of Stock issued as a result of the
exercise of options under the Plan and which are still outstanding exceed in the
aggregate 20,000 shares (the "Option Pool"); provided that such aggregate number
of shares shall be subject to adjustment in accordance with the provisions of
Section 17. In the event that any outstanding Option shall expire for any reason
or shall terminate by reason of the death or severance of employment of the
Optionee, the surrender of any such Option; or any
<PAGE>
other cause, the shares of Stock allocable to the unexercised portion of such
Option may again be subject to an option under the Plan. Should the Company
repurchase any shares of Stock which were acquired pursuant to the exercise of
options granted under the Plan, such shares may be returned to the Option Pool
pursuant to a vote of the Committee, subject, however, to the Option Pool size
limitation set forth above.
4. AUTHORITY TO GRANT OPTIONS
The Committee may grant from time to time, to such eligible individuals as
it shall from time to time determine, an Option or Options to buy a stated
number of shares of Stock under the terms and conditions of the Plan, each of
which Option or Options shall be designated at the time of grant as either an
ISO or a NQO. Subject only to any applicable limitations set forth elsewhere in
the Plan, the number of shares of Stock to be covered by any Option shall be as
determined by the Committee. The Committee shall have the right, with the
consent of the Optionee, to convert an ISO granted under the Plan into a NQO and
to impose such conditions on the exercise of the resulting NQO as the Committee
may in its discretion determine, provided that such conditions shall not be
inconsistent with the Plan.
5. WRITTEN AGREEMENT
Options granted hereunder shall be embodied in written option agreements
(which need not be identical) in such forms as the Committee may from time to
time approve (each an "Option Agreement"). Option Agreements shall be subject to
the terms and conditions prescribed herein and shall be signed by the Optionee
and by the President or any Vice President of the Company for and in the name
and on behalf of the Company. An Option Agreement shall indicate whether the
subject Option has been designated an ISO or a NQO. The written Option Agreement
for any Option may contain such provisions not inconsistent with this Plan as
the Committee in its discretion may deem advisable.
6. ELIGIBILITY
The individuals who shall be eligible for grant of Options under the Plan
shall be key employees (including officers who may be members of the Board of
Directors), directors who are not employees and other individuals who render
services of special importance to the management, operation, or development of
the Company or a Subsidiary, and who have contributed or may be expected to
contribute materially to the success of the Company or a Subsidiary. No Option
designated as an ISO shall be granted to any individual who is not an employee
of the Company or a Subsidiary.
If required to insure compliance with Section 16 of the Securities
Exchange Act of 1934 (the "Exchange Act"), the selection of a director as a
participant and the number of shares for which an Option may be granted to such
director shall be determined either (i) by the Board of Directors, of which a
majority, as well as a majority of the directors acting in the matter, shall be
"disinterested persons" (as hereinafter defined) or (ii) by, or only in
accordance with, the recommendations of a committee of three or more persons
having full authority to act in the matter, of which all members shall be
"disinterested persons". For purposes of the Plan, a director or member of such
committee shall be deemed to be "disinterested" only if such person
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qualifies as a "disinterested person" within the meaning of Rule 16b-3 under the
Exchange Act or any successor rule, as such term is interpreted from time to
time.
7. OPTION PRICE
The price at which shares may be purchased pursuant to an Option shall be
specified by the Committee at the time the Option is granted, but shall in no
event be less than the par value of such shares and, in the case of an incentive
stock option, except as set forth in the following sentence, shall not be less
than one hundred percent (100%) of the fair market value of the shares of Stock
on the date the ISO is granted. In the case of any employee who owns (or is
considered under Section 424(d) of the Code as owning) stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Subsidiary, the price at which shares may be so
purchased pursuant to an incentive stock option shall be not less than one
hundred ten percent (110%) of the fair market value of the Stock on the date the
ISO is granted.
For the purposes of the Plan, the "fair market value" of a share of Stock
on any date specified herein shall mean (a) the last reported sales price,
regular way, or, in the event that no sale takes place on such day, the average
of the reported lowest closing bid and asked prices, regular way, in either case
(i) as reported on the New York Stock Exchange Composite Tape, or (ii) if the
Stock is not listed or admitted to trading on the New York Stock Exchange, on
the principal national securities exchange on which such security is listed or
admitted to trading, or (iii) if not then listed or admitted to trading on any
national securities exchange, on the NASDAQ National Market System; or (b) if
the stock is not quoted on such National Market System, (i) the average of the
closing bid and asked prices on each such day in the over-the-counter market as
reported by NASDAQ, or (ii) if bid and asked prices for such security on each
such day shall not have been reported through NASDAQ, the average of the bid and
asked prices for such day as furnished by any New York Stock Exchange member
firm regularly making a market in such security selected for such purpose by the
Committee, or (c) if the Stock is not then listed or admitted to trading on any
national exchange or quoted in the over-the-counter market, the fair values
thereof determined in good faith by the Committee as of a date which is within
thirty (30) days of the date as of which the determination is to be made;
provided however that any method of determining fair market value employed by
the Committee with respect to an ISO shall be consistent with any applicable
laws of regulations pertaining to "incentive stock options".
8. DURATION OF OPTIONS
The duration of any Option shall be specified by the Committee in the
Option Agreement, but no ISO shall be exercisable after the expiration of ten
(10) years from the date such Option is granted in the case of any employee who
owns (or is considered under Section 424(d) of the Code as owning) stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any Subsidiary, no ISO shall be exercisable
after the expiration of five (5) years from the date such Option is granted. The
Committee, in its sole and absolute discretion, may extend any Option
theretofore granted subject to the aforesaid limits and may provide that an
Option shall be exercisable during its entire duration or during any lesser
period of time.
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9. RESTRICTION ON EXERCISE OF OPTIONS
Notwithstanding any other provision of the Plan, the aggregate fair market
value (determined as of the time the Option is granted) of the Stock with
respect to which ISOs may be exercisable for the first time by an Optionee
during any calendar year (under the Plan or any other incentive stock option
plan(s) of the Company or any Subsidiary) shall not exceed $100,000. Subject to
the foregoing, each Option may be exercised so long as it is valid and
outstanding from time to time, in part or as a whole, in such manner and subject
to such conditions as the Committee, in its sole and absolute discretion, may
provide in the Option Agreement.
10. EXERCISE OF OPTIONS
Each Option may be exercised from time to time in such amounts as is
provided in the Option Agreement by the delivery of written notice to the
Company setting forth the number of shares with respect to which the Option is
to be exercised, accompanied by payment of the option price of such shares,
which payment shall be made, subject to the alternative provisions of this
Section, in cash or by such cash equivalent, payable to the order of the Company
in an amount in United States dollars equal to the option price of such shares,
as the Committee in its discretion shall consider acceptable. Such notice shall
be delivered in person to the Clerk of the Company or shall be sent by
registered mail, return receipt requested, to the Clerk of the company, in which
case delivery shall be deemed made on the date such notice is deposited in the
mail.
Alternatively, payment of the option price may be made, in whole or in
part, in shares of Stock owned by Optionee; provided, however, that the Optionee
may not make payment in shares of Stock that he acquired upon the earlier
exercise of any ISO, unless he has held the shares until at least two (2) years
after the date the ISO was granted and at least one (1) year after the date the
ISO was exercised. If payment is made in whole or in part in shares of Stock,
then the Optionee shall deliver to the Company in payment of the option price of
the shares with respect of which such Option is exercised (i) certificates
registered in the name of such Optionee representing a number.
11. NONTRANSFERABILITY OF OPTIONS
No Option shall be transferable by the Optionee, either voluntarily or by
operation of law, except by will or pursuant to the laws of descent and
distribution. During the life of an Optionee, an Option shall be exercisable
only by such Optionee.
12. TERMINATION OF EMPLOYMENT OR INVOLVEMENT OF OPTIONEE WITH THE
COMPANY
For purposes of this Section, employment by or involvement with (in the
case of an Optionee who is not an employee) a Subsidiary shall be considered
employment by or involvement with the Company. NQOs shall be exercisable
following an Optionee's termination of employment or involvement with the
Company to the extent provided below with respect to ISOs unless otherwise set
forth in the Option Agreement for such non-qualified options. Except as may be
otherwise expressly provided herein, Options designated incentive stock options
shall
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<PAGE>
be exercisable after the Optionee's termination of employment with the Company,
and only to the extent to which the Optionee was entitled to exercise the Option
immediately prior to the termination of his or her employment. If, before the
date of expiration of the Option, the Optionee shall be retired in good standing
from the employ of the Company for reasons of age under the then established
rules of the Company, the Option shall terminate on the earlier of such date of
expiration or three (3) months after the date of such retirement. In the event
of the death of the holder of an Option before the date of expiration of such
Option and while in the employ of the Company or during the three (3) month
period described in the preceding sentence, or in the event of the retirement of
the Optionee for reasons of disability (within the meaning of Section 22(o)(3)
of the Code), such Option shall terminate on the earlier of such date of
expiration or one (1) year following the date of such death or retirement. After
the death of the Optionee , his or her executors, administrators or any persons
to whom his or her Option may be transferred by will or by the laws of descent
and distribution shall have the right at any time prior to such termination to
exercise the Option to the extent to which the Optionee was entitled to exercise
the Option on the date of his or her death.
Authorized leave of absence on military or government service shall not
constitute severance of the employment relationship between the Company and the
Optionee for purposes of the Plan, provided that either (i) such absence is for
a period of no more than ninety (90) days or (ii) the Optionee's right to
re-employment after such absence is guaranteed either by statute or by contract.
13. REQUIREMENTS OF LAW
The Company shall not be required to sell or issue any shares of Stock
upon the exercise of any Option if the issuance of such shares shall constitute
or result in a violation by the Optionee or the Company of any provisions of any
law, statue or regulation of any governmental authority. Specifically, in
connection with the Securities Act of 1933, as amended (the "Securities Act"),
and any applicable state securities or "blue sky" law (a "Blue Sky Law"), upon
exercise of any Option the Company shall not be required to issue such shares
unless the Committee has received evidence satisfactory to it to the effect that
the holder of such Option will not transfer such shares except pursuant to a
registration statement in effect under the Securities Act and Blue Sky Laws or
unless an opinion of counsel satisfactory to the Company has been received by
the Company to the effect that such registration and compliance is not required.
Any determination in this connection by the Committee shall be final, binding
and conclusive. The Company shall not be obligated to take any other affirmative
action in order to cause the exercise of an Option or the issuance of shares of
Stock pursuant thereto to comply with any law or regulations of any governmental
authority, including, without limitation, the Securities Act or applicable Blue
Skys Laws.
Notwithstanding any other provision of the Plan to the contrary, the
Company may refuse to permit transfer of shares of Stock if in the option of its
legal counsel such transfer would violate federal or state securities laws or
subject the Company to liability thereunder. Any sale, assignment, transfer,
pledge or other disposition of shares of Stock received upon exercise of any
Option (or any other shares or securities derived therefrom) which is not in
accordance with the provisions of this Section shall be void and of no effect
and shall not be recognized by the Company.
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The Company shall not be required to sell or issue any shares upon the
exercise of any Option if the Committee is advised by counsel that the issuance
of such shares would result in the termination of any then effective election of
the Company to be taxed as an S corporation pursuant to the Code.
Legend on Certificates. The Committee may cause any certificate
representing shares of Stock acquired upon exercise of an Option (and any other
shares or securities derived therefrom) to bear a legend to the effect that the
securities represented by such certificate have not been registered under the
Securities Act or any applicable state securities laws, and may not be sold,
transferred, pledged or otherwise disposed of except in accordance with the Plan
and applicable agreements binding the holder and the Company or any of its
stockholders.
14. NO RIGHTS AS STOCKHOLDER
No Optionee shall have rights with respect to shares covered by his or her
Option until the date of issuance of a stock certificate for such shares. Except
as otherwise provided in Section 17 no adjustment for dividends or other rights
shall be made if the record date therefor is prior to the date of issuance of
such certificate.
15. EMPLOYMENT OBLIGATION
Nothing in this Plan nor the granting of any Option under this Plan shall
(i) impose upon the Company or any Subsidiary any obligation to employ or
continue to employ any Optionee, or to engage or retain the services of any
person, (ii) diminish or affect the right of the Company or any Subsidiary to
terminate the employment or services of any person or (iii) affect the ability
of the Company to increase or decrease the compensation of any person. The
existence of any Option shall not be taken into account in determining any
damages relating to termination of employment for any reason.
16. FORFEITURE AS A RESULT OF TERMINATION FOR CAUSE
Notwithstanding anything to the contrary in the Plan, if the Committee
determines, after full consideration of the facts presented on behalf of both
the Company and an Optionee, that
a. the Optionee has been engaged in fraud, embezzlement, theft, commission
of a felony or proven dishonesty in the course of his or her employment by
or involvement with the Company or a Subsidiary, which damaged the Company
or a Subsidiary, or has made unauthorized disclosure of trade secrets or
other proprietary information of the Company of a Subsidiary or of a third
party who has entrusted such information to the Company or a Subsidiary,
or
b. the Optionee's employment or involvement was otherwise terminated for
"cause", as defined in any employment agreement with the Optionee, if
applicable, or if there is no such agreement, as determined by the
Committee, which may determine that "cause" includes among other matters
the failure or inability of the Optionee to carry out his or her assigned
duties diligently and in a manner satisfactory to the Company.
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then the Optionee's right to exercise an Option shall terminate as of the date
of such act (in the case of (16.a)) or such termination (in the case of (16.b))
and the Optionee shall forfeit all unexercised Options. If an Optionee whose
behavior the Company asserts falls within the provision of (16.a) or (16.b)
above has exercised or attempts to exercise an Option prior to a decision of the
Committee, the Company shall not be required to recognize such exercise until
the Committee has made its decision and, in the event of any exercise shall have
taken place, it shall be of no force and effect (and void ab initio) if the
committee makes an adverse determination; provided, however, if the Committee
finds in favor of the Optionee then the Optionee will be deemed to have
exercised such Options retroactively as of the date he or she originally gave
written notice of his or her attempt to exercise or actual exercise, as the case
may be. The decision of the committee as to the cause of an Optionee's discharge
and the damage done to the company or a Subsidiary shall be final, binding and
conclusive. No decision of the Committee, however, shall affect in any manner
the finality of the discharge of such Optionee by the Company or a Subsidiary.
17. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE
The existence of outstanding Options shall not affect in any way the right
or power of the Company or its stockholders to make or authorize any
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business or any merger or consolidation of
the Company or any issue of bonds, debentures, preferred or preference stock,
whether or not convertible into the Stock or other securities, ranking prior to
the Stock or affecting the rights thereof, or warrants, rights or options to
acquire the same, or the dissolution or liquidation of the Company or any sale
or transfer of all or any part of its assets or business or any other corporate
act or proceeding, whether of a similar character or otherwise.
The number of shares of Stock in the Option Pool (less the number of
shares theretofore delivered upon exercise of Options) and the number of shares
of Stock covered by any outstanding Option and the Price per share payable upon
exercise thereof (provided that in no event shall the option price be less then
the par value of such shares) shall be proportionately adjusted for any increase
or decrease in the number of issued and outstanding shares of Stock resulting
from the subdivision, split, combination or consolidation of shares of Stock or
any other capital adjustment, the payment of a stock dividend or any other
increase in such shares effected without receipt of consideration by the Company
or any other decrease therein effected without a distribution of cash or
property in connection therewith, provided, however, that no adjustment shall be
made that would constitute a modification as defined in Section 424(h)(3) of the
Code.
In the event the Company merges or consolidates with a wholly-owned
subsidiary for the purpose of reincorporating itself under the laws of another
jurisdiction, the Optionees will be entitled to acquire shares of the common
stock of the reincorporated Company upon the same terms and conditions as were
in effect immediately prior to such reincorporation (unless such reincorporation
involves a change in the number of shares, in which case proportional
adjustments shall be made as provided above) and the Plan, unless otherwise
rescinded by the Committee, will remain the Plan of the reincorporated Company.
Except as otherwise provided in the preceding paragraph, if the Company is
merged or consolidated with another corporation, whether or not the Company is
the surviving entity, or if
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the Company is liquidated or sells or otherwise disposes of all or substantially
all of its assets to another entity while unexercised Options remain outstanding
under the Plan, or in other circumstances in which the Committee in its sole and
absolute discretion deems it appropriate for the provisions of this paragraph to
apply, (a) subject to the provisions of clause (c) below, after the effective
date of such mergers, consolidation, liquidation, sale or other event (in each
case, an "Applicable Event", as the case may be, each holder of an outstanding
Option shall be entitled, upon exercise of such Option, to receive in lieu of
shares of Stock, such stock or other securities or property as he or she would
have received had he exercised such Option immediately prior to the Applicable
Event; (b) the Committee may, in its sole and absolute discretion, waive,
generally or in more specific cases, any limitations imposed pursuant to Section
9 (even if the effect of such waiver is to disqualify the Option as an ISO) or
Section 10 so that some or all Options from and after a date prior to the
effective date of such Applicable Event specified by the Committee, in its sole
and absolute discretion, shall be exercisable in full; and (c) all outstanding
and unexercised Options may, in its sole and absolute discretion, be cancelled
by the Committee as of the effective date of any such Applicable Event;
provided, however, notice of any such cancellation shall be given to each holder
of an Option not less than thirty (30) days preceding the effective date of such
Applicable Event; and provided further, however, that the committee may in its
sole and absolute discretion, waive, generally or in one or more specific
instances, any limitations imposed pursuant to Section 9 (even if the effect of
such waiver is to disqualify the Option as an ISO) or Section 10 with respect to
any Option so that such Option shall be exercisable in full or in part, as the
committee may, in its sole and absolute discretion, determine, during such
thirty (30) day period.
Except as expressly provided herein, the issue by the Company of shares of
Stock or other securities of any class or securities convertible into or
exchangeable or exercisable for shares of Stock or other securities of any class
for cash or property or for labor or services either upon direct sale or upon
the exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number, class or price of shares of Stock then subject to
outstanding Options.
18. AMENDMENT OR TERMINATION OF PLAN
The Committee may, in its sole and absolute discretion, modify, revise or
terminate the Plan at any time from time to time; provided, however, that
without the further approval of the holders of at least a majority of the
outstanding shares of Stock, the Committee may not (a) materially increase the
benefits accruing to Optionees under the Plan or make any "modifications" as
that term is defined under Section 424(h)(3) (or its successor) of the Code if
such increase in benefits or modifications would adversely effect (i) the
availability to the Plan of the protections of Section 16(b) of the Securities
Exchange Act, if applicable to the Company, or (ii) the qualification of the
Plan or any Options for "incentive stock option" treatment under Section 422 of
the Code; (b) change the aggregate number of shares of Stock which may be issued
under Options pursuant to the provisions of the Plan; (c) reduce the option
price at which ISOs may be granted to an amount less than the fair market value
per share, or 110% of fair market value as the case may be, at the time the
Option is granted; or (d) change the claim of persons eligible to receive ISOs.
Notwithstanding the preceding sentence, the Committee shall in all events have
the power and authority to make such changes in the Plan and in the
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<PAGE>
regulations and administrative provisions hereunder or in any outstanding Option
as, in the opinion of counsel for the Company, may be necessary or appropriate
from time to time to enable any Option granted pursuant to the Plan to qualify
as an ISO or such other stock option as may be defined under the Code, as
amended from time to time, so as to receive preferential federal income tax
treatment. The termination or any modification or amendment of the Plan shall
not, without the consent of an Optionee, affect his or her rights under an
Option previously granted to him or her. With the consent of the Optionee
affected, the Committee may amend outstanding option agreements in a manner not
inconsistent with the Plan.
19. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall become effective and shall be deemed to have been adopted
on January 10, 1996 subject only too ratification by the holders of at least a
majority of the outstanding shares of Stock within twelve (12) months after such
data. Unless the Plan shall have terminated earlier, the Plan shall terminate on
the tenth (10th) anniversary of its effective date, and no Option shall be
granted pursuant to the Plan after the day preceding the tenth (10th)
anniversary of its effective date.
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Exhibit 1 to Stock Option Plan
Form of Incentive Stock Option Certificate
Interactive Solutions Incorporated
Incentive Stock Option Agreement
Option Certificate Number:___________________
Specific Terms of the Option
Subject to the terms and conditions hereinafter set forth and the terms
and conditions of the Interactive Solutions Incorporated 1996 Stock Option Plan
(the "Plan"), Interactive Solutions Incorporated, a Massachusetts corporation
(the "Company") hereby grants the following option to purchase Common Stock, per
value $0.01 per share (the "Stock") of the Company:
1. Name of Person to Whom the Option is granted (the "Optionee":_______________.
2. Date of Grant of Option:______________________.
3. An Option for __________ shares of __________ Stock.
4. Option Exercise Price (per share): $_______________.
5. Term of Option: Subject to Section 9 below, this Option expires at 5:00 p.m.
Eastern Time on _______________.
6. Vesting Schedule: Provided that on the dates set forth below the Optionee has
been continuously employed by the Company or, if the Optionee is not employed by
the Company the Optionee is still actively involved in the Company (as
determined by the Board of Directors) the Option will become exercisable as
follows and as provided in Section 9 below:
The Option will Become Cumulative
On This Vested ("Exercisable") as Vested
Date To This Number of Shares ("Exercisable")
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7. Does Section 10 of the Plan apply to Stock covered by this Option?
Yes ___ No ___.
<PAGE>
INTERACTIVE SOLUTIONS INCORPORATED
By:_____________________________________ X___________________________________
Title:____________________________ (Signature of Optionee)
Date:_______________________________
Optionee's Address:_____________________________________________________________
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<PAGE>
OTHER TERMS OF THE OPTION
WHEREAS, the Board of Directors (the "Board") has authorized the grant of
stock options upon certain terms and conditions set forth herein; and
WHEREAS, the Board has authorized the grant of this stock option pursuant
and subject to the terms of the Plan, a copy of which is available from the
Company and is hereby incorporated herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the Company and the Optionee agree as set forth
above and as follows:
8. Grant. Pursuant and subject to the Plan, the Company does hereby grant
to the Optionee a stock option (the "Option") to purchase from the Company the
number of shares of its Common Stock set forth in Section 3 upon the terms and
conditions set forth in the Plan and upon the additional terms and conditions
contained herein. This Option is intended to qualify for special federal income
tax treatment as an "incentive stock option" pursuant to Section 422A of the
Internal Revenue Code of 1986, as amended (the "Code").
9. Option Price. This Option may be exercised at the option price per
share of Stock set forth in Section 4 hereof, subject to adjustment as provided
herein and in the Plan.
10. Term and Exercisability of Option. This Option shall expire on the
date determined pursuant to Section 5 hereof and shall be exercisable prior to
that date in accordance with and subject to the conditions set forth in the Plan
and those conditions, if any, set forth in Section 6 hereof. In addition, in the
event that before this Option has been exercised in full, the Optionee ceases to
be an employee of the Company for any reason other than death or a termination
for dishonesty or other "cause" as provided in Section 16 of the Plan, the
Optionee may exercise this Option to the extent that he or she might have
exercised it on the date of termination of his or her employment, during the
period ending on the earlier of (i) the date on which the Option expires in
accordance with Section 5 of this Agreement or (ii) 90 days after the date of
termination of the Optionee's employment by the Company. In the event of the
death of the Optionee before this Option has been exercised in full, the
personal representative of the Optionee may exercise this Option to the extent
that the Optionee might have exercised it on the date of his or her death,
during the period ending on the earlier of (i) the date on which the Option
expires in accordance with Section 5 of this Agreement or (ii) the first
anniversary of the date of the Optionee's death.
11. Method of Exercise. To the extent that the right to purchase shares of
Stock has accrued hereunder, this Option may be exercised from time to time by
written notice to the Company substantially in the form attached hereto as
Exhibit A, stating the number of shares with respect to which this Option is
being exercised, and accompanied by payment in full of the option price for the
number of shares to be delivered by means of payments acceptable to the Company
in accordance with Section 10 of the Plan. As soon as practicable after its
receipt of such notice, the company shall, without transfer or issue tax to the
Optionee (or other person entitled to exercise this Option), deliver to the
Optionee (or other person entitled to exercise this
<PAGE>
Option), deliver to the Optionee (or other person entitled to exercise this
Option), at the principal executive offices of the Company or such other place
as shall be mutually acceptable, a certificate or certificates for such shares
out of theretofore authorized but unissued shares or reacquired shares of its
Stock as the Company may elect; provided, however, that the time of such
delivery may be postponed by the Company for such period as may be required for
it with reasonable diligence to comply with any applicable requirements of law.
Payment of the option price may be made in cash or cash equivalents, [or, in
accordance with the terms and conditions of Section 10 of the Plan, (a) in whole
or in part in shares of Common Stock of the Company, or (b) in part by
promissory note of the Optionee in the form attached hereto as Exhibit B;
provided, however, that the Board reserves the right upon receipt of any written
notice of exercise from the Optionee to require payment in cash with respect to
the shares contemplated in such notice].(1) If the Optionee (or other person
entitled to exercise this Option) fails to pay for and accept delivery of all of
the shares specified in such notice upon tender of delivery thereof, his or her
right to exercise this Option with respect to such shares not paid for may be
terminated by the Company.
12. Non-assignability of Option Rights. This Option shall not be
assignable or transferable by the Optionee except by will or by the laws of
descent and distributions. During the life of the Optionee, this Option shall be
exercisable only by him or her.
13. Compliance with Securities Act. The Company shall not be obligated to
sell or issue any shares of Stock or other securities pursuant to the exercise
of this Option unless the shares of Stock or other securities with respect to
which this Option is being exercised are at that time effectively registered or
exempt from registration under the Securities Act of 1933, as amended, and
applicable state securities laws. In the event shares or other securities shall
be issued which shall not be so registered, the Optionee hereby represents,
warrants and agrees that he or she will receive such shares or other securities
for investment and not with a view to their resale or distribution, and will
execute an appropriate investment letter satisfactory to the Company and its
counsel.
14. Legends. The Optionee hereby acknowledges that the stock certificate
or certificates evidencing shares of Stock or other securities issued pursuant
to any exercise of this Option will bear a legend setting forth the restrictions
on their transferability described in Section 12 hereof and, if applicable to
this Option, in Section 19 of the Plan.
15. Rights as Stockholders. The Optionee shall have no rights as a
stockholder with respect to any shares of Stock or other securities covered by
this Option until the date of issuance of a certificate to him or her for such
shares or other securities. No adjustment shall be made for dividends or other
rights for which the record date is prior to the date such stock certificates is
issued.
16. Notice to Company of Disqualifying Disposition. The Optionee hereby
agree that he or she will promptly give notice to the Company in the event that
he or she sells, transfers, exchanges or otherwise disposes of any shares of
Stock or other securities obtained pursuant to any exercise of this Option
before the day after the later of (a) the second anniversary of the date
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1 Review.
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of grant set forth at the conclusion of this Agreement and (b) the first
anniversary of the date on which the shares of Stock or other securities were
transferred to him or her pursuant to his or her exercise of this Option.
17. Termination or Amendment of Plan. The Board may in its sole and
absolute discretion at any time terminate or from time to time modify and amend
the Plan, but no such termination or amendment will affect rights and
obligations under this Option.
18. Effect Upon Employment. Nothing in this Option or the Plan shall be
construed to impose any obligation upon the Company to employ the Optionee or to
retain the Optionee in its employ, or continue its involvement with, the
Optionee.
19. Time for Acceptance. Unless the Optionee shall evidence his acceptance
of this Option by execution of this Agreement within seven (7) days after its
delivery to him or her, the Option and this Agreement shall be null and void.
20. General Provisions.
a. Amendment Waivers. This Agreement, including the Plan, contains the
full and complete understanding and agreement of the parties hereto as to the
subject matter hereof and may not be modified or amended, nor may any provision
hereof be waived, except by a further written agreement duly signed by each of
the parties. The waiver by either of the parties hereto of any provisions hereof
in any instance shall not operate as a waiver of any other provision hereof or
in any other instance.
b. Binding Effect. This Agreement shall inure to the benefit of and be
biding upon the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns.
c. Construction. This Agreement is to be construed in accordance with the
terms of the Plan. In case of any conflict between the Plan and this Agreement,
the Plan shall control. The titles of the sections of this Agreement and of the
Plan are included for convenience only and shall not be construed as modifying
or affecting their provisions. The masculine gender shall include both sexes;
the singular shall include the plural and the plural the singular unless the
context otherwise requires.
d. Notices. Any notice in connection with this Agreement shall be deemed
to have been properly delivered if it is in writing and is delivered in hand or
sent by registered mail to the party addressed as follows, unless another
address has been substituted by notice so given:
To the Optionee: To his or her address as listed on the books of the
Company
To the Company: Interactive Solutions Incorporate
855 Boylston Street
Boston, Massachusetts 02116
Copy to:
3
<PAGE>
Sullivan & Worcaster LLP
One Post Office Square
Boston, MA 02109
Attention: John A. Picelone
4
<PAGE>
EXHIBIT A to Incentive Stock Option
[FORM FOR EXERCISE OF INCENTIVE STOCK OPTION]
Interactive Solutions Incorporated
855 Boylaton Street
Boston, Massachusetts 02116
RE: Exercise of Incentive Stock Option under Interactive Solutions
Incorporated 1996 Stock Option Plan
Gentlemen:
Please take notice that the undersigned hereby elects to exercise the
stock option granted to shares of Common Stock of Interactive Solutions
Incorporated ("the Company") for the option price of $ per share, subject to the
terms and conditions of the Incentive Stock Option Agreement between and
Interactive Solutions Incorporated dated as of ___________, 199__.
The undersigned encloses herewith payment, in cash or in such other
property as is permitted under the Plan, of the purchase price for sold shares.
If the undersigned is making payment of any part of the purchase price by
delivery of shares of Common Stock of Interactive Solutions Incorporated, he or
she hereby confirms that he or she has investigated and considered the possible
income tax consequences to him or her of making such payments that form.
The undersigned hereby specifically confirms to Interactive Solutions
Incorporated that he or she is acquiring said shares for investment and not with
a view to their sale or distribution, and that sold shares shall be held subject
to all of the terms and conditions of said Incentive Stock Option Agreement.
Very truly yours,
_______________________ __________________________________________________
Date (Signed by _________________ or other party duly
exercising option)
<PAGE>
Exhibit B to Incentive Stock Option
[FORM OF TERM NOTE IN PAYMENT OF EXERCISE PRICE OF OPTIONS]
PROMISSORY NOTE
$________________ Date:________________
FOR VALUE RECEIVED, the undersigned (the "Payor") hereby promises to pay
to the order of Interactive Solutions Incorporated (the "Payor") at the
principal office of Payee in Massachusetts on or before __________, 19___ the
sum of ____________________ ($ __________) with interest from the date hereof of
the principal amount hereof from time to time unpaid at the rate of percent (%)
per annum (being the "base rate" of *** on the date hereof). Interest on the
outstanding principal amount hereof shall be due and payable quarterly on the
last business day of March, June, September and December in each year during the
term of this Note, and at maturity commencing __________. The Payor authorizes
the Payee to withhold such interest from his regular monthly or other salary
payment or other compensation and to apply such withheld amount to interest due
hereon and also agrees to execute such instruments and other documents as the
Payee may from time to time request to reflect such right of withholding. [The
Payor shall on __________ of each year, commencing in __ percent (__%) of the
original principal amount of this Note, together with all accrued and unpaid
interest thereon.]
All payments on this Note shall be first applied against accrued but
unpaid interest to the extent thereof, and then to the outstanding principal
amount.
The Payor shall have the right to prepay the principal amount of this Note
in which or in part at any time without penalty, but together with all but
unpaid accrued interest on the outstanding principal amount. No such prepayment
amount shall affect the obligation of the Payor to make the payments required by
the last sentence of the first paragraph of this Note.
Payor shall pay principal, interest, and other amounts under, and in
accordance with the terms of, this Note, free and clear of and without deduction
for any and all present and future taxes, levies, imports, deductions, charges,
withholdings, and all liabilities with respect thereto, excluding taxes measured
by income.
Should the indebtedness evidenced by this Note or any part thereof be
collected by legal action, or in bankruptcy, receivership or other court
proceedings, or should this Note be placed in the hands of attorneys for
collection after default, Payor agrees to pay, upon demand by Payee, in addition
to principal and interest and other sums, if any, due and payable hereon , court
costs and reasonable attorneys' fees and other reasonable collection charges, to
the maximum extent permitted by applicable law.
This Note represents the obligation of the Payor to pay on an installment
basis the balance of the purchase price of shares of Common Stock of the Payee
to be issued to the Payor promptly after the date hereof (the "Shares"), plus
interest on such purchase price, pursuant to a stock option granted on
__________ pursuant to the Stock Option Agreement dated ________, 199__ (the
"Agreement").
<PAGE>
[Notwithstanding any other provisions of this Note or the Agreement, Payor
and Payee agree that Payor shall have no personal liability with respect to the
payment of any amount due under this Note, the sole recourse of the Payee being
to the Shares.]
[In addition to the rights and obligations of the Payor and the holder of
this Note specifically set forth in this Note, the Payor and the holder of this
Note shall also have the benefit of and be subject to (i) the provisions of
Section 19 and 25 of the Massachusetts Business Corporation Law and any other
sections of said Law relating to the installment payment for shares and (if) the
rights and obligations of the Payor and the Payee set forth in the Agreement,
including but not limited to the provisions relating to acceleration of the
obligations to make payment of the purchase price of the Shares.]
Upon the occurrence of any of the following events (an "acceleration
event"):
(a) Failure of the Payor to perform or observe any of his
obligations under this Note or the Agreement, or acceleration of the
Payor's obligation to make payment of the purchase price of the Shares
pursuant to the provisions of the Agreement; or
(b) Commencement of voluntary of involuntary proceedings in respect
of the Payor under any federal or state bankruptcy, insolvency,
receivership or other similar law; or
(c) Termination of the Payor's employment by the Payee;
then, and in any such event, the holder of this Note at its election may
forthwith declare the entire principal amount of this Note, together with
accrued interest thereon, immediately due and payable, and this Note shall
thereupon forthwith become so due and payable without presentation,
protest or further demand or notice of any kind, all of which are
expressly waived.
The Payor hereby waives the presentment, demand, notice of protest and all
other demands and notices in connection with delivery, acceptance, performance,
default or enforcement hereof. No delay or omission on the part of the holder of
this Note in exercising any right hereunder shall operate as a waiver of any of
the holder's rights hereunder unless set forth in a writing signed by the
holder, and a waiver on any one occasion shall not be construed as a bar to or
waiver of any right on any future occasion. The Payor further agrees to pay the
costs, fees and expenses (including reasonable attorneys' fees) of collection
and enforcement of this Note.
Any provision of this Note to the contrary notwithstanding, changes in or
additions to this Note may be made, or compliance with any team, covenant,
agreement, condition or provision set forth herein may be omitted or waived
(either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the corrupt in writing of Payee and Payor,
and each such change, addition or waiver shall be binding upon each future
holder of the Note and Payor. Any consent may be given subject to satisfaction
of conditions stated therein.
2
<PAGE>
This Note shall be binding upon and shall inure to the benefit of the
Payor and the Payee and their respective successors and assigns, including,
without limitation, successors by operation of law pursuant to any merger,
consolidation or ___ of ___ involving any of the parties.
This Note shall be deemed to be a contract made under and to be construed
in accordance with the governed by the applicable law of the United States of
America and the laws (other than the law governing conflict of law matters) of
The Commonwealth of Massachusetts.
If the last of appointed day for taking of any action required or
permitted hereby (other than the payment of principal of interest of premium, if
any, herein) shall be a Saturday, Sunday or legal holiday in Boston,
Massachusetts, or a day on which banking institutions in Boston, Massachusetts
are authorized by law or executive order to close, than such action may be taken
on the next succeeding business day for banking institutions in each city.
This Note is executed as, and shall be effective as, a sealed instrument
and shall be binding upon the estate and my successor or the Payor.
Witness: __________________________ ________________________________________
Payor
3
<PAGE>
Exhibit 2 to Stock Option Plan
Form of Non-Qualified Stock Option Certificate
Interactive Solutions Incorporated
Nonqualified Stock Option Agreement
Option Certificate Number:___________________
Specific Terms of the Option
Subject to the terms and conditions hereinafter set forth and the terms
and conditions of the Interactive Solutions Incorporated 1996 Stock Option Plan
(the "Plan"), Interactive Solutions Incorporated, a Massachusetts corporation
(the "Company") hereby grants the following option to purchase Common Stock, per
value $0.01 per share (the "Stock") of the Company:
1. Name of Person to Whom the Option is granted (the "Optionee":_______________.
2. Date of Grant of Option:______________________.
3. An Option for __________ shares of __________ Stock.
4. Option Exercise Price (per share): $_______________.
5. Term of Option: Subject to Section 9 below, this Option expires at 5:00 p.m.
Eastern Time on _______________.
6. Vesting Schedule: Provided that on the dates set forth below the Optionee has
been continuously employed by the Company or, if the Optionee is not employed by
the Company the Optionee is still actively involved in the Company (as
determined by the Board of Directors) the Option will become exercisable as
follows and as provided in Section 9 below:
The Option will Become Cumulative
On This Vested ("Exercisable") as Vested
Date To This Number of Shares ("Exercisable")
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
7. Does Section 10 of the Plan apply to Stock covered by this Option?
Yes ___ No ___.
INTERACTIVE SOLUTIONS INCORPORATED
By:___________________________________ X___________________________________
Title:__________________________ (Signature of Optionee)
Date:_______________________________
Optionee's Address:_____________________________________________________________
2
<PAGE>
OTHER TERMS OF THE OPTION
WHEREAS, the Board of Directors (the "Board") has authorized the grant of
stock options upon certain terms and conditions set forth herein; and
WHEREAS, the Board has authorized the grant of this stock option pursuant
and subject to the terms of the Plan, a copy of which is available from the
Company and is hereby incorporated herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the Company and the Optionee agree as set forth
above and as follows:
8. Grant. Pursuant and subject to the Plan, the Company does hereby grant
to the Optionee a stock option (the "Option") to purchase from the Company the
number of shares of its Common Stock set forth in Section 3 upon the terms and
conditions set forth in the Plan and upon the additional terms and conditions
contained herein. This Option is a non-qualified stock option and is NOT
intended to qualify for special federal income tax treatment as an "incentive
stock option" pursuant to Section 422A of the Internal Revenue Code of 1986, as
amended.
9. Option Price. This Option may be exercised at the option price per
share of Stock set forth in Section 4 hereof, subject to adjustment as provided
herein and in the Plan.
10. Term and Exercisability of Option. This Option shall expire on the
date determined pursuant to Section 5 hereof and shall be exercisable prior to
that date in accordance with and subject to the conditions set forth in the Plan
and those conditions, if any, set forth in Section 6 hereof. In addition, in the
event that before this Option has been exercised in full, the Optionee ceases to
be an employee of the Company for any reason other than death or a termination
for dishonesty or other "cause" as provided in Section 16 of the Plan, the
Optionee may exercise this Option to the extent that he or she might have
exercised it on the date of termination of his or her employment, during the
period ending on the earlier of (i) the date on which the Option expires in
accordance with Section 5 of this Agreement or (ii) 90 days after the date of
termination of the Optionee's employment by the Company. In the event of the
death of the Optionee before this Option has been exercised in full, the
personal representative of the Optionee may exercise this Option to the extent
that the Optionee might have exercised it on the date of his or her death,
during the period ending on the earlier of (i) the date on which the Option
expires in accordance with Section 5 of this Agreement or (ii) the first
anniversary of the date of the Optionee's death.
11. Method of Exercise. To the extent that the right to purchase shares of
Stock has accrued hereunder, this Option may be exercised from time to time by
written notice to the Company substantially in the form attached hereto as
Exhibit A, stating the number of shares with respect to which this Option is
being exercised, and accompanied by payment in full of the option price for the
number of shares to be delivered by means of payments acceptable to the Company
in accordance with Section 10 of the Plan. As soon as practicable after its
receipt of such notice, the company shall, without transfer or issue tax to the
Optionee (or other person entitled to exercise this Option), deliver to the
Optionee (or other person entitled to exercise this
<PAGE>
Option), deliver to the Optionee (or other person entitled to exercise this
Option), at the principal executive offices of the Company or such other place
as shall be mutually acceptable, a certificate or certificates for such shares
out of theretofore authorized but unissued shares or reacquired shares of its
Stock as the Company may elect; provided, however, that the time of such
delivery may be postponed by the Company for such period as may be required for
it with reasonable diligence to comply with any applicable requirements of law.
Payment of the option price may be made in cash or cash equivalents, [or, in
accordance with the terms and conditions of Section 10 of the Plan, (a) in whole
or in part in shares of Common Stock of the Company, or (b) in part by
promissory note of the Optionee in the form attached hereto as Exhibit B;
provided, however, that the Board reserves the right upon receipt of any written
notice of exercise from the Optionee to require payment in cash with respect to
the shares contemplated in such notice].2 If the Optionee (or other person
entitled to exercise this Option) fails to pay for and accept delivery of all of
the shares specified in such notice upon tender of delivery thereof, his or her
right to exercise this Option with respect to such shares not paid for may be
terminated by the Company.
12. Non-assignability of Option Rights. This Option shall not be
assignable or transferable by the Optionee except by will or by the laws of
descent and distributions. During the life of the Optionee, this Option shall be
exercisable only by him or her.
13. Compliance with Securities Act. The Company shall not be obligated to
sell or issue any shares of Stock or other securities pursuant to the exercise
of this Option unless the shares of Stock or other securities with respect to
which this Option is being exercised are at that time effectively registered or
exempt from registration under the Securities Act of 1933, as amended, and
applicable state securities laws. In the event shares or other securities shall
be issued which shall not be so registered, the Optionee hereby represents,
warrants and agrees that he or she will receive such shares or other securities
for investment and not with a view to their resale or distribution, and will
execute an appropriate investment letter satisfactory to the Company and its
counsel.
14. Legends. The Optionee hereby acknowledges that the stock certificate
or certificates evidencing shares of Stock or other securities issued pursuant
to any exercise of this Option will bear a legend setting forth the restrictions
on their transferability described in Section 12 hereof and, if applicable to
this Option, in Section 19 of the Plan.
15. Rights as Stockholders. The Optionee shall have no rights as a
stockholder with respect to any shares of Stock or other securities covered by
this Option until the date of issuance of a certificate to him or her for such
shares or other securities. No adjustment shall be made for dividends or other
rights for which the record date is prior to the date such stock certificates is
issued.
16. Withholding Taxes. The Optionee hereby agrees, as a condition to any
exercise of this Option, to provide to the Company an amount sufficient to
satisfy its obligation to withhold certain federal, state and local taxes
arising by reason of such exercise (the "Withholding Amount") by (a) authorizing
the Company to withhold the Withholding Amount
- -----------------------
2 Review.
2
<PAGE>
from his or her cash compensation, or (b) remitting the Withholding Amount to
the Company in cash; provided that to the extent that the Withholding Amount is
not provided by one or a combination of such methods, the Company in its
discretion may refuse to issue such Stock or may withhold from the Stock
delivered upon exercise of this Option that number of shares having a fair
market value, on the date of exercise, sufficient to eliminate any deficiency in
the Withholding Amount.
17. Termination or Amendment of Plan. The Board may in its sole and
absolute discretion at any time terminate or from time to time modify and amend
the Plan, but no such termination or amendment will affect rights and
obligations under this Option.
18. Effect Upon Employment. Nothing in this Option or the Plan shall be
construed to impose any obligation upon the Company to employ the Optionee or to
retain the Optionee in its employ, or continue its involvement with, the
Optionee.
19. Time for Acceptance. Unless the Optionee shall evidence his acceptance
of this Option by execution of this Agreement within seven (7) days after its
delivery to him or her, the Option and this Agreement shall be null and void.
20. General Provisions.
a. Amendment Waivers. This Agreement, including the Plan, contains the
full and complete understanding and agreement of the parties hereto as to the
subject matter hereof and may not be modified or amended, nor may any provision
hereof be waived, except by a further written agreement duly signed by each of
the parties. The waiver by either of the parties hereto of any provisions hereof
in any instance shall not operate as a waiver of any other provision hereof or
in any other instance.
b. Binding Effect. This Agreement shall inure to the benefit of and be
biding upon the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns.
c. Construction. This Agreement is to be construed in accordance with the
terms of the Plan. In case of any conflict between the Plan and this Agreement,
the Plan shall control. The titles of the sections of this Agreement and of the
Plan are included for convenience only and shall not be construed as modifying
or affecting their provisions. The masculine gender shall include both sexes;
the singular shall include the plural and the plural the singular unless the
context otherwise requires.
d. Notices. Any notice in connection with this Agreement shall be deemed
to have been properly delivered if it is in writing and is delivered in hand or
sent by registered mail to the party addressed as follows, unless another
address has been substituted by notice so given:
To the Optionee: To his or her address as listed on the books of the
Company
To the Company: Interactive Solutions Incorporate
855 Boylston Street
Boston, Massachusetts 02116
3
<PAGE>
Copy to:
Sullivan & Worcaster LLP
One Post Office Square
Boston, MA 02109
Attention: John A. Picelone
4
<PAGE>
EXHIBIT A to Non-qualified Stock Option
[FORM FOR EXERCISE OF NON-QUALIFIED STOCK OPTION]
Interactive Solutions Incorporated
855 Boylaton Street
Boston, Massachusetts 02116
RE: Exercise of Incentive Stock Option under Interactive Solutions
Incorporated 1996 Stock Option Plan
Gentlemen:
Please take notice that the undersigned hereby elects to exercise the
stock option granted to on ___________, 199__ by and to the extent of purchasing
______ shares of Common Stock of Interactive Solutions Incorporated ("the
Company") for the option price of $ ______ per share, subject to the terms and
conditions of the Non-qualified Stock Option Agreement between _____________ and
the Company dated as of _____________, 199__.
The undersigned encloses herewith payment, in cash or in such other
property as is permitted under the Plan, of the purchase price for sold shares.
If the undersigned is making payment of any part of the purchase price by
delivery of shares of Common Stock of Interactive Solutions Incorporated, he or
she hereby confirms that he or she has investigated and considered the possible
income tax consequences to him or her of making such payments that form. The
undersigned hereby agrees to provide the Company with an amount sufficient to
satisfy the obligation of the Company to withhold certain taxes.
The undersigned hereby specifically confirms to Interactive Solutions
Incorporated that he or she is acquiring said shares for investment and not with
a view to their sale or distribution, and that sold shares shall be held subject
to all of the terms and conditions of said Stock Option Agreement.
Very truly yours,
___________________________ __________________________________________________
Date (Signed by ________________ or other party duly
exercising option)
<PAGE>
Exhibit B to Nonqualified Stock Option
[FORM OF TERM NOTE IN PAYMENT OF EXERCISE PRICE OF OPTIONS]
PROMISSORY NOTE
$ _______________ Date:____________
FOR VALUE RECEIVED, the undersigned (the "Payor") hereby promises to pay
to the order of Interactive Solutions Incorporated (the "Payor") at the
principal office of Payee in Massachusetts on or before __________, 19___ the
sum of ___________________ ($________) with interest from the date hereof of the
principal amount hereof from time to time unpaid at the rate of _____ percent
(%) per annum (being the "base rate" of *** on the date hereof). Interest on the
outstanding principal amount hereof shall be due and payable quarterly on the
last business day of March, June, September and December in each year during the
term of this Note, and at maturity commencing __________. The Payor authorizes
the Payee to withhold such interest from his regular monthly or other salary
payment or other compensation and to apply such withheld amount to interest due
hereon and also agrees to execute such instruments and other documents as the
Payee may from time to time request to reflect such right of withholding. [The
Payor shall on __________ of each year, commencing in ___ percent (___%) of the
original principal amount of this Note, together with all accrued and unpaid
interest thereon.]
All payments on this Note shall be first applied against accrued but
unpaid interest to the extent thereof, and then to the outstanding principal
amount.
The Payor shall have the right to prepay the principal amount of this Note
in which or in part at any time without penalty, but together with all but
unpaid accrued interest on the outstanding principal amount. No such prepayment
amount shall affect the obligation of the Payor to make the payments required by
the last sentence of the first paragraph of this Note.
Payor shall pay principal, interest, and other amounts under, and in
accordance with the terms of, this Note, free and clear of and without deduction
for any and all present and future taxes, levies, imports, deductions, charges,
withholdings, and all liabilities with respect thereto, excluding taxes measured
by income.
Should the indebtedness evidenced by this Note or any part thereof be
collected by legal action, or in bankruptcy, receivership or other court
proceedings, or should this Note be placed in the hands of attorneys for
collection after default, Payor agrees to pay, upon demand by Payee, in addition
to principal and interest and other sums, if any, due and payable hereon, court
costs and reasonable attorneys' fees and other reasonable collection charges, to
the maximum extent permitted by applicable law.
This Note represents the obligation of the Payor to pay on an installment
basis the balance of the purchase price of shares of Common Stock of the Payee
to be issued to the Payor promptly after the date hereof (the "Shares"), plus
interest on such purchase price, pursuant to a stock option granted on
__________ pursuant to the Stock Option Agreement dated ________, 199__ (the
"Agreement").
<PAGE>
[Notwithstanding any other provisions of this Note or the Agreement, Payor
and Payee agree that Payor shall have no personal liability with respect to the
payment of any amount due under this Note, the sole recourse of the Payee being
to the Shares.]
[In addition to the rights and obligations of the Payor and the holder of
this Note specifically set forth in this Note, the Payor and the holder of this
Note shall also have the benefit of and be subject to (i) the provisions of
Section 19 and 25 of the Massachusetts Business Corporation Law and any other
sections of said Law relating to the installment payment for shares and (if) the
rights and obligations of the Payor and the Payee set forth in the Agreement,
including but not limited to the provisions relating to acceleration of the
obligations to make payment of the purchase price of the Shares.]
Upon the occurrence of any of the following events (an "acceleration
event"):
(a) Failure of the Payor to perform or observe any of his
obligations under this Note or the Agreement, or acceleration of the
Payor's obligation to make payment of the purchase price of the Shares
pursuant to the provisions of the Agreement; or
(b) Commencement of voluntary of involuntary proceedings in respect
of the Payor under any federal or state bankruptcy, insolvency,
receivership or other similar law; or
(c) Termination of the Payor's employment by the Payee;
then, and in any such event, the holder of this Note at its election may
forthwith declare the entire principal amount of this Note, together with
accrued interest thereon, immediately due and payable, and this Note shall
thereupon forthwith become so due and payable without presentation,
protest or further demand or notice of any kind, all of which are
expressly waived.
The Payor hereby waives the presentment, demand, notice of protest and all
other demands and notices in connection with delivery, acceptance, performance,
default or enforcement hereof. No delay or omission on the part of the holder of
this Note in exercising any right hereunder shall operate as a waiver of any of
the holder's rights hereunder unless set forth in a writing signed by the
holder, and a waiver on any one occasion shall not be construed as a bar to or
waiver of any right on any future occasion. The Payor further agrees to pay the
costs, fees and expenses (including reasonable attorneys' fees) of collection
and enforcement of this Note.
Any provision of this Note to the contrary notwithstanding, changes in or
additions to this Note may be made, or compliance with any team, covenant,
agreement, condition or provision set forth herein may be omitted or waived
(either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the corrupt in writing of Payee and Payor,
and each such change, addition or waiver shall be binding upon each future
holder of the Note and Payor. Any consent may be given subject to satisfaction
of conditions stated therein.
2
<PAGE>
This Note shall be binding upon and shall inure to the benefit of the
Payor and the Payee and their respective successors and assigns, including,
without limitation, successors by operation of law pursuant to any merger,
consolidation or ___ of ___ involving any of the parties.
This Note shall be deemed to be a contract made under and to be construed
in accordance with the governed by the applicable law of the United States of
America and the laws (other than the law governing conflict of law matters) of
The Commonwealth of Massachusetts.
If the last of appointed day for taking of any action required or
permitted hereby (other than the payment of principal of interest of premium, if
any, herein) shall be a Saturday, Sunday or legal holiday in Boston,
Massachusetts, or a day on which banking institutions in Boston, Massachusetts
are authorized by law or executive order to close, than such action may be taken
on the next succeeding business day for banking institutions in each city.
This Note is executed as, and shall be effective as, a sealed instrument
and shall be binding upon the estate and my successor or the Payor.
Witness: ____________________________ _______________________________________
Payor
3
EXHIBIT 99.5
INTERACTIVE TRAFFIC, INC. 1999 STOCK INCENTIVE PLAN
<PAGE>
INTERACTIVE TRAFFIC INC.
1999 STOCK INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this Stock Incentive Plan are to
attract and retain the best available personnel, to provide additional incentive
to Employees, Directors and Consultants and to promote the success of the
Company's business.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of the Committees
appointed to administer the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
administration of stock incentive plans, if any, under applicable provisions of
federal and state securities laws, the corporate laws of California and New York
and, to the extent other than California and New York, the corporate law of the
state of the Company's incorporation, the Code, the rules of any applicable
stock exchange or national market system, and the rules of any foreign
jurisdiction applicable to Awards granted to residents therein.
(c) "Award" means the grant of an Option, Restricted Stock, or other
right or benefit under the Plan.
(d) "Award Agreement" means the written agreement evidencing the
grant of an Award executed by the Company and the Grantee, including any
amendments thereto.
(e) "Board" means the Board of Directors of the Company.
(f) "Cause" means, with respect to the termination by the Company or
a Related Entity of the Grantee's Continuous Service, that such termination is
by reason of Grantee's breach of a covenant not to compete or a non-solicitation
obligation of the Grantee in favor of the Company.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means any committee appointed by the Board to
administer the Plan.
(i) "Common Stock" means the common stock of the Company.
(j) "Company" means Interactive Traffic Inc., a Delaware
corporation.
(k) "Consultant" means any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity as
a Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.
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(l) "Continuous Service" means that the provision of services to the
Company or a Related Entity in any capacity of Employee, Director or Consultant,
is not interrupted or terminated. Continuous Service shall not be considered
interrupted in the case of (i) any approved leave of absence, (ii) transfers
between locations of the Company or among the Company, any Related Entity, or
any successor, in any capacity of Employee, Director or Consultant, or (iii) any
change in status as long as the individual remains in the service of the Company
or a Related Entity in any capacity of Employee, Director or Consultant (except
as otherwise provided in the Award Agreement). An approved leave of absence
shall include sick leave, military leave, or any other authorized personal
leave. For purposes of Incentive Stock Options, no such leave may exceed ninety
(90) days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract.
(m) "Corporate Transaction" means any of the following transactions
to which the Company is a party:
(i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations) in connection with the complete
liquidation or dissolution of the Company;
(iii) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities are
transferred to a person or persons different from those who held such securities
immediately prior to such merger; or
(iv) acquisition by any person or related group of persons
(other than the Company or by a Company-sponsored employee benefit plan) of
beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of
securities possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities, but excluding any such
transaction that the Administrator determines shall not be a Corporate
Transaction.
(n) "Director" means a member of the Board or the board of directors
of any Related Entity.
(o) "Disability" means that a Grantee is permanently unable to carry
out the responsibilities and functions of the position held by the Grantee by
reason of any medically determinable physical or mental impairment. A Grantee
will not be considered to have incurred a Disability unless he or she furnishes
proof of such impairment sufficient to satisfy the Administrator in its
discretion.
(p) "Employee" means any person, including an Officer or Director,
who is an employee of the Company or any Related Entity. The payment of a
director's fee by the Company or a Related Entity shall not be sufficient to
constitute "employment" by the Company.
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(q) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(r) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) Where there exists a public market for the Common Stock,
the Fair Market Value shall be (A) the closing price for a Share for the last
market trading day prior to the time of the determination (or, if no closing
price was reported on that date, on the last trading date on which a closing
price was reported) on the stock exchange determined by the Administrator to be
the primary market for the Common Stock or the Nasdaq National Market, whichever
is applicable or (B) if the Common Stock is not traded on any such exchange or
national market system, the average of the closing bid and asked prices of a
Share on the Nasdaq Small Cap Market for the day prior to the time of the
determination (or, if no such prices were reported on that date, on the last
date on which such prices were reported), in each case, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or
(ii) In the absence of an established market for the Common
Stock of the type described in (i), above, the Fair Market Value thereof shall
be determined by the Administrator in good faith and in a manner consistent with
Section 260.140.50 of Title 10 of the California Code of Regulations.
(s) "Grantee" means an Employee, Director or Consultant who receives
an Award under the Plan.
(t) "Incentive Stock Option' means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.
(u) "Non-Qualified Stock Option' means an Option not intended to
qualify as an Incentive Stock Option.
(v) "Officer" means a person who is an officer of the Company or a
Related Entity within the meaning of Section 1.6 of the Exchange Act and the
rules and regulations promulgated thereunder.
(w) "Option" means an option to purchase Shares pursuant to an Award
Agreement granted under the Plan.
(x) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(y) "Plan" means this 1999 Stock Incentive Plan.
(z) "Post-Termination Exercise Period" means the period specified in
the Award Agreement of not less than ninety (90) days commencing on the date of
termination (other than termination by the Company or any Related Entity for
Cause) of the Grantee's Continuous Service, or such longer period as may be
applicable upon death or Disability.
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(aa) "Registration Date" means the first to occur of (i) the closing
of the first sale to the general public of (A) the Common Stock or (B) the same
class of securities of a successor corporation (or its Parent) issued pursuant
to a Corporate Transaction in exchange for or in substitution of the Common
Stock, pursuant to a registration statement filed with and declared effective by
the Securities and Exchange Commission under the Securities Act of 1933, as
amended; and (ii) in the event of a Corporate Transaction, the date of the
consummation of the Corporate Transaction if the same class of securities of the
successor corporation (or its Parent) issuable in such Corporate Transaction
shall have been sold to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, on or prior to the date of
consummation of such Corporate Transaction.
(bb) "Related Entity" means any Parent, Subsidiary and any business,
corporation, partnership, limited liability company or other entity in which the
Company, a Parent or a Subsidiary holds a substantial ownership interest,
directly or indirectly.
(cc) "Restricted Stock" means Shares issued under the Plan to the
Grantee for such consideration, if any, and subject to such restrictions on
transfer, rights of first refusal, repurchase provisions, forfeiture provisions,
and other terms and conditions as established by the Administrator.
(dd) "Share" means a share of the Common Stock.
(ee) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan.
(a) Subject to the provisions of Section 11(a) below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards (including
Incentive Stock Options) is 200,000 Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock.
(b) Any Shares covered by an Award (or portion of an Award) which is
forfeited or canceled, expires or is settled in cash, shall be deemed not to
have been issued for purposes of determining the maximum aggregate number of
Shares which may be issued under the Plan. If any unissued Shares are retained
by the Company upon exercise of an Award in order to satisfy the exercise price
for such Award or any withholding taxes due with respect to such Award, such
retained Shares subject to such Award shall become available for future issuance
under the Plan (unless the Plan has terminated). Shares that actually have been
issued under the Plan pursuant to an Award shall not be returned to the Plan and
shall not become available for future issuance under the Plan, except that if
unvested Shares are forfeited, or repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the
Plan.
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4. Administration of the Plan.
(a) Plan Administrator. With respect to grants of Awards to
Employees, Directors, or Consultants, the Plan shall be administered by (A) the
Board or (B) a Committee (or a subcommittee of the Committee) designated by the
Board, which Committee shall be constituted in such a manner as to satisfy
Applicable Laws. Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board.
(b) Powers of the Administrator. Subject to Applicable Laws and the
provisions of the Plan (including any other powers given to the Administrator
hereunder), and except as otherwise provided by the Board, the Administrator
shall have the authority, in its discretion:
(i) to select the Employees, Directors and Consultants to whom
Awards may be granted from time to time hereunder;
(ii) to determine whether and to what extent Awards are
granted hereunder,
(iii) to determine the number of Shares or the amount of other
consideration to be covered by each Award granted hereunder;
(iv) to approve forms of Award Agreements for use under the
Plan;
(v) to determine the terms and conditions of any Award granted
hereunder;
(vi) to establish additional terms, conditions, rules or
procedures to accommodate the rules or laws of applicable foreign jurisdictions
and to afford Grantees favorable treatment under such rules or laws; provided,
however, that no Award shall be granted under any such additional terms,
conditions, rules or procedures with terms or conditions which are inconsistent
with the provisions of the Plan;
(vii) to amend the terms of any outstanding Award granted
under the Plan, provided that any amendment that would adversely affect the
Grantee's rights under an outstanding Award shall not be made without the
Grantee's written consent;
(viii) to construe and interpret the terms of the Plan and
Awards, including without limitation, any notice of award or Award Agreement,
granted pursuant to the Plan; and
(ix) to take such other action, not inconsistent with the
terms of the Plan, as the Administrator deems appropriate.
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be conclusive and
binding on all persons.
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5. Eligibility. Awards other than Incentive Stock Options may be granted
to Employees, Directors and Consultants. Incentive Stock Options may be granted
only to Employees of the Company, a Parent or a Subsidiary. An Employee,
Director or Consultant who has been granted an Award may, if otherwise eligible,
be granted additional Awards. Awards may be granted to such Employees, Directors
or Consultants who are residing in foreign jurisdictions as the Administrator
may determine from time to time.
6. Terms and Conditions of Awards.
(a) Type of Awards. The Administrator is authorized under the Plan
to award any type of arrangement to an Employee, Director or Consultant that is
not inconsistent with the provisions of the Plan and that by its terms involves
or might involve the issuance of (i) Shares, (ii) an Option, or similar fight
with a fixed or variable price related to the Fair Market Value of the Shares
and with an exercise or conversion privilege related to the passage of time, the
occurrence of one or more events, or the satisfaction of performance criteria or
other conditions, or (iii) any other security with the value derived from the
value of the Shares. Such awards include, without limitation, Options, sales or
bonuses of Restricted Stock, and an Award may consist of one such security or
benefit, or two (2) or more of them in any combination or alternative.
(b) Designation of Award. Each Award shall be designated in the
Award Agreement. In the case of an Option, the Option shall be designated as
either an Incentive Stock Option or a Non-Qualified Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of Shares subject to Options designated as Incentive Stock Options which
become exercisable for the first time by a Grantee during any calendar year
(under all plans of the Company or any Parent or Subsidiary) exceeds $100,000,
such excess Options, to the extent of the Shares covered thereby in excess of
the foregoing limitation, shall be treated as Non-Qualified Stock Options. For
this purpose, Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of the Shares shall be
determined as of the grant date of the relevant Option.
(c) Conditions of Award. Subject to the terms of the Plan, the
Administrator shall determine the provisions, terms, and conditions of each
Award including, but not limited to, the Award vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, form of payment
(cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance
criteria established by the Administrator may be based on any one of, or
combination of, increase in share price, earnings per share, total stockholder
return, return on equity, return on assets, return on investment, net operating
income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator.
Partial achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the Award Agreement.
(d) Acquisitions and Other Transactions. The Administrator may issue
Awards under the Plan in settlement, assumption or substitution for, outstanding
awards or obligations to grant future awards in connection with the Company or a
Related Entity acquiring
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another entity, an interest in another entity or an additional interest in a
Related Entity whether by merger, stock purchase, asset purchase or other form
of transaction.
(e) Deferral of Award Payment. The Administrator may establish one
or more programs under the Plan to permit selected Grantees the opportunity to
elect to defer receipt of consideration upon exercise of an Award, satisfaction
of performance criteria, or other event that absent the election would entitle
the Grantee to payment or receipt of Shares or other consideration under an
Award. The Administrator may establish the election procedures, the timing of
such elections, the mechanisms for payments of, and accrual of interest or other
earnings, if any, on amounts, Shares or other consideration so deferred, and
such other terms, conditions, rules and procedures that the Administrator deems
advisable for the administration of any such deferral program.
(f) Award Exchange Programs. The Administrator may establish one or
more programs under the Plan to permit selected Grantees to exchange an Award
under the Plan for one or more other types of Awards under the Plan on such
terms and conditions as determined by the Administrator from time to time.
(g) Separate Programs. The Administrator may establish one or more
separate programs under the Plan for the purpose of issuing particular forms of
Awards to one or more classes of Grantees on such terms and conditions as
determined by the Administrator from time to time.
(h) Early Exercise. The Award Agreement may, but need not, include a
provision whereby the Grantee may elect at any time while an Employee, Director
or Consultant to exercise any part or all of the Award prior to full vesting of
the Award. Any unvested Shares received pursuant to such exercise may be subject
to a repurchase right in favor of the Company or a Related Entity or to any
other restriction the Administrator determines to be appropriate.
(i) Term of Award. The term of each Award shall be the term stated
in the Award Agreement, provided, however, that the term shall be no more than
ten (10) years from the date of grant thereof. However, in the case of an
Incentive Stock Option granted to a Grantee who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant
thereof or such shorter term as may be provided in the Award Agreement.
(j) Transferability of Awards. Non-Qualified Stock Options shall be
transferable (i) to the extent provided in the Award Agreement and in a manner
consistent with Section 260.140.41 of Title 10 of the California Code of
Regulations and (ii) by will, and by the laws of descent and distribution.
Incentive Stock Options and other Awards may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Grantee, only by the Grantee.
(k) Time of Granting Awards. The date of grant of an Award shall for
all purposes be the date on which the Administrator makes the determination to
grant such Award,
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or such other date as is determined by the Administrator. Notice of the grant
determination shall be given to each Employee, Director or Consultant to whom an
Award is so granted within a reasonable time after the date of such grant.
7. Award Exercise or Purchase Price, Consideration, Taxes and Reload
Options.
(a) Exercise or Purchase Price. The exercise or purchase price, if
any, for an Award shall be as follows:
(i) In the case of an Incentive Stock Option:
(A) granted to an Employee who, at the time of the grant
of such Incentive Stock Option owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be not less than one hundred
ten percent (110%) of the Fair Market Value per Share on the date of grant; or
(B) granted to any Employee other than an Employee
described in the preceding paragraph, the per Share exercise price shall be not
less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant.
(ii) In the case of a Non-Qualified Stock Option:
(A) granted to a person who, at the time of the grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be not less than one hundred ten percent (110%)
of the Fair Market Value per Share on the date of grant; or
(B) granted to any person other than a person described
in the preceding paragraph, the per Share exercise price shall be not less than
eighty-five percent (85%) of the Fair Market Value per Share on the date of
grant.
(iii) In the case of the sale of Shares:
(A) granted to a person who, at the time of the grant of
such Award, or at the time the purchase is consummated, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share purchase price shall be not
less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant; or
(B) granted to any person other than a person described
in the preceding paragraph, the per Share purchase price shall be not less than
eighty-five percent (85%) of the Fair Market Value per Share on the date of
grant.
(iv) In the case of other Awards, such price as is determined
by the Administrator.
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(v) Notwithstanding the foregoing provisions of this Section
7(a), in the case of an Award issued pursuant to Section 6(d), above, the
exercise or purchase price for the Award shall be determined in accordance with
the principles of Section 424(a) of the Code.
(b) Consideration. Subject to Applicable Laws, the consideration to
be paid for the Shares to be issued upon exercise or purchase of an Award
including the method of payment, shall be determined by the Administrator (and,
in the case of an Incentive Stock Option, shall be determined at the time of
grant). In addition to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as consideration for Shares
issued under the Plan the following, provided that the portion of the
consideration equal to the par value of the Shares must be paid in cash or other
legal consideration permitted by the Delaware General Corporation Law:
(i) cash;
(ii) check;
(iii) delivery of Grantee's promissory note with such
recourse, interest, security, and redemption provisions as the Administrator
determines as appropriate;
(iv) if the exercise or purchase occurs on or after the
Registration Date, surrender of Shares or delivery of a properly executed form
of attestation of ownership of Shares as the Administrator may require
(including withholding of Shares otherwise deliverable upon exercise of the
Award) which have a Fair Market Value on the date of surrender or attestation
equal to the aggregate exercise price of the Shares as to which said Award shall
be exercised (but only to the extent that such exercise of the Award would not
result in an accounting compensation charge with respect to the Shares used to
pay the exercise price unless otherwise determined by the Administrator);
(v) with respect to Options, if the exercise occurs on or
after the Registration Date, payment through a broker-dealer sale and remittance
procedure pursuant to which the Grantee (A) shall provide written instructions
to a Company designated brokerage firm to effect the immediate sale of some or
all of the purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased Shares and (B) shall provide written
directives to the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm in order to complete the sale transaction; or
(vi) any combination of the foregoing methods of payment.
(c) Taxes. No Shares shall be delivered under the Plan to any
Grantee or other person until such Grantee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any foreign, federal,
state, or local income and employment tax withholding obligations, including,
without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition of Shares received on exercise of an Incentive Stock
Option. Upon exercise of an Award the Company shall withhold or collect from
Grantee an amount sufficient to satisfy such tax obligations.
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(d) Reload Options. In the event the exercise price or tax
withholding of an Option is satisfied by the Company or the Grantee's employer
withholding Shares otherwise deliverable to the Grantee, the Administrator may
issue the Grantee an additional Option, with terms identical to the Award
Agreement under which the Option was exercised, but at an exercise price as
determined by the Administrator in accordance with the Plan.
8. Exercise of Award.
(a) Procedure for Exercise, Rights as a Stockholder.
(i) Any Award granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator under the
terms of the Plan and specified in the Award Agreement but in the case of an
Option, in no case at a rate of less than twenty percent (20%) per year over
five (5) years from the date the Option is granted, subject to reasonable
conditions such as continued employment. Notwithstanding the foregoing, in the
case of an Option granted to an Officer, Director or Consultant, the Award
Agreement may provide that the Option may become exercisable, subject to
reasonable conditions such as such Officer's, Director's or Consultant's
Continuous Service, at any time or during any period established in the Award
Agreement.
(ii) An Award shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Award by the person entitled to exercise the Award and full payment
for the Shares with respect to which the Award is exercised, including, to the
extent selected, use of the broker-dealer sale and remittance procedure to pay
the purchase price as provided in Section 7(b)(v). Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to Shares subject to an Award,
notwithstanding the exercise of an Option or other Award. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in the Award Agreement
or Section 1 I (a), below.
(b) Exercise of Award Following Termination of Continuous Service.
In the event of termination of a Grantee's Continuous Service for any reason
other than Disability or death (but not in the event of a Grantee's change of
status from Employee to Consultant or from Consultant to Employee), such Grantee
may, but only during the Post-Termination Exercise Period (but in no event later
than the expiration date of the term of such Award as set forth in the Award
Agreement), exercise the Award to the extent that the Grantee was entitled to
exercise it at the date of such termination or to such other extent as may be
determined by the Administrator. The Grantee's Award Agreement may provide that
upon the termination of the Grantee's Continuous Service for Cause, the
Grantee's right to exercise the Award shall terminate concurrently with the
termination of Grantee's Continuous Service. The Award Agreement may also
provide that upon Grantee's breach of any covenant not to compete or any
non-solicitation obligation of the Grantee to the Company, the Grantee's right
to exercise the Award shall terminate concurrently with such breach (and there
shall be no Post-Termination Exercise Period under such circumstances), and that
any such breach after the exercise of an Award shall cause such exercise to be
rescinded. In the event of a Grantee's change of status from Employee to
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Consultant, an Employee's Incentive Stock Option shall convert automatically to
a Non-Qualified Stock Option on the day three (3) months and one day following
such change of status. To the extent that the Grantee is not entitled to
exercise the Award at the date of termination, or if the Grantee does not
exercise such Award to the extent so entitled within the Post-Termination
Exercise Period, the Award shall terminate.
(c) Disability of Grantee. In the event of termination of a
Grantee's Continuous Service as a result of his or her Disability, Grantee may,
but only within twelve (12) months from the date of such termination (and in no
event later than the expiration date of the ten-n of such Award as set forth in
the Award Agreement), exercise the Award to the extent that the Grantee was
otherwise entitled to exercise it at the date of such termination; provided,
however, that if such Disability is not a "disability" as such term is defined
in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such
Incentive Stock Option shall automatically convert to a Non-Qualified Stock
Option on the day three (3) months and one day following such termination. To
the extent that the Grantee is not entitled to exercise the Award at the date of
termination, or if Grantee does not exercise such Award to the extent so
entitled within the time specified herein, the Award shall terminate.
(d) Death of Grantee. In the event of a termination of the Grantee's
Continuous Service as a result of his or her death, or in the event of the death
of the Grantee during the Post-Termination Exercise Period or during the twelve
(12) month period following the Grantee's Termination of Continuous Service as a
result of his or her Disability, the Grantee's estate or a person who acquired
the right to exercise the Award by bequest or inheritance may exercise the
Award, but only to the extent that the Grantee was entitled to exercise the
Award as of the date of termination, within twelve (12) months from the date of
death (but in no event later than the expiration of the term of such Award as
set forth in the Award Agreement). To the extent that, at the time of death, the
Grantee was not entitled to exercise the Award, or if the Grantee's estate or a
person who acquired the fight to exercise the Award by bequest or inheritance
does not exercise such Award to the extent so entitled within the time specified
herein, the Award shall terminate.
(e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Award previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Grantee at the time that such offer is made.
9. Conditions Upon Issuance of Shares.
(a) Shares shall not be issued pursuant to the exercise of an Award
unless the exercise of such Award and the issuance and delivery of such Shares
pursuant thereto shall comply with all Applicable Laws, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and warrant at the time of
any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or
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distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required by any Applicable Laws.
10. Repurchase Rights. If the provisions of an Award Agreement grant to
the Company the right to repurchase Shares upon termination of the Grantee's
Continuous Service, the Award Agreement shall (or may, with respect to Awards
granted or issued to Officers, Directors or Consultants) provide that:
(a) the right to repurchase must be exercised, if at all, within
thirty (30) days of the termination of the Grantee's Continuous Service (or in
the case of Shares issued upon exercise of Awards after the date of termination
of the Grantee's Continuous Service, within thirty (30) days after the date of
the Award exercise);
(b) the consideration payable for the Shares upon exercise of such
repurchase right shall be made in cash or by cancellation of purchase money
indebtedness within the ninety (90) periods specified in Section 10(a);
(c) the amount of such consideration shall (i) be equal to the
original purchase price paid by Grantee for each such Share; provided, that the
right to repurchase such Shares at the original purchase price shall lapse at
the rate of at least twenty percent (20%) of the Shares subject to the Award per
year over five (5) years from the date the Award is granted (without respect to
the date the Award was exercised or became exercisable), and (ii) with respect
to Shares, other than Shares subject to repurchase at the original purchase
price pursuant to clause (i) above, not less than the Fair Market Value of the
Shares to be repurchased on the date of termination of Grantee's Continuous
Service; and
(d) the right to repurchase Shares, other than the right to
repurchase Shares at the original purchase price pursuant to clause (i) of
Section 10(c), shall terminate on the Registration Date.
11. Adjustments Upon Changes in Capitalization or Corporate Transaction.
(a) Adjustments upon Changes in Capitalization. Subject to any
required action by the stockholders of the Company, the number of Shares covered
by each outstanding Award, and the number of Shares which have been authorized
for issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan, the exercise or purchase price of each
such outstanding Award, as well as any other terms that the Administrator
determines require adjustment shall be proportionately adjusted for (i) any
increase or decrease in the number of issued Shares resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Shares, or similar transaction affecting the Shares, (ii) any other increase
or decrease in the number of issued Shares effected without receipt of
consideration by the Company, or (iii) as the Administrator may determine in its
discretion, any other transaction with respect to Common Stock to which Section
424(a) of the Code applies or a similar transaction; provided, however that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Administrator and its determination shall be final, binding and
conclusive. Except as the Administrator determines, no issuance by the
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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 hereof shall be
made with respect to, the number or price of Shares subject to an Award.
(b) Corporate Transaction. In the event of any Corporate Transaction
each Award which is at the time outstanding under the Plan shall automatically
become fully vested and exercisable and be released from any restrictions on
transfer (other than transfer restrictions applicable to Options) repurchase or
forfeiture rights, immediately prior to the specified effective date of such
Corporate Transaction, for all of the Shares at the time represented by such
Award. Effective upon the consummation of the Corporate Transaction, all
outstanding Awards under the Plan shall terminate immediately prior to the
specified effective date of the Corporate Transaction unless the Award is
assumed by the successor corporation or Parent thereof in connection with the
Corporate Transaction.
(c) Effective Date and Term of Plan. The Plan shall become effective
upon the earlier to occur of its adoption by the Board or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated. Subject to Section 16, below, and Applicable
Laws, Awards may be granted under the Plan upon its becoming effective.
12. Amendment, Suspension or Termination of the Plan.
(a) The Board may at any time amend, suspend or terminate the Plan.
To the extent necessary to comply with Applicable Laws, the Company shall obtain
stockholder approval of any Plan amendment in such a manner and to such a degree
as required.
(b) No Award may be granted during any suspension of the Plan or
after termination of the Plan.
(c) Any amendment, suspension or termination of the Plan (including
termination of the Plan under Section 12, above) shall not affect Awards already
granted, and such Awards shall remain in full force and effect as if the Plan
had not been amended, suspended or terminated, unless mutually agreed otherwise
between the Grantee and the Administrator, which agreement must be in writing
and signed by the Grantee and the Company.
13. Reservation of Shares.
(a) The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
(b) The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
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14. No Effect on Terms of Employment/Consulting Relationship. The Plan
shall not confer upon any Grantee any right with respect to the Grantee's
Continuous Service, nor shall it interfere in any way with his or her right or
the Company's right to terminate the Grantee's Continuous Service at any time,
with or without cause.
15. No Effect on Retirement and Other-Benefit Plans. Except as
specifically provided in a retirement or other benefit plan of the Company or a
Related Entity, Awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Company or
a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation. The Plan
is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement
Income Security Act of 1974, as amended.
16. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company, within twelve (12) months before or
after the date the Plan is adopted. Such stockholder approval shall be obtained
in the degree and manner required under Applicable Laws. Any Award exercised
before stockholder approval is obtained shall be rescinded if stockholder
approval is not obtained within the time prescribed, and Shares issued on the
exercise of any such Award shall not be counted in determining whether
stockholder approval is obtained.
17. Information to Grantees. The Company shall provide to each Grantee,
during the period for which such Grantee has one or more Awards outstanding,
copies of financial statements at least annually.
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