EXHIBIT 99.2
FILENET CORPORATION
1998 EMPLOYEE STOCK PURCHASE PLAN
AS AMENDED AND RESTATED THROUGH MARCH 31, 2000
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the interests of
FileNet Corporation by providing eligible employees with the opportunity to
acquire a proprietary interest in the Corporation through participation in a
payroll-deduction based employee stock purchase plan designed to qualify under
Section 423 of the Code.
This Plan shall serve as the successor to the Corporation's existing 1988
Employee Stock Purchase Plan (the "Predecessor Plan"), and no further shares of
Common Stock will be issued under the Predecessor Plan from and after the
Effective Date.
Capitalized terms herein shall have the meanings assigned to such terms in
the attached Appendix.
All share numbers in this Plan reflect the 2-for-1 split of the Common
Stock effective on June 12, 1998
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and construe
any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares of Common Stock
purchased on the open market. The maximum number of shares of Common
Stock which may be issued over the term of the Plan and the
International Plan shall not exceed One Million Thirty Two Thousand
Two Hundred and Seventy Eight (1,032,278) shares in the aggregate and
shall be limited to the following components: (i) the actual number of
shares of Common Stock remaining for issuance under the Predecessor
Plan on the Effective Date (Ninety Two Thousand Two Hundred Seventy
Eight (92,278) shares plus (ii) an additional Three Hundred Thousand
(300,000) shares of Common Stock approved by the stockholders at the
1998 Annual Meeting in connection with the implementation of the Plan
plus (iii) an additional increase of Three Hundred Thousand
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(300,000) shares authorized by the Board on March 22, 1999 and
approved by the stockholders at the 1999 Annual Meeting plus (iv) an
additional increase of Three Hundred Forty Thousand (340,000) shares
authorized by the Board on March 20, 2000, subject to stockholder
approval at the 2000 Annual Meeting.
B. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration,
appropriate adjustments shall be made to (i) the maximum number and
class of securities issuable under the Plan and the International
Plan, (ii) the maximum number and class of securities purchasable per
Participant on any one Purchase Date, (iii) the maximum number and
class of securities purchasable by all Participants in the aggregate
on any one Purchase Date and (iv) the number and class of securities
and the price per share in effect under each outstanding purchase
right in order to prevent the dilution or enlargement of benefits
thereunder.
IV. PURCHASE PERIODS
A. Shares of Common Stock shall be offered for purchase under the Plan
through a series of successive purchase periods until such time as (i)
the maximum number of shares of Common Stock available for issuance
under the Plan shall have been purchased or (ii) the Plan shall have
been sooner terminated.
B. Each purchase period shall have a duration of six (6) months. Purchase
periods shall run from the first business day in May to the last
business day in October each year and from the first business day in
November each year to the last business day in April of the following
year. However, the initial purchase period under the Plan shall begin
on October 1, 1998 and end on the last business day in April 1999.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the start date of any
purchase period shall be eligible to participate in the Plan for that
purchase period.
B. To participate in the Plan for a particular purchase period, the
Eligible Employee must complete the enrollment form prescribed by the
Plan Administrator and file such form with the Plan Administrator (or
its designate) on or before the start date of the purchase period.
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock under the Plan may be any multiple of
one percent (1%) of the Cash Earnings paid to the Participant during
each purchase period, up to a maximum of ten percent (10%). The
deduction rate so authorized shall continue in effect for the entire
purchase period and for each subsequent purchase period the
Participant remains in the Plan. The Participant may not increase his
or her rate of payroll deduction during a purchase period, but may
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effect such increase as of the start date of any subsequent purchase
period following the filing of a new payroll deduction authorization
with the Plan Administrator. However, the Participant may, at any time
during the purchase period, reduce his or her rate of payroll
deduction to become effective as soon as possible after filing the
appropriate form with the Plan Administrator. The Participant may not,
however, effect more than one (1) such reduction per purchase period.
B. Payroll deductions shall begin on the first pay day following the
start date of the purchase period and shall (unless sooner terminated
by the Participant) continue through the pay day ending with or
immediately prior to the last day of the purchase period. The amounts
so collected shall be credited to the Participant's book account under
the Plan, but no interest shall be paid on the balance from time to
time outstanding in such account. The amounts collected from the
Participant shall not be required to be held in any segregated account
or trust fund and may be commingled with the general assets of the
Corporation and used for general corporate purposes.
C. Payroll deductions shall automatically cease upon the termination of
the Participant's purchase right in accordance with the provisions of
the Plan.
D. The Participant's acquisition of Common Stock under the Plan on any
Purchase Date shall neither limit nor require the Participant's
acquisition of Common Stock on any subsequent Purchase Date.
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. A Participant shall be granted a separate
purchase right on the start date of each purchase period in which he
or she participates. The purchase right shall provide the Participant
with the right to purchase shares of Common Stock on the Purchase Date
upon the terms set forth below. The Participant shall execute a stock
purchase agreement embodying such terms and such other provisions (not
inconsistent with the Plan) as the Plan Administrator may deem
advisable.
Under no circumstances shall purchase rights be granted under the Plan
to any Eligible Employee if such individual would, immediately after
the grant, own (within the meaning of Code Section 424(d)) or hold
outstanding options or other rights to purchase, stock possessing five
percent (5%) or more of the total combined voting power or value of
all classes of stock of the Corporation or any Corporate Affiliate.
B. Exercise of the Purchase Right. Each purchase right shall be
automatically exercised on the Purchase Date, and shares of Common
Stock shall accordingly be purchased on behalf of each Participant on
such date. The purchase shall be effected by applying the
Participant's payroll deductions for the purchase period ending on
such Purchase Date to the purchase of shares of Common Stock at the
purchase price in effect for that purchase period.
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C. Purchase Price. The purchase price per share at which Common Stock
will be purchased on the Participant's behalf on each Purchase Date
shall be equal to eighty-five percent (85%) of the lower of (i) the
Fair Market Value per share of Common Stock on the start date of the
purchase period or (ii) the Fair Market Value per share of Common
Stock on that Purchase Date.
D. Number of Purchasable Shares. The number of shares of Common Stock
purchasable by a Participant on each Purchase Date shall be the number
of whole shares obtained by dividing the amount collected from the
Participant through payroll deductions during the purchase period
ending with that Purchase Date by the purchase price in effect for
that period. However, the maximum number of shares of Common Stock
purchasable per Participant on any one Purchase Date shall not exceed
eight hundred (800) shares, subject to periodic adjustments in the
event of certain changes in the Corporation's capitalization. In
addition, the maximum number of shares of Common Stock purchasable by
all Participants in the aggregate on any one Purchase Date under the
Plan and the International Plan shall not exceed One Hundred Seventy
Thousand (170,000) shares, subject to periodic adjustments in the
event of certain changes in the Corporation's capitalization. However,
the Plan Administrator shall have the discretionary authority,
exercisable prior to the start of any purchase period under the Plan,
to increase or decrease the limitations to be in effect for the number
of shares purchasable per Participant and in the aggregate by all
Participants on the Purchase Date in effect for that period.
E. Excess Payroll Deductions. Any payroll deductions not applied to the
purchase of shares of Common Stock on any Purchase Date because they
are not sufficient to purchase a whole share of Common Stock shall be
held for the purchase of Common Stock on the next Purchase Date.
However, any payroll deductions not applied to the purchase of Common
Stock by reason of the limitation on the maximum number of shares
purchasable by the Participant on the Purchase Date or the limitation
on the maximum number of shares purchasable in the aggregate on the
Purchase Date by all Participants shall be promptly refunded.
F. Termination of Purchase Right. The following provisions shall govern
the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the last fifteen (15)
days of the purchase period, terminate his or her outstanding
purchase right by filing the appropriate form with the Plan
Administrator (or its designate), and no further payroll
deductions shall be collected from the Participant with respect
to the terminated purchase right. Any payroll deductions
collected during the purchase period in which such termination
occurs shall, at the Participant's election, be immediately
refunded or held for the purchase of shares on the next Purchase
Date. If no such election is made at the time the purchase right
is terminated, then the payroll deductions collected with respect
to the terminated right shall be refunded as soon as possible.
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(ii) The termination of such purchase right shall be irrevocable, and
the Participant may not subsequently rejoin the purchase period
for which the terminated purchase right was granted. In order to
resume participation in any subsequent purchase period, such
individual must re-enroll in the Plan (by making a timely filing
of the prescribed enrollment forms) before the start date of the
new purchase period.
(iii)Should the Participant cease to remain an Eligible Employee for
any reason (including death, disability or change in status)
while his or her purchase right remains outstanding, then that
purchase right shall immediately terminate, and all of the
Participant's payroll deductions for the purchase period in which
the purchase right so terminates shall be immediately refunded.
However, should the Participant cease to remain in active service
by reason of an approved unpaid leave of absence, then the
Participant shall have the right, exercisable up until the last
business day of the purchase period in which such leave
commences, to (a) withdraw all the payroll deductions collected
to date on his or her behalf during such purchase period or (b)
have such funds held for the purchase of shares on the next
scheduled Purchase Date. In no event, however, shall any further
payroll deductions be collected on the Participant's behalf
during such leave. Upon the Participant's return to active
service (i) within ninety (90) days after the start of the leave
or (ii) prior to the expiration of any longer period during his
or her re-employment rights are guaranteed by law or contract,
his or her payroll deductions under the Plan shall automatically
resume at the rate in effect at the time the leave began.
G. Corporate Transaction. Each outstanding purchase right shall
automatically be exercised, immediately prior to the effective date of
any Corporate Transaction, by applying the payroll deductions of each
Participant for the purchase period in which such Corporate
Transaction occurs to the purchase of whole shares of Common Stock at
a purchase price per share equal to eighty-five percent (85%) of the
lower of (i) the Fair Market Value per share of Common Stock on the
start date of the purchase period in which such Corporate Transaction
occurs or (ii) the Fair Market Value per share of Common Stock
immediately prior to the effective date of such Corporate Transaction.
However, the applicable limitation on the number of shares of Common
Stock purchasable per Participant shall continue to apply to any such
purchase, but not the limitation on the aggregate number of shares
purchasable by all Participants.
The Corporation shall use its best efforts to provide at least ten
(10) days prior written notice of the occurrence of any Corporate
Transaction, and Participants shall, following the receipt of such
notice, have the right to terminate their outstanding purchase rights
prior to the effective date of the Corporate Transaction.
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H. Proration of Purchase Rights. Should the total number of shares of
Common Stock which are to be purchased pursuant to outstanding
purchase rights on any particular date exceed either (i) the number of
shares then available for issuance under the Plan or (ii) the maximum
number of shares purchasable by all Participants (and all participants
in the International Plan) in the aggregate on that Purchase Date,
then the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the
payroll deductions of each Participant (and each participant in the
International Plan), to the extent in excess of the aggregate purchase
price payable for the Common Stock pro-rated to such individual, shall
be refunded.
I. Assignability. The purchase right shall be exercisable only by the
Participant and shall not be assignable or transferable by the
Participant.
J. Stockholder Rights. A Participant shall have no stockholder rights
with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant's behalf in
accordance with the provisions of the Plan and the Participant has
become a holder of record of the purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any purchase right outstanding under this Plan if
and to the extent such accrual, when aggregated with (i) rights to
purchase Common Stock accrued under any other purchase right granted
under this Plan and (ii) similar rights accrued under other employee
stock purchase plans (within the meaning of Code Section 423) of the
Corporation or any Corporate Affiliate, would otherwise permit such
Participant to purchase more than Twenty-Five Thousand Dollars
($25,000) worth of stock of the Corporation or any Corporate Affiliate
(determined on the basis of the Fair Market Value of such stock on the
date or dates such rights are granted) for each calendar year such
rights are at any time outstanding.
B. For purposes of applying such accrual limitations, the following
provisions shall be in effect:
(i) The right to acquire Common Stock under each outstanding purchase
right shall accrue on the Purchase Date in effect for the
purchase period for which such right is granted.
(ii) No right to acquire Common Stock under any outstanding purchase
right shall accrue to the extent the Participant has already
accrued in the same calendar year the right to acquire Common
Stock under one (1) or more other purchase rights at a rate equal
to Twenty-Five Thousand Dollars ($25,000) worth of Common Stock
(determined on the basis of the Fair Market Value per share on
the date or dates of grant) for each calendar year such rights
were at any time outstanding.
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C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular purchase period, then the
payroll deductions which the Participant made during that purchase
period with respect to such purchase right shall be promptly refunded.
D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument
issued thereunder, the provisions of this Article shall be
controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on March 17, 1998 and approved by
the Corporation's stockholders at the 1998 Annual Meeting held on May
15, 1998. The Plan .shall become effective on the Effective Date.
However, no purchase rights granted under the Plan shall be exercised,
and no shares of Common Stock shall be issued hereunder, until the
Corporation shall have complied with all applicable requirements of
the 1933 Act (including the registration of the shares of Common Stock
issuable under the Plan on a Form S-8 registration statement filed
with the Securities and Exchange Commission), all applicable listing
requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock is listed for trading and all
other applicable requirements established by law or regulation.
B. The Plan was amended and restated on March 22, 1999 (the "1999
Restatement") to increase the number of shares of Common Stock
authorized for issuance over the term of the Plan by an additional
Three Hundred Thousand (300,000) shares, and the 1999 Restatement was
approved by the stockholders at the 1999 Annual Meeting. No purchase
rights were granted, and no shares were issued, on the basis of the
Three Hundred Thousand (300,000)-share increase authorized by the 1999
Restatement until such Restatement was approved by the stockholders at
the 1999 Annual Meeting.
C. The Plan was amended and restated on March 20, 2000 (the "March 2000
Restatement") to increase the number of shares of Common Stock
authorized for issuance over the term of the Plan by an additional
Three Hundred Forty Thousand (340,000) shares, subject to stockholder
approval at the 2000 Annual Meeting. No purchase rights shall be
granted, and no shares shall be issued, on the basis of the Three
Hundred Forty Thousand (340,000)-share increase authorized by the
March 2000 Restatement unless and until the Restatement is approved by
the stockholders at the 2000 Annual Meeting.
D. Unless sooner terminated by the Board, the Plan shall terminate upon
the earliest to occur of (i) the last business day in October 2008,
(ii) the date on which all shares available for issuance under the
Plan (and the International Plan) shall have been sold pursuant to
purchase rights exercised under the Plan (and the International Plan)
or (iii) the date on which all purchase rights are exercised in
connection with a Corporate Transaction. No further purchase rights
shall be granted or exercised, and no further payroll deductions shall
be collected, under the Plan following such termination.
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X. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the Plan at any time to
become effective immediately following the close of any purchase period.
However, the Board may not, without the approval of the Corporation's
stockholders, (i) increase the number of shares of Common Stock issuable under
the Plan, except for permissible adjustments in the event of certain changes in
the Corporation's capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock purchasable
under the Plan, or (iii) modify the requirements for eligibility to participate
in the Plan.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the Plan
shall be paid by the Corporation.
B. Nothing in the Plan shall confer upon the Participant any right to
continue in the employ of the Corporation or any Corporate Affiliate
for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any Corporate
Affiliate employing such person) or of the Participant, which rights
are hereby expressly reserved by each, to terminate such person's
employment at any time for any reason, with or without cause.
C. The provisions of the Plan shall be governed by the laws of the State
of California without resort to that State's conflict-of-laws rules.
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Schedule A
Corporations Participating in
Employee Stock Purchase Plan
As of October 1, 1998
FileNet Corporation, a Delaware corporation
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APPENDIX
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
B. Cash Earnings shall mean the (i) base salary payable to a Participant
by one or more Participating Companies during such individual's period
of participation in one or more purchase periods under the Plan plus
(ii) all overtime payments, bonuses, commissions and other
incentive-type payments received during such period. Such Cash
Earnings shall be calculated before deduction of (A) any income or
employment tax withholdings or (B) any pre-tax contributions made by
the Participant to any Code Section 401(k) salary deferral plan or any
Code Section 125 cafeteria benefit program now or hereafter
established by the Corporation or any Corporate Affiliate. However,
Cash Earnings shall not include any contributions (other than Code
Section 401(k) or Code Section 125 contributions) made on the
Participant's behalf by the Corporation or any Corporate Affiliate to
any employee benefit or welfare plan now or hereafter established.
C. Code shall mean the Internal Revenue Code of 1986, as amended.
D. Common Stock shall mean the Corporation's common stock.
E. Corporate Affiliate shall mean any parent or subsidiary corporation of
the Corporation (as determined in accordance with Code Section 424),
whether now existing or subsequently established.
F. Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing fifty
percent (50%) or more of the total combined voting power of the
Corporation's outstanding securities are transferred to a person
or persons different from the persons holding those securities
immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the assets of the Corporation in complete liquidation or
dissolution of the Corporation.
G. Corporation shall mean FileNet Corporation, a Delaware corporation and
any corporate successor to all or substantially all of the assets or
voting stock of FileNet Corporation which shall by appropriate action
adopt the Plan.
H. Effective Date shall mean the October 1, 1998 effective date of the
Plan.
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I. Eligible Employee shall mean any person who is employed by a
Participating Corporation on a basis under which he or she is
regularly expected to render more than twenty (20) hours of service
per week for more than five (5) months per calendar year for earnings
considered wages under Code Section 3401(a).
J. Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the average of the
high and low selling prices per share of Common Stock on the date
in question, as those prices are reported by the National
Association of Securities Dealers on the Nasdaq National Market
and published in The Wall Street Journal. If there are no selling
prices for the Common Stock on the date in question, then the
Fair Market Value shall be the average of the high and low
selling prices on the last preceding date for which such
quotations exist.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the average of the high and
low selling prices per share of Common Stock on the date in
question on the Stock Exchange determined by the Plan
Administrator to be the primary market for the Common Stock, as
those prices are officially quoted in the composite tape of
transactions on such exchange and published in The Wall Street
Journal. If there are no selling prices for the Common Stock on
the date in question, then the Fair Market Value shall be the
average of the high and low selling prices on the last preceding
date for which such quotations exist.
K. International Plan shall mean the FileNet Corporation International
Employee Stock Purchase Plan.
L. 1933 Act shall mean the Securities Act of 1933, as amended.
M. Participant shall mean any Eligible Employee of a Participating
Corporation who is actively participating in the Plan.
N. Participating Corporation shall mean the Corporation and such
Corporate Affiliate or Affiliates as may be authorized from time to
time by the Board to extend the benefits of the Plan to their Eligible
Employees. The Participating Corporations in the Plan as of the
Effective Date are listed in attached Schedule A.
O. Plan shall mean the Corporation's Employee Stock Purchase Plan, as set
forth in this document.
P. Plan Administrator shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Plan.
Q. Predecessor Plan shall mean the Corporation's 1988 Employee Stock
Purchase Plan.
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R. Purchase Date shall mean the last business day of each purchase
period. The initial Purchase Date shall be April 30, 1999.
S. Stock Exchange shall mean either the American Stock Exchange or the
New York Stock Exchange.
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