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EXHIBIT 10.1
SNAP APPLIANCES, INC.
2000 STOCK PLAN
1. Purpose of the Plan. The purpose of the Snap Appliances, Inc. 2000
Stock Plan is to enable Snap Appliances, Inc. to provide an incentive to
eligible employees, consultants and officers whose present and potential
contributions are important to the continued success of the Company, to afford
these individuals the opportunity to acquire a proprietary interest in the
Company, and to enable the Company to enlist and retain in its employment the
best available talent for the successful conduct of its business. It is intended
that this purpose will be effected through the granting of (a) stock options,
(b) stock purchase rights, (c) stock appreciation rights, and (d) long-term
performance awards.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or such of its Committees as
shall be administering the Plan, in accordance with Section 5 of the Plan.
(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,
or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a Committee of Directors appointed by the
Board in accordance with Section 5 of the Plan.
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Snap Appliances, Inc. a Delaware corporation.
(h) "Consultant" means any natural person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services to such
entity and who is compensated for such services, provided that the term
"Consultant" shall not include Directors who are paid only a Director's fee by
the Company or who are not compensated by the Company for their services as
Directors.
(i) "Continuous Status as an Employee or Consultant" means that
the employment or consulting relationship is not interrupted or terminated by
the Company, or any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) transfers
between locations of the Company or between the Company,
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its Parent, or its Subsidiaries, (ii) any leave of absence approved by the
Board, including sick leave, military leave, or any other personal leave;
provided, however, that for purposes of Incentive Stock Options, any such leave
may not exceed ninety (90) days, unless reemployment upon the expiration of such
leave is guaranteed by contract (including certain Company policies) or statute
or (iii) notification by the Company of a reduction-in-force; such termination
shall be considered to have occurred at the end of the Employee's continuation
period.
(j) "Director" means a member of the Board.
(k) "Disability" means total and permanent disability as defined
in Section 22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and
Directors, employed by the Company any Parent or Subsidiary. Neither service as
a Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value" means, as of any date, the value 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 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 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 a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock for the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(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
the regulations promulgated thereunder.
(p) "Long-Term Performance Award" means an award under Section 9
below. A Long-Term Performance Award shall permit the recipient to receive a
cash or stock bonus (as determined by the Administrator) upon satisfaction of
such performance factors as are set out in the recipient's individual grant.
Long-term Performance Awards will be based upon the achievement of
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Company, Subsidiary and/or individual performance factors or upon such other
criteria as the Administrator may deem appropriate.
(q) "Long-Term Performance Award Agreement" means a written
agreement between the Company and an Optionee evidencing the terms and
conditions of an individual Long-Term Performance Award grant. The Long-Term
Performance Award Agreement is subject to the terms and conditions of the Plan.
(r) "Nonstatutory Stock Option" means any Option that is not an
Incentive Stock Option.
(s) "Notice of Grant" means a written notice evidencing certain
terms and conditions of an individual Option, Stock Purchase Right, SAR or
Long-Term Performance Award grant. The Notice of Grant is part of the Option
Agreement, the SAR Agreement and the Long-Term Performance Award Agreement.
(t) "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.
(u) "Option" means a stock option granted pursuant to the Plan.
(v) "Option Agreement" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of the
Plan.
(w) "Optioned Stock" means the Common Stock subject to an Option
or Stock Purchase Right.
(x) "Optionee" means the holder of an outstanding Option or stock
Purchase Right granted under the Plan.
(y) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(z) "Plan" means this Snap Appliances, Inc. 2000 Stock Plan.
(z) "Restricted Stock" means Shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 8 below.
(aa) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to Restricted Stock purchased under a Stock Purchase
Right. The Restricted Stock Purchase Agreement is subject to the terms and
conditions of the Plan and the Notice of Grant.
(bb) "Right" means and includes SARs, Long-Term Performance
Awards and Stock Purchase Rights granted pursuant to the Plan.
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(cc) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor rule thereto, as in effect when discretion is being exercised by the
Administrator with respect to the Plan.
(dd) "SAR" means a stock appreciation right granted pursuant to
Section 7 of the Plan.
(ee) "SAR Agreement" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual SAR
grant. The SAR Agreement is subject to the terms and conditions of the Plan.
(ff) "Share" means a share of Common Stock as adjusted in
accordance with Section 11 of the Plan.
(gg) "Stock Purchase Right" means the right to purchase Common
stock pursuant to Section 8 of the Plan, as evidenced by a Notice of Grant.
(hh) "Subsidiary" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Eligibility. Nonstatutory Stock Options and Rights may be granted to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees. If otherwise eligible, an Employee or Consultant who has been granted
an Option or Right may be granted additional Options or Rights.
4. Stock Subject to the Plan.
(a) Subject to the provisions of Section 11 of the Plan, the
maximum aggregate number of Shares that may be optioned and sold under the Plan
is 12,900,000 Shares plus any reserved but unissued shares under the Company's
2000 Incentive Stock Option Plan as of the effective date of the Company's
registration statement on the form S-1 and any shares returned to the 2000
Incentive Stock Option Plan. An annual increase shall be made to the Plan on the
first day of the Company's fiscal year beginning in 2001, equal to the lesser of
(i) 3,900,000 shares, (ii) 5% of the outstanding shares on such date or (iii) a
lesser amount determined by the Board. The Shares may be authorized, but
unissued, or reacquired Common Stock.
(b) Subject to Section 11 of the Plan, if any Shares that have
been optioned under an Option cease to be subject to such Option (other than
through exercise of the Option), or if any Option or Right granted hereunder is
forfeited, or any such award otherwise terminates prior to the issuance of the
Shares to the participant, the Shares that were subject to such Option or Right
shall again be available for distribution in connection with future Option or
right grants under the Plan. In addition, Shares that have been subject to SARs
exercised for cash, whether granted in connection with or independently of
options, shall again be available for distribution under the Plan. Shares that
have actually been issued under the Plan, whether upon exercise of an Option or
Right, shall not in any event be returned to the Plan and shall not become
available for future distribution under the Plan, except that 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.
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5. Administration.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be
administered by different Committees with respect to different groups of Service
Providers.
(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
(iv) Other Administration. Other than as provided above, the
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Consultants and Employees to whom Options
and Rights may be granted hereunder;
(iii) to determine whether and to what extent Options and
Rights or any combination thereof, are granted hereunder;
(iv) to determine the number and type of Shares covered by
each Option and Stock Purchase Right granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options or Rights may 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 Right or the Shares
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
(vii) to construe and interpret the terms of the Plan;
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(viii) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(ix) to determine whether and under what circumstances an
Option or Right may be settled in cash instead of Shares or Shares instead of
cash;
(x) to modify or amend each Option or Right (subject to
Section 13 of the Plan);
(xi) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Right that number of Shares having a Fair
Market Value equal to the amount required to be withheld. 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 an Optionee 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;
(xii) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Right
previously granted by the Administrator;
(xiii) to determine the terms and restrictions applicable to
Options and Rights and any Restricted Stock; and
(xiv) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Rights.
6. Duration of the Plan. The Plan shall remain in effect until
terminated by the Board under the terms of the Plan, provided that in no event
may Incentive Stock Options be granted under the Plan later than 10 years from
the date the Plan was adopted by the Board.
7. Options and SARs.
(a) Options. The Administrator, in its discretion, may grant
Options to eligible participants and shall determine whether such Options shall
be Incentive Stock Options or Nonstatutory Stock Options. Each Option shall be
evidenced by a Notice of Grant which shall expressly identify the Options as
Incentive Stock Options or as Nonstatutory Stock Options and be in such form and
contain such provisions as the Administrator shall from time to time deem
appropriate. Without limiting the foregoing, the Administrator may at any time
authorize the Company, with the consent of the respective recipients, to issue
new Options or Rights in exchange for the surrender and cancellation of
outstanding Options or Rights. Option agreements shall contain the following
terms and conditions:
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(i) Exercise Price; Number of Shares. The per share exercise
price for a Share issuable pursuant to an Option shall be such price as is
determined by the Administrator; provided, however, that in no event shall the
price of an Option or Stock Appreciation Right be less than 100% of the Fair
Market Value of the Common Stock on the date the Option or Stock Appreciation
Right is granted, subject to any additional conditions set out in Section
7(a)(iv) below.
The Notice of Grant shall specify the number of Shares of Common Stock
to which it pertains.
(ii) Waiting Period and Exercise Dates. At the time an
Option is granted, the Administrator will determine the terms and conditions to
be satisfied before Shares may be purchased, including the dates on which Shares
subject to the Option may first be purchased. The Administrator may specify that
an Option may not be exercised until the completion of the service period
specified at the time of grant. (Any such period is referred to herein as the
"waiting period.") At the time an Option is granted, the Administrator shall fix
the period within which the Option may be exercised, which shall not be earlier
than the end of the waiting period, if any, nor, in the case of an Incentive
Stock Option, later than ten (10) years, from the date of grant.
(iii) Form of Payment. 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) and may consist entirely of:
(1) cash;
(2) check;
(3) promissory note;
(4) other Shares which (1) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and (2) have a Fair Market Value on
the date of surrender not greater than the aggregate exercise price of the
Shares as to which said Option shall be exercised;
(5) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price;
(6) any combination of the foregoing methods of
payment; or
(7) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws.
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(iv) Special Incentive Stock Option Provisions. In addition
to the foregoing, Options granted under the Plan which are intended to be
Incentive Stock Options under Section 422 of the Code shall be subject to the
following terms and conditions:
(1) Dollar Limitation. To the extent that the aggregate
Fair Market Value of (a) the Shares with respect to which Options designated as
Incentive Stock Options plus (b) the shares of stock of the Company, Parent and
any Subsidiary with respect to which other Incentive Stock Options are
exercisable for the first time by an Optionee during any calendar year under all
plans of the Company and any Parent and Subsidiary exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of the
preceding sentence, (a) Options shall be taken into account in the order in
which they were granted, and (b) the Fair Market Value of the Shares shall be
determined as of the time the Option or other Incentive Stock Option is granted.
(v) Option Grant Limitations. The following limitations will
apply to each Option grant:
(1) No Employee or Consultant shall be granted, in any
fiscal year of the Company, an Option to purchase more than 2,000,000 Shares of
Common Stock.
(2) In connection with his or her initial service or
upon Promotion, an Employee or Consultant may be granted Options to purchase up
to an additional 2,500,000 Shares of Common Stock which shall not count against
the limit set forth in subsection (1) above.
(3) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 11.
(4) If an Option is canceled in the same fiscal year of
the Company in which it was granted (other than in connection with a transaction
described in Section 11), the canceled Option will be counted against the limits
set forth in subsections (1) and (2) above. For this purpose, if the exercise
price of an Option is reduced, the transaction will be treated as a cancellation
of the Option and the grant of a new Option.
(vi) Other Provisions. Each Option granted under the Plan
may contain such other terms, provisions, and conditions not inconsistent with
the Plan as may be determined by the Administrator.
(vii) Buyout Provisions. The Administrator may at any time
offer to buyout for a payment in cash, promissory note or Shares, an Option
previously granted, based on such terms and conditions as the Administrator
shall establish and communicate to the Optionee at the time that such offer is
made.
(b) SARs.
(i) In Connection with Options. At the sole discretion of
the Administrator, SARs may be granted in connection with all or any part of an
Option, either
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concurrently with the grant of the Option or at any time thereafter during the
term of the Option. The following provisions apply to SARs that are granted in
connection with Options:
(1) The SAR shall entitle the Optionee to exercise the
SAR by surrendering to the Company unexercised the corresponding portion of the
related Option. The Optionee shall receive in exchange from the Company an
amount equal to the excess of (1) the Fair Market Value on the date of exercise
of the SAR of the Shares covered by the surrendered portion of the related
Option over (2) the exercise price of the Shares covered by the surrendered
portion of the related Option. Notwithstanding the foregoing, the Administrator
may place limits on the amount that may be paid upon exercise of an SAR;
provided, however, that such limit shall not restrict the exercisability of the
related Option.
(2) When an SAR is exercised, the related Option, to
the extent surrendered, shall cease to be exercisable.
(3) An SAR shall be exercisable only when and to the
extent that the related Option is exercisable and shall expire no later than the
date on which the related Option expires.
(4) An SAR may only be exercised at a time when the
Fair Market Value of the Shares covered by the related Option exceeds the
exercise price of the Shares covered by the related Option.
(ii) Independent of Options. At the sole discretion of the
Administrator, SARs may be granted without related Options. The following
provisions apply to SARs that are not granted in connection with Options:
(1) The SAR shall entitle the Optionee, by exercising
the SAR, to receive from the Company an amount equal to the excess of (1) the
Fair Market Value of the Shares covered by the exercised portion of the SAR, as
of the date of such exercise, over (2) the Fair Market Value of the Shares
covered by the exercised portion of the SAR, as of the last market trading date
prior to the date on which the SAR was granted; provided, however, that the
Administrator may place limits on the aggregate amount that may be paid upon
exercise of an SAR.
(2) SARs shall be exercisable, in whole or in part, at
such times as the Administrator shall specify in the Optionee's SAR agreement.
(iii) Form of Payment. The Company's obligation arising upon
the exercise of an SAR may be paid in Shares or in cash, or in any combination
of Shares and cash, as the Administrator, in its sole discretion, may determine.
Shares issued upon the exercise of an SAR shall be valued at their Fair Market
Value as of the date of exercise.
(c) Method of Exercise.
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(i) Procedure for Exercise; Rights as a Stockholder. Any
Option or SAR granted hereunder shall be exercisable at such times and under
such conditions as determined by the Administrator and as shall be permissible
under the terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option or SAR shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option or SAR by the person entitled to exercise the Option or SAR and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Administrator
(and, in the case of an Incentive Stock Option, determined at the time of grant)
and permitted by the Option Agreement, consist of any consideration and method
of payment allowable under subsection 7(a)(iii) of the Plan. Until the issuance
(as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares, which thereafter shall be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised. Exercise of an SAR in any manner shall, to the extent the
SAR is exercised, result in a decrease in the number of Shares, which thereafter
shall be available for purposes of the Plan, and the SAR shall cease to be
exercisable to the extent it has been exercised.
(ii) Termination of Employment or Consulting Relationship.
In the event an Optionee's Continuous Status as an Employee or Consultant
terminates (other than upon the Optionee's death or Disability), the Optionee
may exercise his or her Option or SAR, but only within such period of time as is
determined by the Administrator at the time of grant, not to exceed six (6)
months (three (3) months in the case of an Incentive Stock Option) from the date
of such termination, and only to the extent that the Optionee was entitled to
exercise it at the date of such termination (but in no event later than the
expiration of the term of such Option or SAR as set forth in the Option or SAR
Agreement). To the extent that Optionee was not entitled to exercise an Option
or SAR at the date of such termination, and to the extent that the Optionee does
not exercise such Option or SAR (to the extent otherwise so entitled) within the
time specified herein, the Option or SAR shall terminate.
(iii) Disability of Optionee. In the event an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option or SAR, but
only within twelve (12) months from the date of such termination, and only to
the extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option or SAR as set forth in the Option or SAR Agreement). To the extent that
Optionee was not entitled to exercise an Option or SAR at the date of such
termination, and to the extent that the Optionee does not exercise
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such Option or SAR (to the extent otherwise so entitled) within the time
specified herein, the Option or SAR shall terminate.
(iv) Death of Optionee. In the event of an Optionee's death,
the Optionee's estate or a person who acquired the right to exercise the
deceased Optionee's Option or SAR by bequest or inheritance may exercise the
Option or SAR, but only within twelve (12) months following the date of death,
and only to the extent that the Optionee was entitled to exercise it at the date
of death (but in no event later than the expiration of the term of such Option
or SAR as set forth in the Option or SAR Agreement). To the extent that Optionee
was not entitled to exercise an Option or SAR at the date of death, and to the
extent that the Optionee's estate or a person who acquired the right to exercise
such Option does not exercise such Option or SAR (to the extent otherwise so
entitled) within the time specified herein, the Option or SAR shall terminate.
8. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards 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 and type of Shares that the offeree shall be
entitled to purchase, the price to be paid, and the time within which the
offeree must accept such offer, which shall in no event exceed thirty (30) days
from the date upon which the Administrator made the determination to grant the
Stock Purchase Right. In no event shall the purchase price be less than the
minimum price required to assure compliance with applicable state law. The offer
shall be accepted by execution of a Restricted Stock Purchase Agreement in the
form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine.
(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. In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.
(d) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will 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 11
of the Plan.
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9. Long-Term Performance Awards.
(a) Administration. Long-Term Performance Awards are cash or
stock bonus awards that may be granted either alone or in addition to other
awards granted under the Plan. Subject to any minimum imposed by applicable
state law, such awards may be granted for no cash consideration. The
Administrator shall determine the nature, length and starting date of any
performance period (the "Performance Period") for each Long-Term Performance
Award, and shall determine the performance or employment factors, if any, to be
used in the determination of Long-Term Performance Awards and the extent to
which such Long-Term Performance Awards are valued or have been earned.
Long-Term Performance Awards may vary from participant to participant and
between groups of participants and shall be based upon the achievement of
Company, Subsidiary, Parent and/or individual performance factors or upon such
other criteria as the Administrator may deem appropriate. Performance Periods
may overlap and participants may participate simultaneously with respect to
Long-Term Performance Awards that are subject to different Performance Periods
and different performance factors and criteria. Long-Term Performance Awards
shall be confirmed by, and be subject to the terms of, a Long-Term Performance
Award agreement. The terms of such awards need not be the same with respect to
each participant.
At the beginning of each Performance Period, the Administrator may
determine for each Long-Term Performance Award subject to such Performance
Period the range of dollar values or number and type of Shares to be awarded to
the participant at the end of the Performance Period if and to the extent that
the relevant measures of performance for such Long-Term Performance Award are
met. Such dollar values or number and type of Shares may be fixed or may vary in
accordance with such performance or other criteria as may be determined by the
Administrator.
(b) Adjustment of Awards. The Administrator may adjust the
performance factors applicable to the Long-Term Performance Awards to take into
account changes in legal, accounting and tax rules and to make such adjustments
as the Administrator deems necessary or appropriate to reflect the inclusion or
exclusion of the impact of extraordinary or unusual items, events or
circumstances in order to avoid windfalls or hardships.
10. Non-Transferability of Options. Unless determined otherwise by the
Administrator, Options and Rights may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee. If the Administrator makes an Option or
Right transferable, such Option or Right shall contain such additional terms and
conditions as the Administrator deems appropriate.
11. Adjustments Upon Changes in Capitalization, Dissolution, Merger, or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the stockholders of the Company, the number and type of Shares covered by each
outstanding Option and Right, and the number and type of Shares which have been
authorized for issuance under the Plan but as to which no Options or Rights have
yet been granted or which have been returned to the Plan upon
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cancellation or expiration of an Option or Right, as well as the price per Share
covered by each such outstanding Option or Right, shall be appropriately
adjusted by the Board, in its discretion, for any increase or decrease in the
number or type of issued Shares resulting from a stock split, reverse stock
split, stock dividend, combination, conversion or reclassification, or any other
increase or decrease in the number of issued Shares. Such adjustment by the
Board shall be final, binding and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares subject to an Option or Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option or Right
has not been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Administrator may, in the exercise of
its sole discretion in such instances, declare that any Option or Right shall
terminate as of a date fixed by the Administrator and give each Optionee the
right to exercise his or her Option or Right as to all or any part of the
Optioned Stock, including Shares as to which the Option or Right would not
otherwise be exercisable.
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option or Right shall be assumed or an
equivalent Option or Right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation does not agree to assume the Option or Right or to substitute an
equivalent option or right, the Administrator shall, in lieu of such assumption
or substitution, provide for the Optionee to have the right to exercise the
Option or Right as to all or a portion of the Optioned Stock, including Shares
as to which it would not otherwise be exercisable. If the Administrator makes an
Option or Right exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets, the Administrator shall notify the Optionee that
the Option or Right shall be exercisable for a period of fifteen (15) days from
the date of such notice, and the Option or Right will terminate upon the
expiration of such period. For the purposes of this paragraph, the Option or
Right shall be considered assumed if, immediately following the merger or sale
of assets, the Option or Right confers the right to purchase, for each Share of
Optioned Stock subject to the Option or Right immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Shares for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets was not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation and the Optionee, provide for the
consideration to be received upon the exercise of the Option or Right, for each
Share of Optioned Stock subject to the Option or Right, to be solely common
stock of the successor corporation or its Parent equal in Fair Market Value to
the per share consideration received by holders of Shares in the merger or sale
of assets.
12. Date of Grant. The date of grant of an Option or Right shall be, for
all purposes, the date on which the Administrator makes the determination
granting such Option or Right, or such
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<PAGE> 14
other later date as is determined by the Administrator. Notice of the
determination shall be provided to each Optionee within a reasonable time after
the date of such grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws. Such stockholder approval, if required, shall be obtained
in such a manner and to such a degree as is required by the Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
14. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Right unless the exercise of such Option or Right and
the issuance and delivery of such Shares shall comply with Applicable Laws.
(b) Investment Representations. As a condition to the exercise of
an Option or Right, the Company may require the person exercising such Option or
Right to represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required.
15. Liability of Company.
(a) 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 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.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock
covered by an Option or Right exceeds, as of the date of grant, the number of
Shares which may be issued under the Plan without additional stockholder
approval, such Option or Right shall be void with respect to such excess
Optioned Stock, unless stockholder approval of an amendment sufficiently
increasing the number of Shares subject to the Plan is timely obtained in
accordance with Section 13(b) of the Plan.
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<PAGE> 15
16. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
17. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such stockholder approval shall be obtained
in the manner and to the degree required under Applicable Laws.
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<PAGE> 16
EXHIBIT A
SNAP APPLIANCES, INC.
2000 STOCK PLAN
EXERCISE NOTICE
[Address]
Attention: Corporate Secretary
1. Exercise of Option. Effective as of today, ________________, _____,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Snap Appliances, Inc. (the "Company")
under and pursuant to the 2000 Stock Plan (the "Plan") and the Stock Option
Agreement dated, _____ (the "Option Agreement"). The purchase price for the
Shares shall be $_____, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 11 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
<PAGE> 17
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
Submitted by: Accepted by:
PURCHASER: SNAP APPLIANCES, INC.
------------------------------- -------------------------------
Signature By
------------------------------- -------------------------------
Print Name Its
Address: Address:
------------------------------- SNAP APPLIANCES, INC.
------------------------------- [address]
-------------------------------
Date Received
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<PAGE> 18
EXHIBIT B
SECURITY AGREEMENT
This Security Agreement is made as of __________, _____ between Snap Appliances,
Inc. a Delaware corporation ("Pledgee"), and _________________________
("Pledgor").
Recitals
Pursuant to Pledgor's election to purchase Shares under the Option Agreement
dated ________ (the "Option"), between Pledgor and Pledgee under Pledgee's 2000
Stock Plan, and Pledgor's election under the terms of the Option to pay for such
shares with his promissory note (the "Note"), Pledgor has purchased _________
shares of Pledgee's Common Stock (the "Shares") at a price of $________ per
share, for a total purchase price of $__________. The Note and the obligations
thereunder are as set forth in Exhibit C to the Option. NOW, THEREFORE, it is
agreed as follows:
1. Creation and Description of Security Interest. In consideration of
the transfer of the Shares to Pledgor under the Option Agreement, Pledgor,
pursuant to the [state] Commercial Code, hereby pledges all of such Shares
(herein sometimes referred to as the "Collateral") represented by certificate
number ______, duly endorsed in blank or with executed stock powers, and
herewith delivers said certificate to the Secretary of Pledgee ("Pledgeholder"),
who shall hold said certificate subject to the terms and conditions of this
Security Agreement.
The pledged stock (together with an executed blank stock assignment for
use in transferring all or a portion of the Shares to Pledgee if, as and when
required pursuant to this Security Agreement) shall be held by the Pledgeholder
as security for the repayment of the Note, and any extensions or renewals
thereof, to be executed by Pledgor pursuant to the terms of the Option, and the
Pledgeholder shall not encumber or dispose of such Shares except in accordance
with the provisions of this Security Agreement.
2. Pledgor's Representations and Covenants. To induce Pledgee to enter
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:
(a) Payment of Indebtedness. Pledgor will pay the principal sum of
the Note secured hereby, together with interest thereon, at the time and in the
manner provided in the Note.
(b) Encumbrances. The Shares are free of all other encumbrances,
defenses and liens, and Pledgor will not further encumber the Shares without the
prior written consent of Pledgee.
<PAGE> 19
(c) Margin Regulations. In the event that Pledgee's Common Stock is
now or later becomes margin-listed by the Federal Reserve Board and Pledgee is
classified as a "lender" within the meaning of the regulations under Part 221 of
Title 12 of the Code of Federal Regulations ("Regulation U"), Pledgor agrees to
cooperate with Pledgee in making any amendments to the Note or providing any
additional collateral as may be necessary to comply with such regulations.
3. Voting Rights. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.
4. Stock Adjustments. In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes are declared
or made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.
5. Options and Rights. In the event that, during the term of this
pledge, subscription Options or other rights or options shall be issued in
connection with the pledged Shares, such rights, Options and options shall be
the property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then held
by Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.
6. Default. Pledgor shall be deemed to be in default of the Note and of
this Security Agreement in the event:
(a) Payment of principal or interest on the Note shall be delinquent
for a period of 10 days or more; or
(b) Pledgor fails to perform any of the covenants set forth in the
Option or contained in this Security Agreement for a period of 10 days after
written notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee shall
have the right to accelerate payment of the Note upon notice to Pledgor, and
Pledgee shall thereafter be entitled to pursue its remedies under the California
Commercial Code.
7. Release of Collateral. Subject to any applicable contrary rules under
Regulation U, there shall be released from this pledge a portion of the pledged
Shares held by Pledgeholder hereunder upon payments of the principal of the
Note. The number of the pledged Shares which shall be released shall be that
number of full Shares which bears the same proportion to the initial number of
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<PAGE> 20
Shares pledged hereunder as the payment of principal bears to the initial full
principal amount of the Note.
8. Withdrawal or Substitution of Collateral. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.
9. Term. The within pledge of Shares shall continue until the payment of
all indebtedness secured hereby, at which time the remaining pledged stock shall
be promptly delivered to Pledgor, subject to the provisions for prior release of
a portion of the Collateral as provided in paragraph 7 above.
10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.
11. Pledgeholder Liability. In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of his acts,
or omissions to act, as Pledgeholder.
12. Invalidity of Particular Provisions. Pledgor and Pledgee agree that
the enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
13. Successors or Assigns. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.
14. Governing Law. This Security Agreement shall be interpreted and
governed under the internal substantive laws, but not the choice of law rules,
of California.
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<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PLEDGOR" -------------------------------
Signature
------------------------------
Print Name
Address:
---------------------
---------------------
"PLEDGEE" SNAP APPLIANCES, INC.
a Delaware corporation
------------------------------
Signature
------------------------------
Print Name
------------------------------
Title
"PLEDGEHOLDER"
------------------------------
Secretary of Snap Appliances, Inc.
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<PAGE> 22
EXHIBIT C
NOTE
$
--------------------- [City, State]
------------------, -----
FOR VALUE RECEIVED, _____________________ promises to pay to Snap
Appliances, Inc. a Delaware corporation (the "Company"), or order, the principal
sum of _______________________ ($_____________), together with interest on the
unpaid principal hereof from the date hereof at the rate of _______________
percent (____%) per annum, compounded semiannually.
Principal and interest shall be due and payable on _______________,
_____. Payment of principal and interest shall be made in lawful money of the
United States of America.
The undersigned may at any time prepay all or any portion of the
principal or interest owing hereunder.
This Note is subject to the terms of the Option, dated as of
________________. This Note is secured in part by a pledge of the Company's
Common Stock under the terms of a Security Agreement of even date herewith and
is subject to all the provisions thereof.
The holder of this Note shall have full recourse against the
undersigned, and shall not be required to proceed against the collateral
securing this Note in the event of default.
In the event the undersigned shall cease to be an employee, director or
consultant of the Company for any reason, this Note shall, at the option of the
Company, be accelerated, and the whole unpaid balance on this Note of principal
and accrued interest shall be immediately due and payable.
Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.
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