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EXHIBIT 10.28
PF.NET COMMUNICATIONS, INC.
1999 EQUITY INCENTIVE PLAN
(AMENDED AND RESTATED EFFECTIVE AS OF JULY 12, 2000)
1. PURPOSES OF THE PLAN. The purposes of the PF.Net Communications, Inc.
1999 Equity Incentive Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to Employees, Directors and Consultants and to promote the success of
the Company's business. Options granted under the Plan may be Incentive Stock
Options or Non-Qualified Stock Options, as determined by the Administrator at
the time of grant. Stock Purchase Rights may also be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or the Committee responsible for
conducting the general administration of the Plan, as applicable, in accordance
with Section 4 hereof.
(b) "APPLICABLE LAWS" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are
granted under the Plan.
(c) "BOARD" means the Board of Directors of the Company.
(d) A "CHANGE IN CONTROL" shall mean:
(i) The acquisition by any person, entity or group (other than the
Company, its subsidiaries or any employee benefit plan of the Company) of 50% or
more of the combined voting power of the Company's then outstanding securities;
(ii) A change, during any period of two consecutive years, in a
majority or more of the Board, if the new members have not been approved by at
least two-thirds of the incumbent Board;
(iii) Shareholder approval of a merger or consolidation of the
Company, other than a merger or consolidation in which the voting securities of
the Company immediately prior thereto continue to represent more than 50% of the
combined voting power of the outstanding voting securities of the surviving
entity immediately after such merger or consolidation; or
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(iv) Shareholder approval of a complete liquidation of the Company
or a sale of substantially all of the Company's assets.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMMITTEE" means a committee appointed by the Board in accordance
with Section 4 hereof.
(g) "COMMON STOCK" means the Common Stock of the Company, par value
$.01 per share.
(h) "COMPANY" means PF.Net Communications, Inc., a Delaware corporation
formerly known as PF.Net Holdings, Limited.
(i) "CONSULTANT" means any consultant or adviser if: (i) the consultant
or adviser renders bona fide services to the Company; (ii) the services rendered
by the consultant or adviser are not in connection with the offer or sale of
securities in a capital-raising transaction and do not directly or indirectly
promote or maintain a market for the Company's securities; and (iii) the
consultant or adviser is a natural person who has contracted directly with the
Company to render such services.
(j) "DIRECTOR" means a member of the Board.
(k) "EMPLOYEE" means any person, including an Officer or Director, who
is an employee (as defined in accordance with Section 3401(c) of the Code) of
the Company or any Parent or Subsidiary of the Company. A Service Provider shall
not cease to be an Employee in the case of (i) any leave of absence approved by
the Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. 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. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient, by itself, to constitute "employment" by the Company.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of a share of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including, without limitation, the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for a share of such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or system
for the last market trading day prior to the time of
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determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by one or more
recognized securities dealers but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for a
share of the Common Stock on the last market trading day prior to the day of
determination as quoted by a recognized securities dealer designated as by the
Administrator; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(n) "HOLDER" means a person who has been granted or awarded an Option
or Stock Purchase Right or who holds Shares acquired pursuant to the exercise of
an Option or Stock Purchase Right.
(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and which
is designated as an Incentive Stock Option by the Administrator.
(p) "INDEPENDENT DIRECTOR" means a Director who is not an Employee of
the Company.
(q) "NON-QUALIFIED STOCK OPTION" means an Option (or portion thereof)
that is not designated as an Incentive Stock Option by the Administrator, or
which is designated as an Incentive Stock Option by the Administrator but fails
to qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(r) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "OPTION" means a stock option granted pursuant to the Plan.
(t) "OPTION AGREEMENT" means a written agreement between the Company
and a Holder evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(u) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(v) "PLAN" means the PF.Net Communications, Inc. 1999 Equity Incentive
Plan, as amended from time to time.
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(w) "PUBLIC TRADING DATE" means the first date upon which Common Stock
of the Company is listed (or approved for listing) upon notice of issuance on
any securities exchange or designated (or approved for designation) upon notice
of issuance as a national market security on an interdealer quotation system.
(x) "RESTRICTED STOCK" means Shares acquired pursuant to the exercise
of an unvested Option in accordance with Section 10(h) below or pursuant to a
Stock Purchase Right granted under Section 12 below.
(y) "RULE 16B-3" means that certain Rule 16b-3 under the Exchange Act,
as such Rule may be amended from time to time.
(z) "SECTION 16(B)" means Section 16(b) of the Exchange Act.
(aa) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(bb) "SERVICE PROVIDER" means an Employee, Director or Consultant.
(cc) "SHARE" means a share of Common Stock, as adjusted in accordance
with Section 13 below.
(dd) "STOCK PURCHASE RIGHT" means a right to purchase Common Stock
pursuant to Section 12 below.
(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. Subject to the provisions of Section 13 of
the Plan, the shares of stock subject to Options or Stock Purchase Rights shall
be Common Stock, initially shares of the Company's Common Stock, par value $.01
per share. Subject to the provisions of Section 13 of the Plan, the maximum
aggregate number of Shares which may be issued upon exercise of such Options or
Stock Purchase Rights is 25,000,000 Shares. Shares issued upon exercise of
Options or Stock Purchase Rights may be authorized but unissued, or reacquired
Shares. If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, the unpurchased Shares which were subject
thereto shall become available for future grant or sale under the Plan (unless
the Plan has terminated). Shares which are delivered by the Holder or withheld
by the Company upon the exercise of an Option or Stock Purchase Right under the
Plan, in payment of the exercise price thereof or tax withholding thereon, may
again be optioned, granted or awarded hereunder, subject to the limitations of
this Section 3. If Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan. Notwithstanding the provisions of this Section 3, no
Shares may again be optioned, granted or
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awarded if such action would cause an Incentive Stock Option to fail to qualify
as an Incentive Stock Option under Code Section 422.
4. ADMINISTRATION OF THE PLAN.
(a) ADMINISTRATOR. Unless otherwise determined by the Board, the Plan
shall be administered by a Committee or Committees of one or more members of the
Board, and the term "Committee" shall apply to any person or persons to whom
such authority has been delegated. The Committee shall initially consist of the
Compensation Committee of the Board. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board, including the power to
delegate to a subcommittee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board shall
thereafter be to the Committee or subcommittee), subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board. Notwithstanding the foregoing, however, from and
after the Public Trading Date, a Committee of the Board shall administer the
Plan and the Committee shall consist solely of two or more Independent Directors
each of whom is both an "outside director," within the meaning of Section 162(m)
of the Code, and a "non-employee director" within the meaning of Rule 16b-3.
Within the scope of such authority, the Board or the Committee may (i) delegate
to a committee of one or more members of the Board who are not Independent
Directors the authority to grant awards under the Plan to eligible persons who
are either (A) not then "covered employees," within the meaning of Section
162(m) of the Code and are not expected to be "covered employees" at the time of
recognition of income resulting from such award or (B) not persons with respect
to whom the Company wishes to comply with Section 162(m) of the Code and/or (ii)
delegate to a committee of one or more members of the Board who are not
"non-employee directors," within the meaning of Rule 16b-3, the authority to
grant awards under the Plan to eligible persons who are not then subject to
Section 16 of the Exchange Act. The Board may abolish the Committee at any time
and revest in the Board the administration of the Plan. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members may
resign at any time by delivering written notice to the Board. Vacancies in the
Committee may only be filled by the Board.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the Plan
and the specific duties delegated by the Board to such Committee, and subject to
the approval of any relevant authorities, the Administrator shall have the
authority in its discretion to:
(i) Determine the Fair Market Value;
(ii) Select the Service Providers to whom Options and Stock
Purchase Rights may from time to time be granted hereunder;
(iii) Determine the number of Shares to be covered by each such
award granted hereunder;
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(iv) Approve forms of agreement for use under the Plan;
(v) Determine the terms and conditions of any Option or Stock
Purchase Right granted hereunder (such terms and conditions include, but are not
limited to, the exercise price, the time or times when Options or Stock Purchase
Rights may vest or be exercised (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Option or Stock Purchase Right or the
Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine);
(vi) Determine whether to offer to buyout a previously granted
Option as provided in subsection 10(i) and to determine the terms and
conditions of such offer and buyout (including whether payment is to be made
in cash or Shares);
(vii) Prescribe, amend and rescind rules and regulations relating
to the Plan, including rules and regulations relating to sub-plans established
for the purpose of qualifying for preferred tax treatment under foreign tax
laws;
(viii) Allow Holders to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option or Stock Purchase Right that number of Shares having a Fair Market
Value equal to the minimum amount required to be withheld based on the statutory
withholding rates for federal and state tax purposes that apply to supplemental
taxable income. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be
determined. All elections by Holders to have Shares withheld for this purpose
shall be made in such form and under such conditions as the Administrator may
deem necessary or advisable;
(ix) Amend the Plan or any Option or Stock Purchase Right granted
under the Plan as provided in Section 15; and
(x) Construe and interpret the terms of the Plan and awards
granted pursuant to the Plan and to exercise such powers and perform such acts
as the Administrator deems necessary or desirable to promote the best interests
of the Company which are not in conflict with the provisions of the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. All decisions, determinations
and interpretations of the Administrator shall be final and binding on all
Holders.
5. ELIGIBILITY. Non-Qualified Stock Options and Stock Purchase Rights may be
granted to Service Providers. Incentive Stock Options may be granted only to
Employees. If otherwise eligible, an Employee or Consultant who has been granted
an Option or Stock Purchase Right may be granted additional Options or Stock
Purchase Rights.
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6. LIMITATIONS.
(a) Each Option shall be designated by the Administrator in the Option
Agreement as either an Incentive Stock Option or a Non-Qualified Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of Shares subject to a Holder's Incentive Stock Options and
other incentive stock options granted by the Company, any Parent or Subsidiary,
which become exercisable for the first time during any calendar year (under all
plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess
Options or other options shall be treated as Non-Qualified Stock Options. For
purposes of this Section 6(a), 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 time of grant.
(b) Neither the Plan, any Option nor any Stock Purchase Right shall
confer upon a Holder any right with respect to continuing the Holder's
employment or consulting relationship with the Company, nor shall they interfere
in any way with the Holder's right or the Company's right to terminate such
employment or consulting relationship at any time, with or without cause.
(c) No Service Provider shall be granted, in any calendar year, Options
or Stock Purchase Rights to purchase more than 7,500,000 Shares; PROVIDED,
HOWEVER, that the foregoing limitation shall not apply prior to the Public
Trading Date and, following the Public Trading Date, the foregoing limitation
shall not apply until the earliest of: (i) the first material modification of
the Plan (including any increase in the number of shares reserved for issuance
under the Plan in accordance with Section 3); (ii) the issuance of all of the
shares of Common Stock reserved for issuance under the Plan; (iii) the
expiration of the Plan; (iv) the first meeting of stockholders at which
Directors of the Company are to be elected that occurs after the close of the
third calendar year following the calendar year in which occurred the first
registration of an equity security of the Company under Section 12 of the
Exchange Act; or (v) such other date required by Section 162(m) of the Code and
the rules and regulations promulgated thereunder. The foregoing limitation shall
be adjusted proportionately in connection with any change in the Company's
capitalization as described in Section 13. For purposes of this Section 6(c), if
an Option is canceled in the same calendar year it was granted (other than in
connection with a transaction described in Section 13), the canceled Option will
be counted against the limit set forth in this Section 6(c). For this purpose,
if the exercise price of an Option is reduced, the transaction shall be treated
as a cancellation of the Option and the grant of a new Option.
7. TERM OF PLAN. The Plan shall become effective upon its initial adoption
by the Board and shall continue in effect until it is terminated under Section
15 of the Plan. No Options or Stock Purchase Rights may be issued under the Plan
after the tenth (10th) anniversary of the earlier of (a) the date upon which the
Plan is adopted by the Board or (b) the date the Plan is approved by the
stockholders.
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8. TERM OF OPTION. The term of each Option shall be stated in the Option
Agreement; PROVIDED, HOWEVER, that the term of any Incentive Stock Option shall
be no more than ten (10) years from the date of grant thereof. In the case of an
Incentive Stock Option granted to a Holder who, at the time the Option is
granted, owns (or is treated as owning under Code Section 424) 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 Option shall
be five (5) years from the date of grant or such shorter term as may be provided
in the Option Agreement.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) The per share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Administrator,
PROVIDED, that in the case of an Incentive Stock Option (i) granted to an
Employee who, at the time of grant of such Option, owns (or is treated as owning
under Code Section 424) 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 no less than one hundred ten percent
(110%) of the Fair Market Value per Share on the date of grant, and (ii) granted
to any other Employee, the per Share exercise price shall be no less than one
hundred percent (100%) of the Fair Market Value per Share on the date of grant.
Notwithstanding the foregoing subsections (i) and (ii), Options may be granted
with a per Share exercise price other than as required above pursuant to a
merger or other corporate transaction.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, 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). Such consideration may consist of (i) cash,
(ii) check, (iii) with the consent of the Administrator, a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code) and payable upon such terms
as may be prescribed by the Administrator, (iv) with the consent of the
Administrator, other Shares which (A) in the case of Shares acquired from the
Company, have been owned by the Holder for more than six (6) months on the date
of surrender, and (B) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which such Option shall be
exercised, (v) with the consent of the Administrator, surrendered Shares then
issuable upon exercise of the Option having a Fair Market Value on the date of
exercise equal to the aggregate exercise price of the Option or exercised
portion thereof, (vi) with the consent of the Administrator property of any kind
which constitutes good and valuable consideration, (vii) with the consent of the
Administrator, delivery of a notice that the Holder has placed a market sell
order with a broker with respect to Shares then issuable upon exercise of the
Options and that the broker has been directed to pay a sufficient portion of the
net proceeds of the sale to the Company in satisfaction of the Option exercise
price, PROVIDED, that payment of such proceeds is then made to the
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Company upon settlement of such sale, or (viii) with the consent of the
Administrator, any combination of the foregoing methods of payment.
10. EXERCISE OF OPTION.
(a) VESTING; FRACTIONAL EXERCISES. Options granted hereunder shall be
vested and exercisable according to the terms hereof at such times and under
such conditions as determined by the Administrator and set forth in the Option
Agreement. An Option may not be exercised for a fraction of a Share.
(b) DELIVERIES UPON EXERCISE. All or a portion of an exercisable Option
shall be deemed exercised upon delivery of all of the following to the Secretary
of the Company or his or her office:
(i) A written or electronic notice complying with the applicable
rules established by the Administrator stating that the Option, or a portion
thereof, is exercised. The notice shall be signed by the Holder or other person
then entitled to exercise the Option or such portion of the Option;
(ii) Such representations and documents as the Administrator, in
its absolute discretion, deems necessary or advisable to effect compliance with
Applicable Laws. The Administrator may, in its absolute discretion, also take
whatever additional actions it deems appropriate to effect such compliance,
including, without limitation, placing legends on share certificates and issuing
stop transfer notices to agents and registrars;
(iii) Upon the exercise of all or a portion of an unvested Option
pursuant to Section 10(h), a Restricted Stock purchase agreement in a form
determined by the Administrator and signed by the Holder or other person then
entitled to exercise the Option or such portion of the Option; and
(iv) In the event that the Option shall be exercised pursuant to
Section 10(f) by any person or persons other than the Holder, appropriate proof
of the right of such person or persons to exercise the Option.
(c) CONDITIONS TO DELIVERY OF SHARE CERTIFICATES. The Company shall not
be required to issue or deliver any certificate or certificates for Shares
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
(i) The admission of such Shares to listing on all stock exchanges
on which such class of stock is then listed;
(ii) The completion of any registration or other qualification of
such Shares under any state or federal law, or under the rulings or regulations
of the Securities and
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Exchange Commission or any other governmental regulatory body which the
Administrator shall, in its absolute discretion, deem necessary or advisable;
(iii) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Administrator shall, in its
absolute discretion, determine to be necessary or advisable;
(iv) The lapse of such reasonable period of time following the
exercise of the Option as the Administrator may establish from time to time for
reasons of administrative convenience; and
(v) The receipt by the Company of full payment for such Shares,
including payment of any applicable withholding tax, which in the discretion of
the Administrator may be in the form of consideration used by the Holder to pay
for such Shares under Section 9(b).
(d) TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If a Holder
ceases to be a Service Provider other than by reason of the Holder's disability
or death, such Holder may exercise his or her Option within such period of time
as is specified in the Option Agreement to the extent that the Option is vested
on the date of termination (but in no event later than the expiration of the
term of the Option as set forth in the Option Agreement). In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
three (3) months following the Holder's termination. If, on the date of
termination, the Holder is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option immediately cease to be issuable
under the Option and shall again become available for issuance under the Plan.
If, after termination, the Holder does not exercise his or her Option within the
time period specified herein, the Option shall terminate, and the Shares covered
by such Option shall again become available for issuance under the Plan.
(e) DISABILITY OF HOLDER. If a Holder ceases to be a Service Provider
as a result of the Holder's disability, the Holder may exercise his or her
Option within such period of time as is specified in the Option Agreement to the
extent the Option is vested on the date of termination (but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Holder's
termination. 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 cease to be treated as an Incentive
Stock Option and shall be treated for tax purposes as a Non-Qualified Stock
Option from and after the day which is three (3) months and one (1) day
following such termination. If, on the date of termination, the Holder is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall immediately cease to be issuable under the Option
and shall again become available for issuance under the Plan. If, after
termination, the
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Holder does not exercise his or her Option within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall again become
available for issuance under the Plan.
(f) DEATH OF HOLDER. If a Holder dies while a Service Provider, the
Option may be exercised within such period of time as is specified in the Option
Agreement (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Holder's estate or by a person who
acquires the right to exercise the Option by bequest or inheritance, but only to
the extent that the Option is vested on the date of death. In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
twelve (12) months following the Holder's termination. If, at the time of death,
the Holder is not vested as to his or her entire Option, the Shares covered by
the unvested portion of the Option shall immediately cease to be issuable under
the Option and shall again become available for issuance under the Plan. The
Option may be exercised by the executor or administrator of the Holder's estate
or, if none, by the person(s) entitled to exercise the Option under the Holder's
will or the laws of descent or distribution. If the Option is not so exercised
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall again become available for issuance under the Plan.
(g) REGULATORY EXTENSION. A Holder's Option Agreement may provide that
if the exercise of the Option following the termination of the Holder's status
as a Service Provider (other than upon the Holder's death or Disability) would
be prohibited at any time solely because the issuance of shares would violate
the registration requirements under the Securities Act, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option set
forth in Section 8 or (ii) the expiration of a period of three (3) months after
the termination of the Holder's status as a Service Provider during which the
exercise of the Option would not be in violation of such registration
requirements.
(h) EARLY EXERCISABILITY. The Administrator may provide in the terms of
a Holder's Option Agreement that the Holder may, at any time before the Holder's
status as a Service Provider terminates, exercise the Option in whole or in part
prior to the full vesting of the Option; PROVIDED, HOWEVER, that subject to
Section 20, Shares acquired upon exercise of an Option which has not fully
vested may be subject to any forfeiture, transfer or other restrictions as the
Administrator may determine in its sole discretion.
(i) BUYOUT PROVISIONS. The Administrator may at any time offer to
buyout for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Holder at the time that such offer is made.
11. TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. Except as
otherwise provided in this Section 11, Options and Stock Purchase Rights may not
be sold, pledged,
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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 Holder, only by the Holder. Notwithstanding the foregoing
sentence, the Administrator, in its sole discretion, may determine to permit a
Holder to transfer a Non-Qualified Stock Option to any one or more Permitted
Transferees (as defined below), subject to the following terms and conditions:
(a) a Non-Qualified Stock Option transferred to a Permitted Transferee shall not
be assignable or transferable by the Permitted Transferee other than by will or
the laws of descent and distribution; (b) any Non-Qualified Stock Option which
is transferred to a Permitted Transferee shall continue to be subject to all the
terms and conditions of the Non-Qualified Stock Option as applicable to the
original Holder (other than the ability to further transfer the Non-Qualified
Stock Option); and (c) the Holder and the Permitted Transferee shall execute any
and all documents requested by the Administrator, including, without limitation
documents to (i) confirm the status of the transferee as a Permitted Transferee,
(ii) satisfy any requirements for an exemption for the transfer under applicable
federal and state securities laws and (iii) evidence the transfer. For purposes
of this Section 11, "PERMITTED TRANSFEREE" shall mean, with respect to a Holder,
any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the Holder's household (other than a tenant or
employee), a trust in which these persons have more than fifty percent of the
beneficial interest, a foundation in which these persons (or the Holder) control
the management of assets, and any other entity in which these persons (or the
Holder) own more than fifty percent of the voting interests, or any other
transferee specifically approved by the Administrator after taking into account
any state or federal tax or securities laws applicable to transferable
Non-Qualified Stock Options.
12. STOCK PURCHASE RIGHTS.
(a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with Options granted under the Plan and/or
cash awards made outside of the Plan. After the Administrator determines that it
will offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase,
the price to be paid, and the time within which such person must accept such
offer. The offer shall be accepted by execution of a Restricted Stock purchase
agreement in the form determined by the Administrator.
(b) REPURCHASE RIGHT. Unless the Administrator determines otherwise,
the Restricted Stock purchase agreement shall grant the Company the right to
repurchase Shares acquired upon exercise of a Stock Purchase Right upon the
termination of the purchaser's status as a Service Provider for any reason.
Subject to Section 20, the purchase price for Shares repurchased by the Company
pursuant to such repurchase right and the rate at with such
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repurchase right shall lapse shall be determined by the Administrator in its
sole discretion, and shall be set forth in the Restricted Stock purchase
agreement.
(c) OTHER PROVISIONS. The Restricted Stock purchase agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.
(d) RIGHTS AS A SHAREHOLDER. Once the Stock Purchase Right is
exercised, the purchaser shall have rights equivalent to those of a shareholder
and shall be a shareholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of the Company. No adjustment shall be
made for a dividend or other right for which the record date is prior to the
date the Stock Purchase Right is exercised, except as provided in Section 13 of
the Plan.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET SALE.
(a) In the event that the Administrator determines that any dividend or
other distribution (whether in the form of cash, Common Stock, other securities,
or other property), recapitalization, reclassification, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale, transfer, exchange
or other disposition of all or substantially all of the assets of the Company,
or exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction (including, without limitation,
any Change in Control) or event, in the Administrator's sole discretion, affects
the Common Stock such that an adjustment is determined by the Administrator to
be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to any Option, Stock Purchase Right or Restricted Stock, then the Administrator
shall, in such manner as it may deem equitable, adjust any or all of:
(i) The number and kind of shares of Common Stock (or other
securities or property) with respect to which Options or Stock Purchase Rights
may be granted or awarded (including, but not limited to, adjustments of the
limitations in Section 3 on the maximum number and kind of shares which may be
issued and adjustments of the maximum number of Shares that may be purchased by
any Holder in any calendar year pursuant to Section 6(c));
(ii) The number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Options, Stock Purchase Rights or
Restricted Stock; and
(iii) The grant or exercise price with respect to any Option or
Stock Purchase Right.
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(b) In the event of any transaction or event described in Section 13(a)
(including, without limitation, any Change in Control), the Administrator, in
its sole and absolute discretion, and on such terms and conditions as it deems
appropriate, either by the terms of the Option, Stock Purchase Right or
Restricted Stock or by action taken prior to the occurrence of such transaction
or event and either automatically or upon the Holder's request, is hereby
authorized to take any one or more of the following actions whenever the
Administrator determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Option, Stock Purchase
Right or Restricted Stock granted or issued under the Plan or to facilitate such
transaction or event:
(i) To provide for either the purchase of any such Option, Stock
Purchase Right or Restricted Stock for an amount of cash equal to the amount
that could have been obtained upon the exercise of such Option or Stock Purchase
Right or realization of the Holder's rights had such Option, Stock Purchase
Right or Restricted Stock been currently exercisable or payable or fully vested
or the replacement of such Option, Stock Purchase Right or Restricted Stock with
other rights or property selected by the Administrator in its sole discretion;
(ii) To provide that such Option or Stock Purchase Right shall be
exercisable as to all shares covered thereby, notwithstanding anything to the
contrary in the Plan or the provisions of such Option or Stock Purchase Right;
(iii) To provide that such Option, Stock Purchase Right or
Restricted Stock be assumed by the successor or survivor corporation, or a
parent or subsidiary thereof, or shall be substituted for by similar options,
rights or awards covering the stock of the successor or survivor corporation, or
a parent or subsidiary thereof, with appropriate adjustments as to the number
and kind of shares and prices;
(iv) To make adjustments in the number and type of shares of
Common Stock (or other securities or property) subject to outstanding Options
and Stock Purchase Rights, and/or in the terms and conditions of (including the
grant or exercise price), and the criteria included in, outstanding Options,
Stock Purchase Rights or Restricted Stock or Options, Stock Purchase Rights or
Restricted Stock which may be granted in the future; and
(v) To provide that immediately upon the consummation of such
event, such Option or Stock Purchase Right shall not be exercisable and shall
terminate; PROVIDED, that for a specified period of time prior to such event,
such Option or Stock Purchase Right shall be exercisable as to all Shares
covered thereby, and the restrictions imposed under an Option Agreement or
Restricted Stock purchase agreement upon some or all Shares may be terminated
and, in the case of Restricted Stock, some or all shares of such Restricted
Stock may cease to be subject to repurchase, notwithstanding anything to the
contrary in the Plan or the provisions of such Option, Stock Purchase Right or
Restricted Stock purchase agreement.
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(c) Subject to Section 3, the Administrator may, in its discretion,
include such further provisions and limitations in any Option, Stock Purchase
Right, Restricted Stock agreement or certificate, as it may deem equitable and
in the best interests of the Company.
(d) If the Company undergoes a Change in Control, then any surviving
corporation or entity or acquiring corporation or entity, or affiliate of such
corporation or entity, may assume any Options, Stock Purchase Rights or
Restricted Stock outstanding under the Plan or may substitute similar stock
awards (including an award to acquire the same consideration paid to the
stockholders in the transaction described in this subsection 13(d)) for those
outstanding under the Plan. In the event any surviving corporation or entity or
acquiring corporation or entity in a Change in Control, does not assume such
Options, Stock Purchase Rights or Restricted Stock or does not substitute
similar stock awards for those outstanding under the Plan, then with respect to
(i) Options, Stock Purchase Rights or Restricted Stock held by participants in
the Plan whose status as a Service Provider has not terminated prior to such
event, the vesting of such Options, Stock Purchase Rights or Restricted Stock
(and, if applicable, the time during which such awards may be exercised) shall
be accelerated and made fully exercisable and all restrictions thereon shall
lapse at least ten (10) days prior to the closing of the Change in Control (and
the Options or Stock Purchase Rights terminated if not exercised prior to the
closing of such Change in Control), and (ii) any other Options or Stock Purchase
Rights outstanding under the Plan, such Options or Stock Purchase rights shall
be terminated if not exercised prior to the closing of the Change in Control.
(e) Notwithstanding the foregoing, in the event that the Company
becomes a party to a transaction that is intended to qualify for "pooling of
interests" accounting treatment and, but for one or more of the provisions of
this Plan or any Option Agreement or any Restricted Stock purchase agreement
would so qualify, then this Plan and any such agreement shall be interpreted so
as to preserve such accounting treatment, and to the extent that any provision
of the Plan or any such agreement would disqualify the transaction from pooling
of interests accounting treatment (including, if applicable, an entire Option
Agreement or Restricted Stock purchase agreement), then such provision shall be
null and void. All determinations to be made in connection with the preceding
sentence shall be made by the independent accounting firm whose opinion with
respect to "pooling of interests" treatment is required as a condition to the
Company's consummation of such transaction.
(f) The existence of the Plan, any Option Agreement or Restricted Stock
purchase agreement and the Options or Stock Purchase Rights granted hereunder
shall not affect or restrict in any way the right or power of the Company or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the
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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.
14. TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS. The date of grant
of an Option or Stock Purchase Right shall, for all purposes, be the date on
which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option or Stock Purchase Right is so granted within a reasonable time after the
date of such grant.
15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time wholly or
partially amend, alter, suspend or terminate the Plan. However, without approval
of the Company's stockholders given within twelve (12) months before or after
the action by the Board, no action of the Board may, except as provided in
Section 13, increase the limits imposed in Section 3 on the maximum number of
Shares which may be issued under the Plan or extend the term of the Plan under
Section 7.
(b) STOCKHOLDER APPROVAL. The Board shall obtain stockholder approval
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Holder,
unless mutually agreed otherwise between the Holder and the Administrator, which
agreement must be in writing and signed by the Holder and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options, Stock Purchase
Rights or Restricted Stock granted or awarded under the Plan prior to the date
of such termination.
16. STOCKHOLDER APPROVAL. The Plan will be submitted for the approval of
the Company's stockholders within twelve (12) months after the date of the
Board's initial adoption of the Plan. Options, Stock Purchase Rights or
Restricted Stock may be granted or awarded prior to such stockholder approval,
provided that such Options, Stock Purchase Rights and Restricted Stock shall not
be exercisable, shall not vest and the restrictions thereon shall not lapse
prior to the time when the Plan is approved by the stockholders, and provided
further that if such approval has not been obtained at the end of said
twelve-month period, all Options, Stock Purchase Rights and Restricted Stock
previously granted or awarded under the Plan shall thereupon be canceled and
become null and void.
17. INABILITY TO OBTAIN AUTHORITY. 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
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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.
18. RESERVATION OF SHARES. The Company, during the term of this Plan, shall
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. INFORMATION TO HOLDERS AND PURCHASERS. To the extent required by any
Applicable Laws, the Company shall provide to each Holder and to each individual
who acquires Shares pursuant to the Plan, not less frequently than annually
during the period such Holder or purchaser has one or more Options or Stock
Purchase Rights outstanding, and, in the case of an individual who acquires
Shares pursuant to the Plan, during the period such individual owns such Shares,
copies of annual financial statements. Notwithstanding the preceding sentence,
the Company shall not be required to provide such statements to key employees
whose duties in connection with the Company assure their access to equivalent
information.
20. REPURCHASE PROVISIONS. The Administrator in its discretion may provide
that the Company may repurchase Shares acquired upon exercise of an Option or
Stock Purchase Right upon a Holder's termination as a Service Provider;
PROVIDED, that any such repurchase right shall be set forth in the applicable
Option Agreement or Restricted Stock purchase agreement or in another agreement
referred to in such agreement.
21. INVESTMENT INTENT. The Company may require a Plan participant, as a
condition of exercising or acquiring stock under any Option or Stock Purchase
Right, (i) to give written assurances satisfactory to the Company as to the
participant's knowledge and experience in financial and business matters and/or
to employ a purchaser representative reasonably satisfactory to the Company who
is knowledgeable and experienced in financial and business matters and that he
or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option or Stock Purchase
Right; and (ii) to give written assurances satisfactory to the Company stating
that the participant is acquiring the stock subject to the Option or Stock
Purchase Right for the participant's own account and not with any present
intention of selling or otherwise distributing the stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (A) the issuance of the shares upon the exercise or acquisition
of stock under the applicable Option or Stock Purchase Right has been registered
under a then currently effective registration statement under the Securities Act
or (B) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.
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22. GOVERNING LAW. The validity and enforceability of this Plan shall be
governed by and construed in accordance with the laws of the State of Delaware
without regard to otherwise governing principles of conflicts of law.
23. STOCKHOLDERS AGREEMENT. As a condition precedent to the award of any
Option or Stock Purchase Right under the Plan, or the exercise or delivery of
certificates for shares issued pursuant thereto, the Administrator may require
any Holder (or the Holder's successor, as applicable) to enter into or become a
party to a Stockholders Agreement or a Voting Trust Agreement in such form(s) as
the Administrator may determine from time to time.
* * * * * * *
I hereby certify that the Plan was originally adopted by the
Board of Directors of the Company on November 17, 1999. I further certify that
the Plan, as amended and restated effective July 12, 2000, was adopted by the
Board of Directors of the Company on July 12, 2000.
Executed on this 12th day of July, 2000.
* * * * * * *
I hereby certify that the foregoing Plan, as amended and
restated effective July 12, 2000, was approved by the stockholders of the
Company on July 12, 2000.
Executed on this 12th day of July, 2000.
/s/ DEBORAH MILIAN
_______________________________________
Name: Deborah Milian
Title: Assistant Secretary
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