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EXHIBIT 99.1
KERBANGO, INC. 1999 STOCK OPTION PLAN
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KERBANGO, INC.
1999 STOCK OPTION PLAN
ADOPTED ON JULY 19, 1999,
AS AMENDED ON JULY 23, 2000
1. PURPOSE. The purpose of this Plan is to provide incentives
to attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options. Capitalized terms not defined in
the text are defined in Section 21. This Plan is intended to be a written
compensatory benefit plan within the meaning of Rule 701 promulgated under the
Securities Act.
2. SHARES SUBJECT TO THE PLAN.
2.1 NUMBER OF SHARES AVAILABLE. Subject to Sections 2.2
and 16, the total number of Shares reserved and available for grant and
issuance pursuant to this Plan will be 2,500,000 Shares or such lesser number
of Shares as permitted under Section 260.140.45 of Title 10 of the California
Code of Regulations. Subject to Sections 2.2, 5.10 and 16, Shares subject to
Options previously granted will again be available for grant and issuance in
connection with future Options under this Plan to the extent such Shares: (i)
cease to be subject to issuance upon exercise of an Option, other than due to
the exercise of such Option; or (ii) are issued upon exercise of an Option but
are forfeited or repurchased by the Company at the original exercise price. At
all times the Company will reserve and keep available a sufficient number of
Shares as will be required to satisfy the requirements of all Options granted
and outstanding under this Plan.
2.2 ADJUSTMENT OF SHARES. In the event that the number
of outstanding shares of the Company's Common Stock is changed by a stock
dividend, recapitalization, stock split, reverse stock split, subdivision,
combination, reclassification or similar change in the capital structure of
the Company without consideration, then (i) the number of Shares reserved for
issuance under this Plan and (ii) the Exercise Prices of and number of Shares
subject to outstanding Options will be proportionately adjusted, subject to
any required action by the Board or the shareholders of the Company and
compliance with applicable securities laws; provided, however, that fractions
of a Share will not be issued but will either be paid in cash at the Fair
Market Value of such fraction of a Share or will be rounded down to the
nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 hereof) may be
granted only to employees (including officers and directors who are also
employees) of the Company or of a Parent or Subsidiary of the Company. NQSO's
(as defined in Section 5 hereof) may be granted to employees, officers,
directors and consultants of the Company or any Parent or Subsidiary of the
Company; provided such consultants render bona fide services not in connection
with the offer and sale of securities in a capital-raising transaction. A
person may be granted more than one Option under this Plan.
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4. ADMINISTRATION.
4.1 COMMITTEE AUTHORITY. This Plan will be administered
by the Committee or the Board if no Committee is created by the Board. Subject
to the general purposes, terms and conditions of this Plan, and to the
direction of the Board, the Committee will have full power to implement and
carry out this Plan. Without limitation, the Committee will have the authority
to:
(a) construe and interpret this Plan, any Stock
Option Agreement (as defined in Section 5
hereof) and any other agreement or document
executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and
regulations relating to this Plan;
(c) approve persons to receive Options;
(d) determine the form and terms of Options;
(e) determine the number of Shares or other
consideration subject to Options;
(f) determine whether Options will be granted
singly, in combination with, in tandem with,
in replacement of, or as alternatives to,
other Options under this Plan or options
under any other incentive or compensation
plan of the Company or any Parent or
Subsidiary of the Company;
(g) grant waivers of any conditions of this Plan
or any Option;
(h) determine the terms of vesting and
exercisability of Options;
(i) correct any defect, supply any omission, or
reconcile any inconsistency in this Plan,
any Option, any Stock Option Agreement or
any Exercise Agreement (as defined in
Section 5 hereof);
(j) determine whether an Option has been earned;
(k) make all other determinations necessary or
advisable for the administration of this
Plan; and
(l) extend the vesting period beyond a
Participant's Termination Date.
4.2 COMMITTEE DISCRETION. Unless in contravention of
any express terms of this Plan or Option, any determination made by the
Committee with respect to any Option will be made in its sole discretion
either (i) at the time of grant of the Option, or (ii) subject to Section 5.9
hereof, at any later time. Any such determination will be final and binding on
the Company and on all persons having an interest in any Option under this
Plan. The Committee may
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delegate to one or more officers of the Company the authority to grant Options
under this Plan, provided such officer or officers are members of the Board.
5. OPTIONS. The Committee may grant Options to eligible persons
described in Section 3 hereof and will determine whether such Options will be
Incentive Stock Options within the meaning of the Code (the "ISOS") or
Nonqualified Stock Options (the "NQSOS"), the number of Shares subject to the
Option, the Exercise Price of the Option, the period during which the Option
may be exercised, and all other terms and conditions of the Option, subject to
the following:
5.1 FORM OF OPTION GRANT. Each Option granted under
this Plan will be evidenced by an Agreement which will expressly identify the
Option as an ISO or an NQSO (the "STOCK OPTION AGREEMENT"), and will be in
such form and contain such provisions (which need not be the same for each
Participant) as the Committee may from time to time approve, and which will
comply with and be subject to the terms and conditions of this Plan.
5.2 DATE OF GRANT. The date of grant of an Option will
be the date on which the Committee makes the determination to grant such
Option, unless a later date is otherwise specified by the Committee. The Stock
Option Agreement and a copy of this Plan will be delivered to the Participant
within a reasonable time after the granting of the Option.
5.3 EXERCISE PERIOD. Options may be exercisable
immediately but subject to repurchase pursuant to Section 10 hereof or may be
exercisable within the times or upon the events determined by the Committee as
set forth in the Stock Option Agreement governing such Option; provided,
however, that no Option will be exercisable after the expiration of ten (10)
years from the date the Option is granted; and provided further that no ISO
granted to a person who directly or by attribution owns more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Company or of any Parent or Subsidiary of the Company (the "TEN PERCENT
SHAREHOLDER") will be exercisable after the expiration of five (5) years from
the date the ISO is granted. The Committee also may provide for Options to
become exercisable at one time or from time to time, periodically or
otherwise, in such number of Shares or percentage of Shares as the Committee
determines. Subject to earlier termination of the Option as provided herein,
each Participant who is not an officer, director or consultant of the Company
or of a Parent or Subsidiary of the Company shall have the right to exercise
an Option granted hereunder at the rate of no less than twenty percent (20%)
per year over five (5) years from the date such Option is granted.
5.4 EXERCISE PRICE. The Exercise Price of an Option
will be determined by the Committee when the Option is granted and may not be
less than eighty-five percent (85%) of the Fair Market Value of the Shares on
the date of grant; provided that (i) the Exercise Price of an ISO will not be
less than one hundred percent (100%) of the Fair Market Value of the Shares on
the date of grant and (ii) the Exercise Price of any Option granted to a Ten
Percent Shareholder will not be less than one hundred ten percent (110%) of
the Fair Market Value of the Shares on the date of grant. Payment for the
Shares purchased must be made in accordance with Section 6 hereof.
5.5 METHOD OF EXERCISE. Options may be exercised only
by delivery to the Company of a written stock option exercise agreement (the
"EXERCISE AGREEMENT") in a form approved by the Committee (which need not be
the same for each Participant). The Exercise
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Agreement will state (i) the number of Shares being purchased, (ii) the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and (iii) such representations and agreements regarding Participant's
investment intent and access to information and other matters, if any, as may
be required or desirable by the Company to comply with applicable securities
laws. Participant shall execute and deliver to the Company the Exercise
Agreement together with payment in full of the Exercise Price, and any
applicable taxes, for the number of Shares being purchased.
5.6 TERMINATION. Subject to earlier termination
pursuant to Sections 16 or 17 hereof and notwithstanding the exercise periods
set forth in the Stock Option Agreement, exercise of an Option will always be
subject to the following:
(a) If the Participant is Terminated for any
reason other than death, Disability or for
Cause, then the Participant may exercise
such Participant's Options only to the
extent that such Options are exercisable
upon the Termination Date or as otherwise
determined by the Committee. Such Options
must be exercised by the Participant, if at
all, as to all or some of the Vested Shares
calculated as of the Termination Date or
such other date determined by the Committee,
within three (3) months after the
Termination Date (or within such shorter
time period, not less than thirty (30) days,
or within such longer time period, not
exceeding five (5) years after the
Termination Date as may be determined by the
Committee, with any exercise beyond three
(3) months after the Termination Date deemed
to be an NQSO) but in any event, no later
than the expiration date of the Options.
(b) If the Participant is Terminated because of
Participant's death or Disability (or the
Participant dies within three (3) months
after a Participant's Termination other than
for Cause), then Participant's Options may
be exercised, only to the extent that such
Options are exercisable by Participant on
the Termination Date or as otherwise
determined by the Committee. Such Options
must be exercised by Participant (or
Participant's legal representative or
authorized assignee), if at all, as to all
or some of the Vested Shares calculated as
of the Termination Date or such other date
determined by the Committee, within twelve
(12) months after the Termination Date (or
within such shorter time period, not less
than six (6) months, or within such longer
time period not exceeding five (5) years
after the Termination Date as may be
determined by the Committee, with any
exercise beyond (i) three (3) months after
the Termination Date when the Termination is
for any reason other than the Participant's
death or disability, within the meaning of
Section 22(e)(3) of the Code, or (ii) twelve
(12) months after the Termination Date when
the Termination is for Participant's
disability, within the meaning of Section
22(e)(3) of the Code, deemed to be an NQSO)
but in any event no later than the
expiration date of the Options.
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(c) If the Participant is terminated for Cause,
then Participant's Options shall expire on
such Participant's Termination Date, or at
such later time and on such conditions as
are determined by the Committee.
5.7 LIMITATIONS ON EXERCISE. The Committee may specify
a reasonable minimum number of Shares that may be purchased on any exercise of
an Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 LIMITATIONS ON ISOS. The aggregate Fair Market
Value (determined as of the date of grant) of Shares with respect to which
ISOs are exercisable for the first time by a Participant during any calendar
year (under this Plan or under any other incentive stock option plan of the
Company or any Parent or Subsidiary of the Company) will not exceed One
Hundred Thousand Dollars ($100,000). If the Fair Market Value of Shares on the
date of grant with respect to which ISOs are exercisable for the first time by
a Participant during any calendar year exceeds One Hundred Thousand Dollars
($100,000), then the Options for the first One Hundred Thousand Dollars
($100,000) worth of Shares to become exercisable in such calendar year will be
ISOs and the Options for the amount in excess of One Hundred Thousand Dollars
($100,000) that become exercisable in that calendar year will be NQSOs. In the
event that the Code or the regulations promulgated thereunder are amended
after the Effective Date (as defined in Section 17 hereof) to provide for a
different limit on the Fair Market Value of Shares permitted to be subject to
ISOs, then such different limit will be automatically incorporated herein and
will apply to any Options granted after the effective date of such amendment.
5.9 MODIFICATION, EXTENSION OR RENEWAL. The Committee
may modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not,
without the written consent of a Participant, impair any of such Participant's
rights under any Option previously granted. Any outstanding ISO that is
modified, extended, renewed or otherwise altered will be treated in accordance
with Section 424(h) of the Code. Subject to Section 5.10 hereof, the Committee
may reduce the Exercise Price of outstanding Options without the consent of
Participants by a written notice to them; provided, however, that the Exercise
Price may not be reduced below the minimum Exercise Price that would be
permitted under Section 5.4 hereof for Options granted on the date the action
is taken to reduce the Exercise Price.
5.10 NO DISQUALIFICATION. Notwithstanding any other
provision in this Plan, no term of this Plan relating to ISOs will be
interpreted, amended or altered, nor will any discretion or authority granted
under this Plan be exercised, so as to disqualify this Plan under Section 422
of the Code or, without the consent of the Participant, to disqualify any
Participant's ISO under Section 422 of the Code. In no event shall the total
number of Shares issued (counting each reissuance of a Share that was
previously issued and then forfeited or repurchased by the Company as a
separate issuance) under the Plan upon exercise of ISOs exceed FOUR MILLION
(4,000,000) Shares (adjusted in proportion to any adjustments under Section
2.2. hereof) over the term of the Plan.
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6. PAYMENT FOR SHARE PURCHASES.
6.1 PAYMENT. Payment for Shares purchased pursuant to
this Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the
Company owed to the Participant;
(b) by surrender of shares that: (i) either (A)
have been owned by Participant for more than
six (6) months and have been paid for within
the meaning of SEC Rule 144 (and, if such
shares were purchased from the Company by
use of a promissory note, such note has been
fully paid with respect to such shares) or
(B) were obtained by Participant in the
public market and (ii) are clear of all
liens, claims, encumbrances or security
interests;
(c) by tender of a full recourse promissory note
having such terms as may be approved by the
Committee and bearing interest at a rate
sufficient to avoid imputation of income
under Sections 483 and 1274 of the Code;
provided, however, that Participants who are
not employees or directors of the Company
will not be entitled to purchase Shares with
a promissory note unless the note is
adequately secured by collateral other than
the Shares;
(d) by waiver of compensation due or accrued to
the Participant from the Company for
services rendered;
(e) provided that a public market for the
Company's stock exists:
(i) through a "same day sale" commitment
from the Participant and a
broker-dealer that is a member of
the National Association of
Securities Dealers (an "NASD
DEALER") whereby the Participant
irrevocably elects to exercise the
Option and to sell a portion of the
Shares so purchased sufficient to
pay the total Exercise Price, and
whereby the NASD Dealer irrevocably
commits upon receipt of such Shares
to forward the total Exercise Price
directly to the Company; or
(ii) through a "margin" commitment from
the Participant and an NASD Dealer
whereby the Participant irrevocably
elects to exercise the Option and to
pledge the Shares so purchased to
the NASD Dealer in a margin account
as security for a loan from the NASD
Dealer in the amount of the total
Exercise Price, and whereby the NASD
Dealer irrevocably commits upon
receipt of such Shares to forward
the total Exercise Price directly to
the Company; or
(f) by any combination of the foregoing.
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6.2 LOAN GUARANTEES. The Committee may, in its sole
discretion, elect to assist the Participant in paying for Shares purchased
under this Plan by authorizing a guarantee by the Company of a third-party
loan to the Participant.
7. WITHHOLDING TAXES.
7.1 WITHHOLDING GENERALLY. Whenever Shares are to be
issued in satisfaction of Options granted under this Plan, the Company may
require the Participant to remit to the Company an amount sufficient to
satisfy federal, state and local withholding tax requirements prior to the
delivery of any certificate or certificates for such Shares. Whenever, under
this Plan, payments in satisfaction of Options are to be made in cash by the
Company, such payment will be net of an amount sufficient to satisfy federal,
state, and local withholding tax requirements.
7.2 STOCK WITHHOLDING. When, under applicable tax laws,
a Participant incurs tax liability in connection with the exercise or vesting
of any Option that is subject to tax withholding and the Participant is
obligated to pay the Company the amount required to be withheld, the Committee
may in its sole discretion allow the Participant to satisfy the minimum
withholding tax obligation by electing to have the Company withhold from the
Shares to be issued that number of Shares having a Fair Market Value equal to
the minimum amount required to be withheld, determined on the date that the
amount of tax to be withheld is to be determined. All elections by a
Participant to have Shares withheld for this purpose will be made in
accordance with the requirements established by the Committee for such
elections and be in writing in a form acceptable to the Committee.
8. PRIVILEGES OF STOCK OWNERSHIP.
8.1 VOTING AND DIVIDENDS. No Participant will have any
of the rights of a shareholder with respect to any Shares until the Shares are
issued to the Participant. After Shares are issued to the Participant, the
Participant will be a shareholder and have all the rights of a shareholder
with respect to such Shares, including the right to vote and receive all
dividends or other distributions made or paid with respect to such Shares;
provided, that the Participant will have no right to retain such stock
dividends or stock distributions with respect to Unvested Shares that are
repurchased pursuant to Section 10 hereof. The Company will comply with
Section 260.140.1 of Title 10 of the California Code of Regulations with
respect to the voting rights of Common Stock.
8.2 FINANCIAL STATEMENTS. The Company will provide
financial statements to each Participant annually during the period such
Participant has Options outstanding, or as otherwise required under Section
260.140.46 of Title 10 of the California Code of Regulations. Notwithstanding
the foregoing, the Company will not be required to provide such financial
statements to Participants when issuance is limited to key employees whose
services in connection with the Company assure them access to equivalent
information.
9. TRANSFERABILITY. Options granted under this Plan, and any
interest therein, will not be transferable or assignable by Participant, other
than by will or by the laws of descent and distribution and may not be made
subject to execution, attachment or similar process. During the lifetime of
the Participant an Option will be exercisable only by the Participant or
Participant's legal representative and any elections with respect to an Option
may be made only by the Participant or Participant's legal representative.
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10. RESTRICTIONS ON SHARES.
10.1 RIGHT OF FIRST REFUSAL. At the discretion of the
Committee, the Company may reserve to itself and/or its assignee(s) in the
Stock Option Agreement a right of first refusal to purchase all Shares that a
Participant (or a subsequent transferee) may propose to transfer to a third
party, unless otherwise not permitted by Section 25102(o) of the California
Corporations Code, provided, that such right of first refusal terminates upon
the Company's initial public offering of Common Stock pursuant to an effective
registration statement filed under the Securities Act.
10.2 RIGHT OF REPURCHASE. At the discretion of the
Committee, the Company may reserve to itself and/or its assignee(s) in the
Stock Option Agreement a right to repurchase Unvested Shares held by a
Participant for cash and/or cancellation of purchase money indebtedness owed
to the Company by the Participant following such Participant's Termination at
any time within the later of ninety (90) days after Participant's Termination
Date and the date Participant purchases Shares upon exercise of an Option at
the Participant's Exercise Price, provided, that to the extent the Participant
is not an officer, director or consultant of the Company or of a Parent or
Subsidiary of the Company, such right of repurchase lapses at the rate of no
less than twenty percent (20%) per year over five (5) years from the date of
grant of the Option.
11. CERTIFICATES. All certificates for Shares or other
securities delivered under this Plan will be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem necessary or
advisable, including restrictions under any applicable federal, state or
foreign securities law, or any rules, regulations and other requirements of
the SEC or any stock exchange or automated quotation system upon which the
Shares may be listed or quoted.
12. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares set forth in Section 10 hereof, the Committee may require
the Participant to deposit all certificates representing Shares, together with
stock powers or other instruments of transfer approved by the Committee,
appropriately endorsed in blank, with the Company or an agent designated by
the Company to hold in escrow until such restrictions have lapsed or
terminated. The Committee may cause a legend or legends referencing such
restrictions to be placed on the certificates. Any Participant who is
permitted to execute a promissory note as partial or full consideration for
the purchase of Shares under this Plan will be required to pledge and deposit
with the Company all or part of the Shares so purchased as collateral to
secure the payment of Participant's obligation to the Company under the
promissory note; provided, however, that the Committee may require or accept
other or additional forms of collateral to secure the payment of such
obligation and, in any event, the Company will have full recourse against the
Participant under the promissory note notwithstanding any pledge of the
Participant's Shares or other collateral. In connection with any pledge of the
Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve.
13. EXCHANGE AND BUYOUT OF OPTIONS. The Committee may, at any
time or from time to time, authorize the Company, with the consent of the
respective Participants, to issue new Options in exchange for the surrender
and cancellation of any or all outstanding Options. The Committee may at any
time buy from a Participant an Option previously granted with payment in cash,
shares of Common Stock of the Company or other
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consideration, based on such terms and conditions as the Committee and the
Participant may agree.
14. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. This Plan is
intended to comply with Section 25102(o) of the California Corporations Code.
Any provision of this Plan which is inconsistent with Section 25102(o) shall,
without further act or amendment by the Company or the Board, be reformed to
comply with the requirements of Section 25102(o). An Option will not be
effective unless such Option is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which
the Shares may then be listed or quoted, as they are in effect on the date of
grant of the Option and also on the date of exercise or other issuance.
Notwithstanding any other provision in this Plan, the Company will have no
obligation to issue or deliver certificates for Shares under this Plan prior
to (i) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable, and/or (ii) compliance with any
exemption, completion of any registration or other qualification of such
Shares under any state or federal law or ruling of any governmental body that
the Company determines to be necessary or advisable. The Company will be under
no obligation to register the Shares with the SEC or to effect compliance with
the exemption, registration, qualification or listing requirements of any
state securities laws, stock exchange or automated quotation system, and the
Company will have no liability for any inability or failure to do so.
15. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Option
granted under this Plan will confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship
with, the Company or any Parent or Subsidiary of the Company or limit in any
way the right of the Company or any Parent or Subsidiary of the Company to
terminate Participant's employment or other relationship at any time, with or
without Cause.
16. CORPORATE TRANSACTIONS.
16.1 ASSUMPTION OR REPLACEMENT OF OPTIONS BY SUCCESSOR
OR ACQUIRING COMPANY. In the event of (i) a dissolution or liquidation of the
Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction, or other transaction in which there is no substantial change in
the shareholders of the Company or their relative stock holdings and the
Options granted under this Plan are assumed, converted or replaced by the
successor or acquiring corporation, which assumption, conversion or
replacement will be binding on all Participants), (iii) a merger in which the
Company is the surviving corporation but after which the shareholders of the
Company immediately prior to such merger (other than any shareholder which
merges with the Company in such merger, or which owns or controls another
corporation which merges with the Company in such merger) cease to own their
shares or other equity interests in the Company, (iv) the sale of all or
substantially all of the assets of the Company or (v) the purchase in one or a
series of related transactions of at least 91% of the Company's
then-outstanding capital stock, on an as-converted to Common Stock basis, any
or all outstanding Options may be assumed, converted or replaced by the
successor or acquiring corporation (if any), which assumption, conversion or
replacement will be binding on all Participants. In the alternative, the
successor or acquiring corporation may substitute equivalent Options or
provide substantially similar consideration to Participants as was
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provided to shareholders (after taking into account the existing provisions of
the Options). The successor or acquiring corporation may also substitute by
issuing, in place of outstanding Shares of the Company held by the
Participant, substantially similar shares or other property subject to
repurchase restrictions and other provisions no less favorable to the
Participant than those which applied to such outstanding Shares immediately
prior to such transaction described in this Section 16.1. In the event such
successor or acquiring corporation (if any) does not assume, convert, replace
or substitute Options, as provided above, pursuant to a transaction described
in this Section 16.1, then notwithstanding any other provision in this Plan to
the contrary, the vesting of such Options will accelerate and the Options will
become exercisable in full prior to the consummation of such event at such
times and on such conditions as the Committee determines, and if such Options
are not exercised prior to the consummation of the corporate transaction, they
shall terminate in accordance with the provisions of this Plan. In the event
of any of the transactions enumerated in the first sentence of this Section
16.1 and notwithstanding anything contained in any Stock Option Agreement to
the contrary, the Company shall be permitted to designate a date certain, not
more than seven (7) days prior to the anticipated consummation of the
transaction, prior to which Options granted under this Plan must be exercised
(which exercise may be contingent upon the actual consummation of the
transaction) or, failing such exercise, such options may be cancelled or
assumed, at the option of the acquiring corporation.
16.2 OTHER TREATMENT OF OPTIONS. Subject to any greater
rights granted to Participants under the foregoing provisions of this Section
16 hereof, in the event of the occurrence of any transaction described in
Section 16.1 hereof, any outstanding Options will be treated as provided in
the applicable agreement or plan of merger, consolidation, dissolution,
liquidation, sale of assets or sale of stock.
16.3 ASSUMPTION OF OPTIONS BY THE COMPANY. The Company,
from time to time, also may substitute or assume outstanding options granted
by another company, whether in connection with an acquisition of such other
company or otherwise, by either (i) granting an Option under this Plan in
substitution of such other company's option, or (ii) assuming such option as
if it had been granted under this Plan if the terms of such assumed option
could be applied to an Option granted under this Plan. Such substitution or
assumption will be permissible if the holder of the substituted or assumed
option would have been eligible to be granted an Option under this Plan if the
other company had applied the rules of this Plan to such grant. In the event
the Company assumes an option granted by another company, the terms and
conditions of such option will remain unchanged (EXCEPT that the exercise
price and the number and nature of shares issuable upon exercise of any such
option will be adjusted appropriately pursuant to Section 424(a) of the Code).
In the event the Company elects to grant a new Option rather than assuming an
existing option, such new Option may be granted with a similarly adjusted
Exercise Price.
17. ADOPTION AND SHAREHOLDER APPROVAL. This Plan will become
effective on the date that it is adopted by the Board (the "EFFECTIVE DATE").
This Plan will be approved by the shareholders of the Company (excluding
Shares issued pursuant to this Plan), consistent with applicable laws, within
twelve (12) months before or after the Effective Date. Upon the Effective
Date, the Board may grant Options pursuant to this Plan; provided, however,
that: (i) no Option may be exercised prior to initial shareholder approval of
this Plan; (ii) no Option granted pursuant to an increase in the number of
Shares approved by the Board shall be exercised prior to the time such
increase has been approved by the shareholders of the Company;
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(iii) in the event that initial shareholder approval is not obtained within
the time period provided herein, all Options granted hereunder shall be
canceled, any Shares issued pursuant to any exercised Option shall be canceled
and rescinded; and (iv) Options granted pursuant to an increase in the number
of Shares approved by the Board which increase is not timely approved by
shareholders shall be canceled.
18. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as
provided herein, this Plan will terminate ten (10) years from the Effective
Date or, if earlier, the date of shareholder approval. This Plan and all
agreements hereunder shall be governed by and construed in accordance with the
laws of the State of California.
19. AMENDMENT OR TERMINATION OF PLAN. Subject to Section 5.9
hereof, the Board may at any time terminate or amend this Plan in any respect,
including without limitation amendment of any form of Stock Option Agreement
or instrument to be executed pursuant to this Plan; provided, however, that
the Board will not, without the approval of the shareholders of the Company,
amend this Plan in any manner that requires such shareholder approval pursuant
to Section 25102(o) of the California Corporations Code or the Code or the
regulations promulgated thereunder as such provisions apply to ISO plans.
20. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this
Plan by the Board, the submission of this Plan to the shareholders of the
Company for approval, nor any provision of this Plan will be construed as
creating any limitations on the power of the Board to adopt such additional
compensation arrangements as it may deem desirable, including, without
limitation, the granting of stock options and other equity awards otherwise
than under this Plan, and such arrangements may be either generally applicable
or applicable only in specific cases.
21. DEFINITIONS. As used in this Plan, the following terms will
have the following meanings:
"BOARD" means the Board of Directors of the Company.
"CAUSE" means Termination because of (i) any willful,
material violation by the Participant of any law or regulation applicable to
the business of the Company or a Parent or Subsidiary of the Company, the
Participant's conviction for, or guilty plea to, a felony or a crime involving
moral turpitude, or any willful perpetration by the Participant of a common
law fraud, (ii) the Participant's commission of an act of personal dishonesty
which involves personal profit in connection with the Company or any other
entity having a business relationship with the Company, (iii) any material
breach by the Participant of any provision of any agreement or understanding
between the Company or a Parent or Subsidiary of the Company and the
Participant regarding the terms of the Participant's service as an employee,
officer, director or consultant to the Company or a Parent or Subsidiary of
the Company, including without limitation, the willful and continued failure
or refusal of the Participant to perform the material duties required of such
Participant as an employee, officer, director or consultant of the Company or
a Parent or Subsidiary of the Company, other than as a result of having a
Disability, or a breach of any applicable invention assignment and
confidentiality agreement or similar agreement between the Company or a Parent
or Subsidiary of the Company and the Participant, (iv) Participant's disregard
of the policies of the Company or any Parent or Subsidiary of the Company so
as to cause loss, damage or injury to the property, reputation or employees of
the Company or a Parent or Subsidiary of the Company, or (v) any other
misconduct by the
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Participant which is materially injurious to the financial condition or
business reputation of, or is otherwise materially injurious to, the Company
or a Parent or Subsidiary of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee created and appointed by the
Board to administer this Plan, or if no committee is created and appointed,
the Board.
"COMPANY" means Kerbango, Inc., a California corporation, or
any successor corporation.
"DISABILITY" means a disability, whether temporary or
permanent, partial or total, as determined by the Committee.
"EXERCISE PRICE" means the price at which a holder of an
Option may purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a
share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the
Nasdaq National Market, its closing price on
the Nasdaq National Market on the date of
determination as reported in THE WALL STREET
JOURNAL;
(b) if such Common Stock is publicly traded and
is then listed on a national securities
exchange, its closing price on the date of
determination on the principal national
securities exchange on which the Common
Stock is listed or admitted to trading as
reported in THE WALL STREET JOURNAL;
(c) if such Common Stock is publicly traded but
is not quoted on the Nasdaq National Market
nor listed or admitted to trading on a
national securities exchange, the average of
the closing bid and asked prices on the date
of determination as reported by THE WALL
STREET JOURNAL (or, if not so reported, as
otherwise reported by any newspaper or other
source as the Board may determine); or
(d) if none of the foregoing is applicable, by
the Committee in good faith.
"OPTION" means an award of an option to purchase Shares
pursuant to Section 5.
"PARENT" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock representing fifty percent
(50%) or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
"PARTICIPANT" means a person who receives an Option under
this Plan.
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"PLAN" means this Kerbango, Inc. 1999 Stock Option Plan, as
amended from time to time.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
"SHARES" means shares of the Company's Common Stock reserved
for issuance under this Plan, as adjusted pursuant to Sections 2 and 16
hereof, and any successor security.
"SUBSIDIARY" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
representing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
"TERMINATION" or "TERMINATED" means, for purposes of this
Plan with respect to a Participant, that the Participant has for any reason
ceased to provide services as an employee, officer, director or consultant to
the Company or a Parent or Subsidiary of the Company. A Participant will not
be deemed to have ceased to provide services in the case of (i) sick leave,
(ii) military leave, or (iii) any other leave of absence approved by the
Committee, provided that such leave is for a period of not more than ninety
(90) days (a) unless reinstatement (or, in the case of an employee with an
ISO, reemployment) upon the expiration of such leave is guaranteed by contract
or statute, or (b) unless provided otherwise pursuant to formal policy adopted
from time to time by the Company's Board and issued and promulgated in
writing. In the case of any Participant on (i) sick leave, (ii) military leave
or (iii) an approved leave of absence, the Committee may make such provisions
respecting suspension of vesting of the Option while on leave from the Company
or a Parent or Subsidiary of the Company as it may deem appropriate, except
that in no event may an Option be exercised after the expiration of the term
set forth in the Stock Option Agreement. The Committee will have sole
discretion to determine whether a Participant has ceased to provide services
and the effective date on which the Participant ceased to provide services
(the "TERMINATION DATE").
"UNVESTED SHARES" means "Unvested Shares" as defined in the
Stock Option Agreement.
"VESTED SHARES" means "Vested Shares" as defined in the
Stock Option Agreement.
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