<PAGE>
EXHIBIT 10.13
MINDARROW SYSTEMS, INC.
2000 STOCK INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
Page
1. The Plan............................................................... 1
1.1 Purpose.......................................................... 1
1.2 Administration and Authorization; Power and Procedure............ 1
1.3 Participation.................................................... 2
1.4 Shares Available for Awards; Share Limits........................ 2
1.5 No Transferability; Limited Exception to Transfer Restrictions... 3
2. Options................................................................ 4
2.1 Option Grants.................................................... 4
2.2 Vesting; Term; Exercise Procedure................................ 4
2.3 Option Price..................................................... 5
2.4 Limitations on Grant and Terms of Incentive Stock Options........ 6
2.5 Limits on 10% Holders............................................ 7
2.6 Effects of Termination of Employment; Termination of Subsidiary
Status; Discretionary Provisions................................ 7
2.7 Option Repricing/Cancellation and Regrant/Waiver of
Restrictions.................................................... 10
2.8 Options in Substitution for Stock Options Granted by Other
Corporations.................................................... 10
3. Restricted Stock Awards................................................ 10
3.1 Grants........................................................... 10
3.2 Award Agreement.................................................. 10
3.3 Vesting.......................................................... 11
3.4 Term............................................................. 11
3.5 Purchase Price................................................... 11
3.6 Stock Certificates; Fractional Shares............................ 11
3.7 Restrictions..................................................... 12
3.8 Return to the Corporation........................................ 12
3.9 Other Sections Applicable to Restricted Stock Awards............. 12
3.10 Waiver of Restrictions........................................... 12
4. Other Provisions....................................................... 13
4.1 Rights of Eligible Persons, Participants and Beneficiaries....... 13
4.2 Adjustments; Acceleration........................................ 14
4.3 Compliance with Laws............................................. 16
i
<PAGE>
4.4 Tax Withholding.................................................. 18
4.5 Plan and Award Amendments, Termination and Suspension............ 19
4.6 Privileges of Stock Ownership.................................... 19
4.7 Effective Date of the Plan....................................... 19
4.8 Term of the Plan................................................. 19
4.9 Governing Law/Severability....................................... 20
4.10 Captions......................................................... 20
4.11 Non-Exclusivity of Plan.......................................... 20
4.12 No Restriction on Corporate Powers............................... 20
4.13 Other Company Compensation or Benefit Programs................... 20
5. Definitions............................................................ 21
ii
<PAGE>
MINDARROW SYSTEMS, INC.
2000 STOCK INCENTIVE PLAN
1. The Plan.
--------
1.1 Purpose. The purpose of this Plan is to promote the success of the Company
-------
and the interests of its stockholders by attracting, motivating, retaining
and rewarding certain officers, employees, directors and other eligible
persons with awards and incentives for high levels of individual
performance and improved financial performance of the Company. Capitalized
terms used herein are defined in Section 5.
1.2 Administration and Authorization; Power and Procedure.
-----------------------------------------------------
1.2.1 Committee. This Plan will be administered by and all Awards will be
---------
authorized by the Committee. Action of the Committee with respect to
its authority under this Plan shall be taken pursuant to a majority
vote or by unanimous written consent of its members.
1.2.2 Plan Awards; Interpretation; Powers of Committee. Subject to the
------------------------------------------------
express provisions of this Plan and any express limitations on the
delegated authority of a Committee, the Committee will have the
authority to:
(a) determine eligibility and the particular Eligible Persons who
will receive Awards;
(b) grant Awards to Eligible Persons, determine the price at which
securities will be offered or awarded and the amount of
securities to be offered or awarded to any of such persons, and
determine the other specific terms and conditions of Awards
consistent with the express limits of this Plan, establish the
installments (if any) in which such Awards will become
exercisable or will vest, and the respective consequences
thereof, or determine that no delayed exercisability or vesting
is required, and establish the events of termination or
reversion of such Awards;
(c) approve the forms of Award Agreements, which need not be
identical either as to type of Award or among Participants;
(d) construe and interpret this Plan and any Award or other
agreements defining the rights and obligations of the Company
and Participants under this Plan, further define the terms used
in this Plan, and prescribe, amend and rescind rules and
regulations relating to the administration of this Plan;
(e) cancel, modify, or waive the Corporation's rights with respect
to, or modify, discontinue, suspend, or terminate any or all
outstanding Awards held by Eligible Persons, subject to any
required consent under Section 4.5;
1
<PAGE>
(f) accelerate or extend the exercisability or extend the term of
any or all outstanding Awards within the maximum ten-year term
of Awards under Sections 2.2.2 and 3.4;
(g) determine the duration and purposes of leaves of absence that
may be granted to Participants without constituting a
termination of their employment for purposes of this Plan; and
(h) make all other determinations and take such other action as
contemplated by this Plan or as may be necessary or advisable
for the administration of this Plan and the effectuation of its
purposes.
1.2.3 Binding Determinations. Any action taken by, or inaction of, the
----------------------
Corporation, any Subsidiary, the Board or the Committee relating or
pursuant to this Plan will be within the absolute discretion of that
entity or body and will be conclusive and binding upon all persons.
Subject only to compliance with the express provisions hereof, the
Board and Committee may act in their absolute discretion in matters
within their authority related to this Plan.
1.2.4 Reliance on Experts. In making any determination or in taking or
-------------------
not taking any action under this Plan, the Committee or the Board,
as the case may be, may obtain and may rely upon the advice of
experts, including employees of and professional advisors to the
Corporation.
1.2.5 Delegation. The Committee may delegate ministerial, non-
----------
discretionary functions to individuals who are officers or employees
of the Company.
1.2.6 No Liability. No director, officer or agent of the Company will be
------------
liable for any action, omission or decision under the Plan taken,
made or omitted in good faith.
1.3 Participation. Awards may be granted by the Committee only to those persons
-------------
that the Committee determines to be Eligible Persons. An Eligible Person
who has been granted an Award may, if otherwise eligible, be granted
additional Awards if the Committee so determines.
1.4 Shares Available for Awards; Share Limits.
-----------------------------------------
1.4.1 Shares Available. Subject to the provisions of Section 4.2, the
----------------
capital stock that may be delivered under this Plan will be shares
of the Corporation's authorized but unissued Common Stock and any of
its shares of Common Stock held as treasury shares. The shares may
be delivered for any lawful consideration.
1.4.2 Share Limits. The maximum number of shares of Common Stock that may
------------
be delivered pursuant to Awards granted under this Plan will not
exceed 1,000,000 shares (the "Share Limit"). The maximum number of
shares subject to Options that are granted during any calendar year
to any one individual will be limited to 100,000 shares and the
maximum individual limit on the number of shares in the aggregate
subject to all Awards that during any calendar year are granted
under
2
<PAGE>
this Plan to any one individual will be 100,000 shares. Each of the
foregoing numerical limits will be subject to adjustment as
contemplated by this Section 1.4 and Section 4.2.
1.4.3 Share Reservation; Replenishment and Reissue of Unvested Awards.
---------------------------------------------------------------
Shares subject to outstanding Awards shall be reserved for issuance.
No Award may be granted under this Plan unless, on the date of
grant, the sum of (a) the maximum number of shares of Common Stock
issuable at any time pursuant to such Award, plus (b) the number of
shares of Common Stock that have previously been issued pursuant to
Awards granted under this Plan, other than reacquired shares
available for reissue consistent with any applicable legal
limitations, plus (c) the maximum number of shares of Common Stock
that may be issued at any time after such date of grant pursuant to
Awards that are outstanding on such date, does not exceed the Share
Limit. Shares of Common Stock that are subject to or underlie Awards
that expire or for any reason are canceled or terminated, are
forfeited, fail to vest, or for any other reason are not paid or
delivered under this Plan, as well as reacquired shares, will again,
except to the extent prohibited by law (or the provisions of the
Code, in the case of Incentive Stock Options) or the terms of this
Plan, (or, in the case of Incentive Stock Options, the provisions of
the Internal Revenue Code) be available for subsequent Awards under
this Plan. Accordingly, shares of Common Stock issued pursuant to
the terms hereof (including shares of Common Stock offset in
satisfaction of applicable withholding taxes or the exercise price
of an Award) in respect of an Award shall reduce on a share-for-
share basis the number of shares of Common Stock remaining available
under this Plan and the number of shares remaining subject to the
Award.
1.5 No Transferability; Limited Exception to Transfer Restrictions.
--------------------------------------------------------------
1.5.1 Limit On Exercise and Transfer. Unless otherwise expressly provided
------------------------------
in (or pursuant to) this Section 1.5, by applicable law and by the
Award Agreement, as the same may be amended:
(a) all Awards are non-transferable and will not be subject in any
manner to sale, transfer, anticipation, alienation, assignment,
pledge, encumbrance or charge;
(b) Awards will be exercised only by the Participant; and
(c) amounts payable or shares issuable pursuant to an Award will be
delivered only to (or for the account of) the Participant.
In addition, the shares shall be subject to the restrictions set
forth in the applicable Award Agreement.
3
<PAGE>
1.5.2 Further Exceptions to Limits On Transfer. The exercise and transfer
----------------------------------------
restrictions in Section 1.5.1 will not apply to:
(a) transfers to the Corporation or, with the express written
approval of the Committee, transfers by gift to "immediate
family" as that term is defined in SEC Rule 16a-1(e)
promulgated under the Exchange Act;
(b) the designation of a beneficiary to receive benefits if the
Participant dies or, if the Participant has died, transfers to
or exercises by the Participant's beneficiary, or, in the
absence of a validly designated beneficiary, transfers by will
or the laws of descent and distribution; or
(c) if the Participant has suffered a disability, permitted
transfers or exercises on behalf of the Participant by the
Participant's duly authorized legal representative.
Notwithstanding anything else in this Section 1.5.2 to the contrary,
Incentive Stock Options and Restricted Stock Awards will be subject
to any and all transfer restrictions under the Code applicable to
such awards or necessary to maintain the intended tax consequences of
such Awards.
2. Options.
-------
2.1 Option Grants.
-------------
2.1.1 Approval; Number of Shares. The Committee may grant one or more
--------------------------
Options under this Plan to any Eligible Person. Subject to the
express provisions of this Plan, the Committee will determine
the number of shares of Common Stock subject to each Option.
2.1.2 Award Agreement. Each Option will be evidenced by an Award
---------------
Agreement signed by the Corporation and, to the extent required
by the Committee, by the Participant and the Participant's
spouse. The Award Agreement evidencing an Option shall contain
the terms established by the Committee for that Option, as well
as any other terms, provisions, or restrictions that the
Committee may impose on the Option or any shares of Common Stock
subject to the Option.
2.1.3 Type of Options. The Committee will designate each Option
---------------
granted under this Plan as either an Incentive Stock Option or a
Nonqualified Stock Option and such designation shall be set
forth in the applicable Award Agreement. Any Option granted
hereunder that is not designated as an Incentive Stock Option
will be deemed to be designated a Nonqualified Stock Option
under this Plan and not an incentive stock option under the
Code. Incentive Stock Options shall be subject to the provisions
of Section 2.4 in addition to the provisions hereof applicable
to Options generally.
4
<PAGE>
2.2 Vesting; Term; Exercise Procedure.
---------------------------------
2.2.1 Vesting. An Option may be exercised only to the extent that it
-------
is vested and exercisable. The Committee will determine the
vesting and/or exercisability provisions of each Option, which
provisions will be set forth in the applicable Award Agreement.
Unless the Committee otherwise expressly provides, no Option
will be exercisable or will vest until at least six months
after the initial Award Date, and once exercisable an Option
will remain exercisable until the expiration or earlier
termination of the Option. To the extent required to satisfy
applicable securities laws and subject to Section 2.6, no
Option (except an Option granted to an officer, director, or
consultant of the Company) shall vest and become exercisable at
a rate of less than 20% per year over five years after the date
the Option is granted.
2.2.2 Term. Each Option shall expire not more than 10 years after
----
its date of grant. Each Option will be subject to earlier
termination as provided in or pursuant to Sections 2.6 or 4.2.
Any payment of cash or delivery of stock in payment of or
pursuant to an Option may be delayed until a future date if
specifically authorized by the Committee in writing and by the
Participant.
2.2.3 Exercise Procedure. Any exercisable Option will be deemed to
------------------
be exercised when the Corporation receives written notice of
such exercise from the Participant (on a form and in such
manner as may be required by the Committee), together with any
required payment made in accordance with Section 2.3.2 and
Section 4.4 and any written statement required pursuant to
Section 4.3.
2.2.4 Fractional Shares/Minimum Issue. Fractional share interests
-------------------------------
will be disregarded, but may be accumulated. The Committee,
however, may determine that cash, other securities, or other
property will be paid or transferred in lieu of any fractional
share interests. No fewer than 100 shares may be purchased on
exercise of any Option at one time unless the number purchased
is the total number at the time available for purchase under
the Option.
2.3 Option Price.
------------
2.3.1 Pricing Limits. Subject to the following provisions of this
--------------
Section 2.3.1, the Committee will determine the purchase price
per share of the Common Stock covered by each Option (the
"exercise price" of the Option) at the time of the grant of the
Option, which purchase price will be set forth in the
applicable Award Agreement. In no case will the exercise price
of an Option be less than the greater of:
-------
(a) the par value of the Common Stock;
(b) in the case of a Nonqualified Stock Option and subject to
clause (d) below, 85% of Fair Market Value of the Common
Stock on the date of grant;
5
<PAGE>
(c) in the case of an Incentive Stock Option and subject to
clause (d) below, 100% of the Fair Market Value of the
Common Stock on the date of grant; or
(d) in the case of an Option (incentive or nonqualified)
granted to a Participant described in Section 2.5, 110% of
the Fair Market Value of the Common Stock on the date of
grant.
2.3.2 Payment Provisions. The Corporation will not be obligated to
------------------
deliver certificates for the shares of Common Stock to be
purchased on exercise of an Option unless and until it receives
full payment of the exercise price therefor, all related
withholding obligations under Section 4.4 have been satisfied,
and all other conditions to the exercise of the Option set
forth herein or in the Award Agreement have been satisfied. The
purchase price of any shares of Common Stock purchased on
exercise of an Option must be paid in full at the time of each
purchase in one or a combination of the following methods:
(a) in cash or by electronic funds transfer;
(b) by certified or cashier's check payable to the order of
the Corporation;
(c) by notice and third party payment in such manner as may be
authorized by the Committee;
(d) by the delivery of shares of Common Stock already owned by
the Participant; provided that the Committee may, in its
--------
absolute discretion, limit the Participant's ability to
exercise an Option by delivering previously owned shares,
and any shares of Common Stock delivered that were
initially acquired from the Corporation upon exercise of a
stock option or otherwise must have been owned by the
Participant at least 6 months as of the date of delivery;
or
(e) if authorized by the Committee or specified in the
applicable Award Agreement, by a promissory note of the
Participant consistent with the requirements of Section
1.6.
Shares of Common Stock used to satisfy the exercise price of an
Option will be valued at their Fair Market Value on the date of
exercise.
2.4 Limitations on Grant and Terms of Incentive Stock Options.
---------------------------------------------------------
2.4.1 $100,000 Limit. To the extent that the aggregate "Fair Market
--------------
Value" of stock with respect to which incentive stock options first
become exercisable by a Participant in any calendar year exceeds
$100,000, taking into account both Common Stock subject to Incentive
Stock Options under this Plan and stock subject to incentive stock
options under all other plans of the Company or any parent
corporation, such options will be treated as Nonqualified Stock
Options. For this purpose, the "Fair Market Value" of the stock
subject to options will be
6
<PAGE>
determined as of the date the options were awarded. In reducing the
number of options treated as incentive stock options to meet the
$100,000 limit, the most recently granted options will be reduced
(recharacterized as Nonqualified Stock Options) first. To the extent
a reduction of simultaneously granted options is necessary to meet
the $100,000 limit, the Committee may, in the manner and to the
extent permitted by law, designate which shares of Common Stock are
to be treated as shares acquired pursuant to the exercise of an
Incentive Stock Option.
2.4.2 Other Code Limits. Incentive Stock Options may only be granted to
-----------------
employees of the Corporation or a Subsidiary that satisfy the other
eligibility requirements of the Code. Any Award Agreement relating
to Incentive Stock Options will contain or shall be deemed to
contain such other terms and conditions as from time to time are
required in order that the Option be an "incentive stock option" as
that term is defined in Section 422 of the Code.
2.4.3 ISO Notice of Sale Requirement. Any Participant who exercises an
------------------------------
Incentive Stock Option shall give prompt written notice to the
Corporation of any sale or other transfer of the shares of Common
Stock acquired on such exercise if the sale or other transfer occurs
(a) within one year after the exercise date of the Option, or (b)
two years after the grant date of the Option.
2.5 Limits on 10% Holders. No Option may be granted to any person who, at the
---------------------
time the Option is granted, owns (or is deemed to own under Section 424(d)
of the Code) shares of outstanding stock of the Corporation (or a parent or
subsidiary of the Corporation) possessing more than 10% of the total
combined voting power of all classes of stock of the Corporation (or a
parent or subsidiary of the Corporation), unless the exercise price of such
Option is at least 110% of the Fair Market Value of the stock subject to
the Option and, in the case of an Incentive Stock Option grated to such a
person, such Option by its terms is not exercisable after the expiration of
five years from the date such Option is granted.
2.6 Effects of Termination of Employment; Termination of Subsidiary Status;
-----------------------------------------------------------------------
Discretionary Provisions.
------------------------
2.6.1 Dismissal for Cause. Unless otherwise provided in the Award
-------------------
Agreement and subject to earlier termination pursuant to or as
contemplated by Section 2.2.2 or 4.2, if a Participant's employment
by or service to the Company is terminated by the Company for Cause,
the Participant's Option will terminate on the Participant's
Severance Date, whether or not the Option is then vested and/or
exercisable.
7
<PAGE>
2.6.2 Resignation. Unless otherwise provided in the Award Agreement
-----------
(consistent with applicable securities laws) and subject to earlier
termination pursuant to or as contemplated by Section 2.2.2 or 4.2,
if a Participant voluntarily terminates his or her employment by or
service to the Company (other than because of his or her Total
Disability or Retirement):
(a) the Participant will have until the date that is 30 days after
the Participant's Severance Date to exercise his or her Option
(or portion thereof) to the extent that it was vested and
exercisable on the Severance Date;
(b) the Option, to the extent not vested and exercisable on the
Participant's Severance Date, shall terminate on the Severance
Date; and
(c) the Option, to the extent exercisable for the 30-day period
following the Participant's Severance Date and not exercised
during such period, shall terminate at the close of business on
the last day of the 30-day period.
2.6.3 Layoff or Other Involuntary Termination. Unless otherwise provided
---------------------------------------
in the Award Agreement (consistent with applicable securities laws)
and subject to earlier termination pursuant to or as contemplated by
Section 2.2.2 or 4.2, if a Participant is laid off or the
Participant's employment by or service to the Company is otherwise
terminated at the will of the Company (other than in circumstances
constituting a termination because of death, Total Disability,
Retirement, or a termination by the Company for Cause):
(a) the Participant will have until the date that is three (3)
months after the Participant's Severance Date to exercise his
or her Option (or portion thereof) to the extent that it was
vested and exercisable on the Severance Date ;
(b) the Option, to the extent not vested and exercisable on the
Participant's Severance Date, shall terminate on the Severance
Date; and
(c) the Option, to the extent exercisable for the 3-month period
following the Participant's Severance Date and not exercised
during such period, shall terminate at the close of business on
the last day of the 3-month period.
2.6.4 Death, Disability, or Retirement. Unless otherwise provided in the
--------------------------------
Award Agreement (consistent with applicable securities laws) and
subject to earlier termination pursuant to or as contemplated by
Section 2.2.2 or 4.2, if a Participant's employment by or service to
the Company terminates as a result of the Participant's Total
Disability, death, or Retirement:
(a) the Participant (or his or her Personal Representative or
Beneficiary, in the case of the Participant's Total Disability
or death, respectively), will have until the date that is 12
months after the Participant's Severance Date to
8
<PAGE>
exercise the Participant's Option (or portion thereof) to the
extent that it was vested and exercisable on the Severance
Date;
(b) the Option, to the extent not vested and exercisable on the
Participant's Severance Date, shall terminate on the Severance
Date; and
(c) the Option, to the extent exercisable for the 12-month period
following the Participant's Severance Date and not exercised
during such period, shall terminate at the close of business on
the last day of the 12-month period.
2.6.5 Events Not Deemed a Termination of Employment. Unless Company policy
---------------------------------------------
or the Committee otherwise provides, a Participant's employment or
service relationship with the Company shall not be considered
terminated solely due to any sick leave, military leave, or any
other leave of absence authorized by the Company or the Committee;
provided that, unless reemployment upon the expiration of such leave
-------- ----
is guaranteed by contract or law, such leave is for a period of not
more than 90 days. In the case of any Eligible Person on an approved
leave of absence, continued vesting of the Award while on leave from
the employ of or service with the Company may be suspended until the
employees returns to service, unless the Committee otherwise
provides or applicable law otherwise requires. In no event shall an
Award be exercised after the expiration of the term of the Award set
forth in the Award Agreement.
2.6.6 Effect of Change of Subsidiary Status. For purposes of this Plan and
-------------------------------------
any Award, if an entity ceases to be a Subsidiary, a termination of
employment or service will be deemed to have occurred with respect
to each Eligible Person in respect of such Subsidiary who does not
continue as an Eligible Person in respect of another entity within
the Company.
2.6.7 Committee Discretion. Notwithstanding the foregoing provisions of
--------------------
this Section 2.6, in the event of, or in anticipation of, a
termination of employment or service with the Company for any
reason, other than a discharge for Cause, the Committee may
accelerate the vesting and exercisability of all or a portion of the
Participant's Award, and/or, subject to the provisions of Sections
2.2.2 and 4.2, extend the exercisability period of the Participant's
Option upon such terms as the Committee determines and as expressly
set forth in or by amendment to the Award Agreement.
2.6.8 Determination of Severance Date. Notwithstanding the definition of
-------------------------------
"Severance Date," the Committee may authorize by express provision
in or pursuant to an Award an extension of the date of termination
of the Participant's employment by or services to the Company if the
Participant's status after grant of the Award changes from one
category of Eligible Person to another (for example, employee to
consultant or visa versa), or in other circumstances that the
Committee deems appropriate).
9
<PAGE>
2.6.9 Termination of Consulting or Affiliate Services. If the Participant
-----------------------------------------------
is not an Eligible Employee or a director of the Corporation, and
provides services as an Other Eligible Person, the Committee shall
be the sole judge of whether the Participant continues to render
services to the Company, unless a written contract or the Award
Agreement otherwise provides. If, in these circumstances, the
Company notifies the Participant in writing that a termination of
the Participant's services to the Company has occurred for purposes
of this Plan, then (unless the contract or the Award Agreement
otherwise expressly provides), the Participant's termination of
services with the Company for purposes of this Plan shall be the
date which is 10 days after the Company's mailing of the notice or,
in the case of a termination for Cause, the date of the mailing of
the notice.
2.7 Option Repricing/Cancellation and Regrant/Waiver of Restrictions. Subject
----------------------------------------------------------------
to Section 1.4 and Section 4.5 and the specific limitations on Options
contained in this Plan, the Committee from time to time may authorize,
generally or in specific cases only, for the benefit of any Eligible
Person, any adjustment in the exercise price, the vesting schedule, the
number of shares subject to, or the term of, an Option granted under this
Plan by cancellation of an outstanding Option and a subsequent regranting
of the Option, by amendment, by substitution of an outstanding Option, by
waiver or by other legally valid means. Such amendment or other action may
result in, among other changes, an exercise price that is higher or lower
than the exercise price of the original or prior Option, provide for a
greater or lesser number of shares of Common Stock subject to the Option,
or provide for a longer or shorter vesting or exercise period.
2.8 Options in Substitution for Stock Options Granted by Other Corporations.
-----------------------------------------------------------------------
Options may be granted to Eligible Persons under this Plan in substitution
for employee stock options granted by other entities, in connection with a
distribution, merger or reorganization by or with the granting entity or an
affiliated entity, or the acquisition by the Company, directly or
indirectly, of all or a substantial part of the stock or assets of the
employing entity.
3. Restricted Stock Awards.
-----------------------
3.1 Grants. The Committee may grant one or more Restricted Stock Awards to any
------
Eligible Person. Subject to the provisions of this Plan, the Committee will
determine the number of shares of Common Stock subject to each Restricted
Stock Award. Each Restricted Stock Award will be evidenced by an Award
Agreement signed by the Corporation and, to the extent required by the
Committee, by the Participant and the Participant's spouse. Upon issuance
of the Restricted Stock Award, the Participant may be required to provide
such further assurances and documents as the Committee may require to
enforce the restrictions thereon.
3.2 Award Agreement. Each Restricted Stock Award Agreement will specify the
---------------
number of shares of Common Stock to be issued to the Participant, the date
of such issuance, the consideration for such shares (but not less than the
minimum lawful consideration under applicable state law) to be paid by the
Participant for the shares, the extent (if any) to which and the time (if
ever) at which the Participant will be entitled to dividends, voting
10
<PAGE>
and other rights in respect of the shares prior to vesting, and the
restrictions (which may be based on performance criteria, passage of time
or other factors or any combination thereof) imposed on such shares and the
conditions of release or lapse of such restrictions.
3.3 Vesting. The restrictions imposed on the shares of Common Stock subject to
-------
a Restricted Stock Award will not lapse earlier than twelve months after
the Award Date, except to the extent the Committee may otherwise provide.
To the extent required to satisfy applicable securities laws, the
restrictions imposed on the shares of Common Stock subject to a Restricted
Stock Award (other than an Award granted to an officer, director, or
consultant of the Company, which may include more restrictive provisions)
shall lapse as to such shares, subject to Section 3.8, at a rate of at
least 33.33% of the shares subject to the Award per year over the three
years after the date the Award is granted.
3.4 Term. Any Restricted Stock Award shall either vest or be forfeited not
----
more than 10 years after the date of grant. Each Restricted Stock Award
will be subject to earlier termination as provided in or pursuant to
Section 4.2. Any payment of cash or delivery of stock in payment for a
Restricted Stock Award may be delayed until a future date if specifically
authorized by the Committee in writing and by the Participant.
3.5 Purchase Price.
--------------
3.5.1 Pricing Limits. Subject to the following provisions of this Section
--------------
3.5, the Committee will determine the purchase price per share of
the Common Stock covered by each Restricted Stock Award at the time
of grant of the Award. In no case will such purchase price be less
than the greater of:
-------
(a) 85% of the Fair Market Value of the Common Stock on the date of
grant, or at the time the purchase is consummated; or
(b) 100% of the Fair Market Value of the Common Stock on the date
of grant, or at the time the purchase is consummated, in the
case of any person who owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the
Corporation, its parent, or a Subsidiary.
3.5.2 Payment Provisions. The Corporation will not be obligated to issue
------------------
certificates evidencing shares of Restricted Stock pending the lapse
of restrictions ("Restricted Shares') unless and until it receives
full payment of the purchase price therefor and all other conditions
to the purchase, as determined by the Committee, have been
satisfied. The purchase price of any Restricted Shares must be paid
in full at the time of the purchase in one or a combination of the
methods set forth in clauses (a) through (e) in Section 2.3.2.
3.6 Stock Certificates; Fractional Shares. Stock certificates evidencing
-------------------------------------
Restricted Shares will bear a legend making appropriate reference to the
restrictions imposed hereunder and will be held by the Corporation or by a
third party designated by the Committee until the restrictions on such
shares have lapsed and the shares have vested in accordance with the
11
<PAGE>
provisions of the Award and Section 3.3 and any related loan has been
repaid. Fractional share interests will be disregarded, but may be
accumulated. The Committee, however, may determine that cash, other
securities, or other property will be paid or transferred in lieu of any
fractional share interests.
3.7 Restrictions.
------------
3.7.1 Pre-Vesting Restraints. Except as provided in Section 3.1,
----------------------
Restricted Shares comprising any Restricted Stock Award may not be
sold, assigned, transferred, pledged or otherwise disposed of or
encumbered, either voluntarily or involuntarily, until the
restrictions on such shares have lapsed and the shares have become
vested.
3.7.2 Dividend and Voting Rights. Unless otherwise provided in the
--------------------------
applicable Award Agreement, a Participant receiving a Restricted
Stock Award will be entitled to cash dividend and voting rights for
all Restricted Shares issued even though they are not vested, but
such rights will terminate immediately as to any Restricted Shares
which cease to be eligible for vesting.
3.7.3 Cash Payments. The Award Agreement shall specify whether and to what
-------------
extent cash or other property received in respect of Restricted
Shares must be returned (with or without an earnings factor) if the
Restricted Shares fail to vest and must be returned to the
Corporation in accordance with Section 3.8.
3.8 Return to the Corporation. Unless the Committee otherwise expressly
-------------------------
provides, Restricted Shares subject to a Participant's Restricted Stock
Award that remain subject to restrictions at the time the Participant's
employment by or service to the Company terminates, or are subject to other
conditions to vesting that have not been satisfied by the time specified in
the applicable Award Agreement, will not vest and will be reacquired by the
Corporation in such manner and on such terms as the Committee provides,
which terms shall include return or repayment of the lower of the Fair
Market Value or the original purchase price of the Restricted Shares,
without interest, to the Participant to the extent not prohibited by law.
The Restricted Stock Award shall specify any other terms or conditions of
the repurchase if the Award fails to vest.
3.9 Other Sections Applicable to Restricted Stock Awards . The provisions of
-----------------------------------------------------
Sections 2.6.5 through 2.6.8 are applicable to Restricted Stock Awards as
well as Options.
3.10 Waiver of Restrictions. Subject to Section 1.4 and 4.5 and the specific
----------------------
limitations on Restricted Stock Awards contained in this Plan, the
Committee from time to time may authorize, generally or in specific cases
only, for the benefit of any Eligible Person, any adjustment in the vesting
schedule, or the restrictions upon or the term of, a Restricted Stock Award
granted under this Plan by amendment, by substitution of an outstanding
Restricted Stock Award, by waiver or by other legally valid means.
12
<PAGE>
4. Other Provisions.
----------------
4.1 Rights of Eligible Persons, Participants and Beneficiaries.
----------------------------------------------------------
4.1.1 Employment Status. Status as an Eligible Person will not be
-----------------
construed as a commitment that any Award will be granted under this
Plan to an Eligible Person or to Eligible Persons generally.
4.1.2 No Employment/Service Contract. Nothing contained in this Plan (or
------------------------------
in any other documents under this Plan or related to any Award)
shall confer upon any Eligible Employee or other Participant any
right to continue in the employ or other service of the Company,
constitute any contract or agreement of employment or other service
or affect an employee's status as an employee at will, nor shall
interfere in any way with the right of the Company to change such
person's compensation or other benefits, or to terminate his or her
employment or other service, with or without cause at any time.
Nothing in this Section 4.1.2, or in Section 4.2.2 or 4.12, however,
is intended to adversely affect any express independent right of
such person under a separate employment or service contract. An
Award Agreement shall not constitute a contract of employment or
service.
4.1.3 Plan Not Funded. Awards payable under this Plan will be payable in
---------------
shares of Common Stock or from the general assets of the
Corporation, and (except as provided in Section 1.4.3) no special or
separate reserve, fund or deposit will be made to assure payment of
such Awards. No Participant, Beneficiary or other person will have
any right, title or interest in any fund or in any specific asset
(including shares of Common Stock) of the Company by reason of any
Award hereunder. Neither the provisions of this Plan (or of any
related documents), nor the creation or adoption of this Plan, nor
any action taken pursuant to the provisions of this Plan will
create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Company and any Participant,
Beneficiary or other person. To the extent that a Participant,
Beneficiary or other person acquires a right to receive payment
pursuant to any Award hereunder, such right will be no greater than
the right of any unsecured general creditor of the Company.
4.1.4 Charter Documents. The Certificate of Incorporation and By-Laws of
-----------------
the Corporation, as either of them may lawfully be amended from time
to time, may provide for additional restrictions and limitations
with respect to the Common Stock (including additional restrictions
and limitations on the voting or transfer of Common Stock) or
priorities, rights and preferences as to securities and interests
prior in rights to the Common Stock. To the extent that these
restrictions and limitations are greater than those set forth in
this Plan or any Award Agreement, such restrictions and limitations
shall apply to any shares of Common Stock acquired pursuant to the
exercise of Awards and are incorporated herein by this reference.
13
<PAGE>
4.2 Adjustments; Acceleration.
-------------------------
4.2.1 Adjustments. Upon or in contemplation of any reclassification,
-----------
recapitalization, stock split (including a stock split in the form
of a stock dividend) or reverse stock split; any merger,
combination, consolidation or other reorganization; any split-up;
spin-off, or similar extraordinary dividend distribution ("spin-
off") in respect of the Common Stock (whether in the form of
securities or property); any exchange of Common Stock or other
securities of the Corporation, or any similar, unusual or
extraordinary corporate transaction in respect of the Common Stock;
or a sale of substantially all the assets of the Corporation as an
entirety ("asset sale"); then the Committee shall, in such manner,
to such extent (if any) and at such time as it deems appropriate and
equitable in the circumstances:
(a) proportionately adjust any or all of (1) the number of shares
of Common Stock or the number and type of other securities that
thereafter may be made the subject of Awards (including the
specific maxima and numbers of shares set forth elsewhere in
this Plan), (2) the number, amount and type of shares of Common
Stock (or other securities or property) subject to any or all
outstanding Awards, (3) the grant, purchase, or exercise price
of any or all outstanding Awards, or (4) the securities, cash
or other property deliverable upon exercise or vesting of any
outstanding Awards, or
(b) make provision for a settlement by a cash payment or for the
substitution or exchange of any or all outstanding Awards for
cash, securities or other property (or for other awards) based
upon the distribution or consideration payable to holders of
the Common Stock upon or in respect of such event.
The Committee may adopt such valuation methodologies for outstanding
Awards as it deems reasonable in the event of a cash, securities or
other property settlement. In the case of Options, but without
limitation on other methodologies, the Committee may base such
settlement solely upon the excess (if any) of the amount payable
upon or in respect of such event over the exercise price of the
Option to the extent of the then vested and exercisable shares
subject to the Option. In the case of Restricted Shares, but without
limiting other methodologies, the Committee may limit the payment to
either (1) the purchase price previously paid by the Participant, or
(2) the Fair Market Value of the shares, or (3) the price to be paid
in the transaction for unrestricted shares.
The Committee may make adjustments to and/or accelerate the
exercisability of Options in a manner that disqualifies the Options
as Incentive Stock Options without the written consent of the Option
holders affected thereby.
In any of such events, the Committee may take such action prior to
such event to the extent that the Committee deems the action
necessary to permit the Participant to realize the benefits intended
to be conveyed with respect to the underlying shares in the same
manner as is or will be available to stockholders generally.
14
<PAGE>
4.2.2 Acceleration of Awards Upon Change in Control. Subject to Sections
---------------------------------------------
4.2.3 through 4.2.6, unless prior to a Change in Control Event the
Committee determines that, upon its occurrence, benefits under any
or all Awards will not accelerate or determines that only certain or
limited benefits under any or all Awards will be accelerated and the
extent to which they will be accelerated, and/or establishes a
different time in respect of such event for such acceleration, then
upon (or, as may be necessary to effectuate the purposes of this
acceleration, immediately prior to) the occurrence of a Change in
Control Event:
(a) each Option will become immediately vested and exercisable, and
(b) Restricted Stock will immediately vest free of restrictions.
The Committee may override the limitations on acceleration in this
Section 4.2.2 by express provision in the Award Agreement and may
accord any Eligible Person a right to refuse any acceleration,
whether pursuant to the Award Agreement or otherwise, in such
circumstances as the Committee may approve. Any acceleration of
Awards will comply with applicable legal requirements and, if
necessary to accomplish the purposes of the acceleration or if the
circumstances otherwise require, may be deemed by the Committee to
occur (subject to Sections 4.2.4 through 4.2.6) not more than 30
days before or only upon the consummation of the event. Any
acceleration of an Incentive Stock Option may disqualify the Option
as an Incentive Stock Option and does not require the written
consent of the holder of the Option, whether or not the holder is
adversely affected thereby.
4.2.3 Possible Early Termination of Accelerated Awards. Without any
------------------------------------------------
limitation on the Committee's authority under Section 4.2.1, if the
vesting of any Option under this Plan has been fully accelerated as
required or permitted by Section 4.2.2 but is not exercised prior to
(a) a dissolution of the Corporation, (b) an event described in
Section 4.2.1 that the Corporation does not survive, or (c) the
consummation of a Change in Control Event approved by the Board, the
Option shall terminate, subject to any provision that has been
expressly made by the Board or the Committee for the survival,
substitution, assumption, exchange or other settlement of the
Option.
4.2.4 Possible Rescission of Acceleration. If the vesting of an Award has
-----------------------------------
been accelerated in anticipation of an event or upon stockholder
approval of an event and the Committee or the Board later determines
that the event will not occur, the Committee may rescind the effect
of the acceleration as to any then outstanding and unexercised or
otherwise unvested Awards.
4.2.5 Pooling Exception. Any discretion with respect to the events
-----------------
addressed in this Section 4.2, including any acceleration of
vesting, shall be limited to the extent required by applicable
accounting requirements in the case of a transaction intended to be
accounted for as a pooling of interests transaction.
15
<PAGE>
4.2.6 Golden Parachute Limitations. Unless otherwise specified in an Award
----------------------------
Agreement or otherwise authorized by the Board in the specific case,
no vesting of or lapse or restrictions imposed on an Award will be
accelerated under this Plan to an extent or in a manner that would
result in payments that are not fully deductible by the Company for
federal income tax purposes because of Section 280G of the Code. If
a Participant would be entitled to benefits or payments hereunder
and under any other plan or program that would constitute "parachute
payments" as defined in Section 280G of the Code, then the
Participant may by written notice to the Company designate the order
in which such parachute payments will be reduced or modified so that
the Company is not denied any federal income tax deductions for any
"parachute payments" because of Section 280G of the Code.
4.3 Compliance with Laws.
--------------------
4.3.1 General. This Plan, the granting and vesting of Awards under this
-------
Plan, and the offer, issuance and delivery of shares of Common
Stock, the acceptance of promissory notes and/or the payment of
money under this Plan or under Awards are subject to compliance with
all applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities laws, and
federal margin requirements) and to such approvals by any listing,
regulatory or governmental authority as may, in the opinion of
counsel for the Corporation, be necessary or advisable in connection
therewith. In addition, any securities delivered under this Plan may
be subject to any special restrictions that the Committee may
require to preserve a pooling of interests under generally accepted
accounting principles. The person acquiring any securities under
this Plan will, if requested by the Corporation, provide such
assurances and representations to the Corporation as the Committee
may deem necessary or desirable to assure compliance with all
applicable legal and accounting requirements .
4.3.2 Compliance with Securities Laws. No Participant shall sell, pledge
-------------------------------
or otherwise transfer shares of Common Stock acquired pursuant to an
Award or any interest in such shares except in accordance with the
express terms of this Plan and the applicable Award Agreement. Any
attempted transfer in violation of this Section 4.3 shall be void
and of no effect. Without in any way limiting the provisions set
forth above, no Participant shall make any disposition of all or any
portion of shares of Common Stock acquired or to be acquired
pursuant to an Award, except in compliance with all applicable
federal and state securities laws and unless and until:
(a) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration
statement; or
(b) such disposition is made in accordance with Rule 144 under the
Securities Act; or
16
<PAGE>
(c) such Participant notifies the Corporation of the proposed
disposition and furnishes the Corporation with a statement of
the circumstances surrounding the proposed disposition, and, if
requested by the Corporation, furnishes to the Corporation an
opinion of counsel acceptable to the Corporation's counsel,
that such disposition will not require registration under the
Securities Act and will be in compliance with all applicable
state securities laws.
Notwithstanding anything else herein to the contrary, the Company
has no obligation to register the Common Stock or file any
registration statement under either federal or state securities
laws, nor does the Company make any representation concerning the
likelihood of a public offering of the Common Stock or any other
securities of the Company.
4.3.3 Share Legends . All certificates evidencing shares of Common Stock
--------------
issued or delivered under this Plan shall bear the following legends
and/or any other appropriate or required legends under applicable
laws:
"OWNERSHIP OF THIS CERTIFICATE, THE SHARES EVIDENCED BY THIS
CERTIFICATE AND ANY INTEREST THEREIN ARE SUBJECT TO SUBSTANTIAL
RESTRICTIONS ON TRANSFER UNDER APPLICABLE LAW AND UNDER AGREEMENTS
WITH THE CORPORATION, INCLUDING RESTRICTIONS ON SALE, ASSIGNMENT,
TRANSFER, PLEDGE OR OTHER DISPOSITION."
"THE SHARES ARE SUBJECT TO THE CORPORATION'S RIGHT OF FIRST REFUSAL
AND CALL RIGHTS TO REPURCHASE THE SHARES UNDER THE CORPORATION'S
STOCK INCENTIVE PLAN AND AGREEMENTS WITH THE CORPORATION THEREUNDER,
COPIES OF WHICH ARE AVAILABLE FOR REVIEW AT THE OFFICE OF THE
SECRETARY OF THE CORPORATION."
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), NOR
HAVE THEY BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF
ANY STATE. NO TRANSFER OF SUCH SECURITIES WILL BE PERMITTED UNLESS A
REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH
TRANSFER, THE TRANSFER IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE
ACT, OR IN THE OPINION OF COUNSEL TO THE CORPORATION, REGISTRATION
UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY
WITH THE ACT AND WITH APPLICABLE STATE SECURITIES LAWS."
17
<PAGE>
4.3.4 Delivery of Financial Statements. The Corporation shall deliver
--------------------------------
annually to Participants such financial statements of the
Corporation as are required to satisfy applicable securities laws.
4.3.5 Confidential Information. Any financial or other information
------------------------
relating to the Corporation obtained by Participants in connection
with or as a result of this Plan or their Awards shall be treated as
confidential.
4.4 Tax Withholding.
---------------
4.4.1 Tax Withholding. Upon any exercise, vesting, or payment of any
---------------
Award or upon the disposition of shares of Common Stock acquired
pursuant to the exercise of an Incentive Stock Option prior to
satisfaction of the holding period requirements of Section 422 of
the Code, the Company shall have the right at its option to:
(a) require the Participant (or Personal Representative or
Beneficiary, as the case may be) to pay or provide for payment
of the amount of any taxes which the Company may be required to
withhold with respect to such Award event or payment;
(b) deduct from any amount payable to the Participant (or Personal
Representative or Beneficiary, as the case may be) in cash or
equivalent (in respect of an Award or otherwise) the amount of
any taxes which the Company may be required to withhold with
respect to such Award event or payment; or
(c) reduce the number of shares of Common Stock to be delivered by
(or otherwise reacquire shares held by the Participant at least
6 months) the appropriate number of shares of Common Stock,
valued at their then Fair Market Value, to satisfy the minimum
withholding obligation.
The Committee may, in its sole discretion (subject to Section 4.3),
grant (either at the time of grant of the Award or thereafter) to
the Participant the right to elect, pursuant to such rules and
subject to such conditions as the Committee may establish, to have
the Corporation utilize the withholding offset under clause (c)
above.
In no event will the value of shares withheld under (c) above exceed
the minimum amount of required withholding under applicable law.
4.4.2 Tax Loans. If so provided in the Award Agreement or otherwise
---------
authorized by the Committee, the Corporation may, to the extent
permitted by law, authorize a loan to an Eligible Person in the
amount of any taxes that the Company may be required to withhold
with respect to shares of Common Stock received (or disposed of, as
the case may be) pursuant to a transaction described in Section
4.4.1. Such a loan will be for a term not greater than 12 months and
at a rate of interest and pursuant to such other terms and
conditions as the Corporation may
18
<PAGE>
establish, subject to compliance with applicable law. Such a loan
need not otherwise comply with the provisions of Section 2.3.3.
4.5 Plan and Award Amendments, Termination and Suspension.
-----------------------------------------------------
4.5.1 Board Authorization. The Board may, at any time, terminate or, from
-------------------
time to time, amend, modify or suspend this Plan, in whole or in
part. No Awards may be granted during any suspension of this Plan or
after termination of this Plan. Unless otherwise expressly provided
in this Plan or in an applicable Award Agreement, any Award granted
prior to the termination or suspension of this Plan may extend
beyond the date of such termination or suspension, and all authority
of the Committee with respect to Awards hereunder, including the
authority to amend an Award, will continue during any suspension of
this Plan and in respect of Awards outstanding upon or following the
termination of this Plan.
4.5.2 Stockholder Approval. This Plan and any amendment to this Plan shall
--------------------
be subject to stockholder approval to the extent then required under
Section 422 or 424 of the Code or any other applicable law, or
deemed necessary or advisable by the Board.
4.5.3 Amendments to Awards. Without limiting any other express authority
--------------------
of the Committee under but subject to the express limits of this
Plan, the Committee by resolution or otherwise may make changes to
the terms and conditions of Awards and the Plan.
4.5.4 Limitations on Amendments to Plan and Awards. The Board and the
--------------------------------------------
Committee may not, without the written consent of the Participant
affected thereby, amend, terminate or suspend this Plan in any
manner materially adverse to the Participant's rights or benefits
under an outstanding Award or amend the Participant's Award in any
manner materially adverse to the Participant's rights or benefits
thereunder. Changes contemplated by Section 4.2 or Section 4.5.5 do
not and will not be deemed to constitute changes or amendments for
purposes of this Section 4.5.
4.6 Privileges of Stock Ownership. Except as otherwise expressly authorized by
-----------------------------
the Committee or this Plan or in the Award Agreement, a Participant will
not be entitled to any privilege of stock ownership as to any shares of
Common Stock not actually delivered to and held of record by the
Participant. No adjustment will be made for dividends or other rights as a
stockholder for which a record date is prior to such date of delivery.
4.7 Effective Date of the Plan. This Plan is effective upon the date of its
--------------------------
approval by the Board (the "Effective Date"), subject to approval by the
stockholders of the Corporation within twelve months after the date of
Board approval.
4.8 Term of the Plan. Unless earlier terminated by the Board, this Plan will
----------------
terminate at the close of business on the day before the 10th anniversary
of the Effective Date.
19
<PAGE>
4.9 Governing Law/Severability.
--------------------------
4.9.1 Choice of Law. This Plan, the Awards, all documents evidencing
-------------
Awards and all other related documents will be governed by, and
construed in accordance with, the laws of the state of Delaware.
4.9.2 Severability. If it is determined that any provision of this Plan or
------------
an Award Agreement is invalid and unenforceable, the remaining
provisions of this Plan and/or the Award Agreement, as applicable,
will continue in effect provided that the essential economic terms
of this Plan and the Award can still be enforced.
4.10 Captions. Captions and headings are given to the sections and subsections
--------
of this Plan solely as a convenience to facilitate reference. Such headings
will not be deemed in any way material or relevant to the construction or
interpretation of this Plan or any provision thereof.
4.11 Non-Exclusivity of Plan. Nothing in this Plan will limit or be deemed to
-----------------------
limit the authority of the Board or the Committee to grant awards or
authorize any other compensation, with or without reference to the Common
Stock, under any other plan or authority.
4.12 No Restriction on Corporate Powers. The existence of the Plan, the Award
----------------------------------
Agreements, and the Awards granted hereunder, shall not limit, affect or
restrict in any way the right or power of the Board or the stockholders of
the Corporation to make or authorize: (a) any adjustment, recapitalization,
reorganization or other change in the Corporation's or any Subsidiary's
capital structure or its business; (b) any merger, amalgamation,
consolidation or change in the ownership of the Corporation or any
Subsidiary; (c) any issue of bonds, debentures, capital, preferred or prior
preference stocks ahead of or affecting the Corporation's capital stock or
the rights thereof; (d) any dissolution or liquidation of the Corporation
or any Subsidiary; (e) any sale or transfer of all or any part of the
Corporation or any Subsidiary's assets or business; or (f) any other
corporate act or proceeding by the Corporation or any Subsidiary. No
Participant, Beneficiary or any other person shall have any claim under any
Award or Award Agreement against any member of the Board or the Committee,
or the Corporation or any employees, officers or agents of the Corporation
or any Subsidiary, as a result of any such action.
4.13 Other Company Compensation or Benefit Programs. Payments and other
----------------------------------------------
benefits received by a Participant under an Award made pursuant to this
Plan shall not be deemed a part of a Participant's compensation for
purposes of the determination of benefits under any other employee welfare
or benefit plans or arrangements, if any, provided by the Corporation or
any Subsidiary, except where the Committee or the Board expressly otherwise
provides or authorizes in writing. Awards under this Plan may be made in
addition to, in combination with, as alternatives to or in payment of
grants, awards or commitments under any other plans or arrangements of the
Corporation or any Subsidiary.
20
<PAGE>
5. Definitions.
-----------
"Award" means an award of any Option or Restricted Stock, or any combination
thereof, whether alternative or cumulative, authorized by and granted under this
Plan.
"Award Agreement" means any writing, approved by the Committee, setting forth
the terms of an Award that has been duly authorized and approved.
"Award Date" means the date upon which the Committee took the action granting an
Award or such later date as the Committee designates as the Award Date at the
time of the grant of the Award.
"Beneficiary" means the person, persons, trust or trusts designated by a
Participant, or, in the absence of a designation, entitled by will or the laws
of descent and distribution, to receive the benefits specified in the Award
Agreement and under this Plan if the Participant dies, and means the
Participant's executor or administrator if no other Beneficiary is designated
and able to act under the circumstances.
"Board" means the Board of Directors of the Corporation.
"Cause" with respect to a Participant means (unless otherwise expressly provided
in the applicable Award Agreement, or another applicable contract with the
Participant that defines such term for purposes of determining the effect that a
"for cause" termination has on the Participant's stock options and/or restricted
stock awards) a termination of employment or service based upon a finding by the
Company, acting in good faith and based on its reasonable belief at the time,
that the Participant:
(a) has been negligent in the discharge of his or her duties to the
Company, has refused to perform stated or assigned duties or is
incompetent in or (other than by reason of a disability or analogous
condition) incapable of performing those duties; or
(b) has been dishonest or committed or engaged in an act of theft,
embezzlement or fraud, a breach of confidentiality, an unauthorized
disclosure or use of inside information, customer lists, trade
secrets or other confidential information; or
(c) has breached a fiduciary duty, or willfully and materially violated
any other duty, law, rule, regulation or policy of the Company or an
affiliate; or has been convicted of, or plead guilty or nolo
contendere to, a felony or misdemeanor (other than minor traffic
violations or similar offenses); or
(d) has materially breached any of the provisions of any agreement with
the Company or an affiliated entity; or
(e) has engaged in unfair competition with, or otherwise acted
intentionally in a manner injurious to the reputation, business or
assets of, the Company or an affiliate; or
21
<PAGE>
(f) has improperly induced a vendor or customer to break or terminate
any contract with the Company or an affiliate or induced a principal
for whom the Company or an affiliate acts as agent to terminate such
agency relationship.
A termination for Cause shall be deemed to occur (subject to reinstatement upon
a contrary final determination by the Committee) on the date on which the
Company first delivers written notice to the Participant of a finding of
termination for Cause.
"Change in Control Event" means any of the following:
(a) Approval by the Board and by stockholders of the Corporation (or, if
no stockholder approval is required, by the Board alone) of the
dissolution or liquidation of the Corporation, other than in the
context of a transaction that does not constitute a Change in
Control Event under clause (b) below;
(b) Consummation of a merger, consolidation, or other reorganization,
with or into, or the sale of all or substantially all of the
Corporation's business and/or assets as an entirety to, one or more
entities that are not Subsidiaries or other affiliates of the
Company (a "Business Combination"), unless (1) as a result of the
------
Business Combination, more than 50% of the outstanding voting power
generally in the election of directors of the surviving or resulting
entity or a parent thereof (the "Successor Entity") immediately
after the reorganization are, or will be, owned, directly or
indirectly, by holders of the Corporation's voting securities
immediately before the Business Combination; and (2) no "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act),
excluding the Successor Entity or an Excluded Person, beneficially
owns, directly or indirectly, more than 50% of the outstanding
shares or the combined voting power of the outstanding voting
securities of the Successor Entity, after giving effect to the
Business Combination, except to the extent that such ownership
existed prior to the Business Combination; or
(c) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) other than an Excluded Person becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation
representing more than 50% of the combined voting power of the
Corporation's then outstanding securities entitled to then vote
generally in the election of directors of the Corporation, other
than as a result of (1) an acquisition directly from the Company,
(2) an acquisition by the Company, or (3) an acquisition by an
entity pursuant to a transaction which is expressly excluded under
clause (b) above.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Commission" means the Securities and Exchange Commission.
"Committee" means the Board or one or more committees of director(s) appointed
by the Board to administer all or certain aspects of this Plan, each committee
to be comprised solely of one or more directors or such greater number of
directors as may be required under applicable law.
22
<PAGE>
"Common Stock" means the shares of the Corporation's Common Stock, $0.001 par
value, and such other securities or property as may become the subject of
Awards, or become subject to Awards, pursuant to an adjustment made under
Section 4.2 of this Plan.
"Company" means the Corporation and its Subsidiaries.
"Corporation" means MindArrow Systems, Inc., a Delaware corporation, and its
successors.
"Eligible Employee" means an officer (whether or not a director) or employee of
the Company.
"Eligible Person" means an Eligible Employee, or any Other Eligible Person,
designated by the Committee in its discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from time
to time.
"Excluded Person" means (a) any person described in and satisfying the
conditions of Rule 13d-1(b)(1) under the Exchange Act, (b) the Company, (c) an
employee benefit plan (or related trust) sponsored or maintained by the Company
or the Successor Entity, or (d) any person who is the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of more than 25% of the Common
Stock on the Effective Date (or an affiliate, successor, heir, descendant, or
related party of or to such person).
"Fair Market Value" on any date means:
(a) if the stock is listed or admitted to trade on a national securities
exchange, the closing price of the stock on the Composite Tape, as
published in the Western Edition of The Wall Street Journal, of the
principal national securities exchange on which the stock is so
listed or admitted to trade, on such date, or, if there is no
trading of the stock on such date, then the closing price of the
stock as quoted on such Composite Tape on the next preceding date on
which there was trading in such shares;
(b) if the stock is not listed or admitted to trade on a national
securities exchange, the last/closing price for the stock on such
date, as furnished by the National Association of Securities
Dealers, Inc. ("NASD") through the NASDAQ National Market Reporting
System or a similar organization if the NASD is no longer reporting
such information;
(c) if the stock is not listed or admitted to trade on a national
securities exchange and is not reported on the National Market
Reporting System, the mean between the bid and asked price for the
stock on such date, as furnished by the NASD or a similar
organization; or
(d) if the stock is not listed or admitted to trade on a national
securities exchange, is not reported on the National Market
Reporting System and if bid and asked prices for the stock are not
furnished by the NASD or a similar organization, the value as
established by the Committee at such time for purposes of this Plan.
23
<PAGE>
Any determination as to fair market value made pursuant to this Plan shall
be determined without regard to any restriction other than a restriction
which, by its terms, will never lapse, and shall be conclusive and binding
on all persons.
"Incentive Stock Option" means an Option that is designated and intended as an
incentive stock option within the meaning of Section 422 of the Code, the award
of which contains such provisions (including but not limited to the receipt of
stockholder approval of this Plan, if the award is made prior to such approval)
and is made under such circumstances and to such persons as may be necessary to
comply with that section.
"Nonqualified Stock Option" means an Option that is not an incentive stock
option within the meaning of Section 442 of the code and includes an Option
designated as a Nonqualified Stock Option and any Option intended as an
Incentive Stock Option that fails to meet the applicable legal requirements
thereof.
"Option" means an option to purchase Common Stock granted under this Plan. The
Committee will designate any Option granted to an employee of the Corporation or
a Subsidiary as a Nonqualified Stock Option or an Incentive Stock Option.
"Other Eligible Person" means any director of, or any individual consultant or
advisor who renders or has rendered bona fide services (other than services in
---- ----
connection with the offering or sale of securities of the Company in a capital
raising transaction or as a market maker or promoter of the Company's
securities) to, the Company, and who is selected to participate in this Plan by
the Committee. An advisor or consultant may be selected as an Other Eligible
Person only if such person's participation in this Plan would not adversely
affect (a) the Corporation's eligibility to rely on the Rule 701 from
registration under the Securities Act for the offering of shares issuable under
this Plan by the Company, or (b) the Corporation's compliance with any other
applicable laws.
"Participant" means an Eligible Person who has been granted and holds an Award
under this Plan.
"Personal Representative" means the person or persons who, upon the disability
or incompetence of a Participant, has acquired on behalf of the Participant, by
legal proceeding or otherwise, the power to exercise the rights or receive
benefits under this Plan by virtue of having become the legal representative of
the Participant.
"Plan" means this MindArrow Systems, Inc. 2000 Stock Incentive Plan, as it may
hereafter be amended from time to time.
"Public Offering Date" means the date the Common Stock is first registered under
the Exchange Act and listed or quoted on a recognized national securities
exchange or in the NASDAQ National Market Quotation System.
"Restricted Shares" or "Restricted Stock" means shares of Common Stock awarded
to a Participant under this Plan, subject to payment of such consideration and
such conditions on vesting (which may include, among others, the passage of
time, specified performance objectives or other factors) and such transfer and
other restrictions as are established in or pursuant to this
24
<PAGE>
Plan and the related Award Agreement, to the extent such remain unvested and
restricted under the terms of the applicable Award Agreement.
"Retirement" means retirement with the consent of the Company or, from active
service as an employee or officer of the Company on or after attaining (a) age
55 with ten or more years of employment with the Company, or (b) age 65.
"Securities Act" means the Securities Act of 1933, as amended from time to time.
"Severance Date" means (a) in the case of an Award granted to an Eligible
Employee, the date the Eligible Employee's employment by the Company terminates
for any reason whatsoever, (b) in the case of an Award granted to an Other
Eligible Person who is a director of the Corporation, the date the director
ceases to be a director of the Corporation for any reason whatsoever, or (c) in
the case of any other Other Eligible Person, the date the person's services to
the Company terminate for any reason whatsoever.
"Severance Date" means the date the Participant's employment by or services to
the Company terminate (for any reason whatsoever).
"Subsidiary" means any corporation or other entity a majority of whose
outstanding voting stock or voting power is beneficially owned, directly or
indirectly, by the Corporation.
"Total Disability" means a "total and permanent disability" within the meaning
of Section 22(e)(3) of the Code and, with respect to Awards other than Incentive
Stock Options, such other disabilities, infirmities, afflictions, or conditions
as the Committee may include.
25
