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Exhibit 4.1
2000 SUPPLEMENTAL STOCK OPTION PLAN
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MERCURY INTERACTIVE CORPORATION
2000 SUPPLEMENTAL STOCK OPTION PLAN
(Adopted by the Board on July 25, 2000)
1. Purposes of the Plan. The purposes of this Stock Option Plan are to
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attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to such individuals of the
Company and to promote the success of the Company's business. Options granted
hereunder may only be Nonstatutory Stock Options.
2. Definitions. As used herein, the following definitions shall apply:
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(a) "Administrator" means the Committee, if one has been appointed,
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or the Board of Directors of the Company, if no Committee is appointed.
(b) "Board" means the Board of Directors of the Company. A member of
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the Board shall be referred to hereinafter as a "Director."
(c) "Code" means the Internal Revenue Code of 1986, as amended.
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(d) "Committee" means the Committee appointed by the Board of
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Directors in accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed.
(e) "Common Stock" means the Common Stock of the Company.
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(f) "Company" means Mercury Interactive Corporation, a Delaware
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corporation.
(g) "Continuous Status as an Employee " means that the employment or
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consulting relationship is not interrupted or terminated by the Company, any
Parent or Subsidiary. Continuous Status as an Employee shall not be considered
interrupted in the case of: (i) any leave of absence approved by the
Administrator, 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 (ii) transfers between locations of the Company or between the
Company, its Parent, its Subsidiaries or its successor.
(h) "Director" means a member of the Board of Directors of the
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Company or of the board of directors of any Parent or Subsidiary of the Company.
(i) "Employee" means any person, excluding Officers and Directors,
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who is not a United States citizen, employed by the Company or any Parent or
Subsidiary of the Company. Neither service as a Director nor the payment of a
director's fee by the Company shall not be sufficient to constitute "employment"
by the Company.
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(j) "Exchange Act" means the Securities Exchange Act of 1934, as
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amended.
(k) "Incentive Stock Option" means any Option intended to qualify as
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an incentive stock option within the meaning of Section 422 of the Code.
(l) "Nonstatutory Stock Option" means an Option not intended to
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qualify as an Incentive Stock Option.
(m) "Officer" means a person who is an officer of the Company
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within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(n) "Option" means a stock option granted pursuant to the Plan.
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(o) "Optioned Stock" means the Common Stock subject to an Option.
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(p) "Optionee" means an Employee who receives an Option.
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(q) "Parent" means a "parent corporation", whether now or hereafter
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existing, as defined in Section 424(e) of the Code.
(r) "Plan" means this 2000 Supplemental Stock Option Plan.
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(s) "Share" means a share of the Common Stock, as adjusted in
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accordance with Section 11 of the Plan.
(t) "Subsidiary" means a "subsidiary corporation", whether now or
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hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions to Section 11 of
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the Plan, the total number of Shares reserved and available for issuance is
2,000,000.
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 granted hereunder is forfeited, or any such
award otherwise terminates prior to the issuance of Common Stock to the
participant, the Shares that were subject to such Option shall again be
available for distribution in connection with future Option grants under the
Plan. Shares that have actually been issued under the Plan, upon exercise of an
Option, shall not in any event be returned to the Plan and shall not become
available for future distribution under the Plan.
4. Administration of the Plan.
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(a) Procedure. The Plan shall be administered by (A) the Board or (B)
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a committee designated by the Board, which committee shall be constituted in
such a manner as to satisfy the legal requirements relating to the
administration of stock option plans, if any, of state corporate law, the
relevant stock exchange and the Code (the "Applicable Rules"). Once appointed,
such Committee shall serve in its designated capacity until otherwise directed
by the Board. The Board may increase the size of the
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Committee and appoint additional members, remove members (with or without cause)
and substitute new members, fill vacancies (however caused), and remove all
members of the Committee and thereafter directly administer the Plan, all to the
extent permitted by the Applicable Rules.
(b) Powers of the Administrator. Subject to the provisions of the
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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 of the Common Stock, in
accordance with Section 8(b) of the Plan;
(ii) to select the Employees to whom Options may be granted
hereunder;
(iii) to determine whether and to what extent Options are
granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each Option 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 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 the shares of Common Stock
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 and awards
granted pursuant to the Plan;
(viii) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(ix) to modify or amend each Option (subject to Section 14(b)
of the Plan);
(x) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option previously
granted by the Administrator;
(xi) to determine and recommend the terms of any Option
exchange program or repricing program for Options granted under the Plan, and
subject to prior stockholder approval, to institute and implement any such
program;
(xii) to determine the terms and restrictions applicable to
Options; and
(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.
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(c) Effect of Administrator's Decision. The Administrator's
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decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. Eligibility.
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(a) Nonstatutory Stock Options may be granted to only to Employees
who are not Officers or Directors of the Company. For purposes of the foregoing
sentence, "Employees" shall include prospective Employees to whom Options are
granted in connection with written offers of employment with the Company or any
Parent or Subsidiary of the Company.
(b) Each Option shall be designated in the written option agreement
as a Nonstatutory Stock Option. However, notwithstanding such designations, to
the extent that the aggregate Fair Market Value of the Shares with respect to
which Options designated as Incentive Stock Options are exercisable for the
first time by any Optionee during any calendar year (under all plans of the
Company) exceeds$100,000, such Options shall be treated as Nonstatutory Stock
Options.
(c) For purposes of Section 5(b), Options shall be taken into account
in the order in which they were granted, and the Fair Market Value of the Shares
shall be determined as of the time the Option with respect to such Shares is
granted.
(d) Nothing in the Plan or any Option granted hereunder shall confer
upon any Optionee any right with respect to continuation of employment or
consulting relationship with the Company, nor shall it interfere in any way with
the Optionee's right or the Company's right to terminate his employment or
consulting relationship at any time, with or without cause.
(e) The following limitations shall apply to grants of Options to
Employees:
(i) No Employee shall be granted, in any fiscal year of the
Company, Options to purchase more than 1,000,000 Shares.
(ii) In connection with his or her initial employment, an
Employee may be granted Options to purchase up to an additional 2,000,000 Shares
which shall not count against the limit set forth in subsection (i) above .
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 11.
(iv) If an Option is cancelled 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 cancelled Option shall be counted against the
limit set forth in subsection (i) above. For this purpose, if the exercise price
of an Option is reduced, such reduction will be treated as a cancellation of the
Option and the grant of a new Option."
6. Term of Plan. The term of the Plan shall be ten (10) years, commencing
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on July 25, 2000 and terminating on July 25, 2010 unless sooner terminated under
Section 14 of the Plan.
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7. Term of Option. The term of each Option shall be no more than ten (10)
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years from the date of grant. However, in the case of an Incentive Stock Option
granted to an Optionee who, at the time the Incentive Stock Option is granted,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be no more than five (5) years from the date of
grant.
8. Exercise Price and Consideration.
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(a) The per Share exercise price under each Option shall be such
price as is determined by the Board; provided, however, in the case of a
Nonstatutory Stock Option the per Share exercise price shall be no less than
100% of the Fair Market Value per Share on the date of grant.
For purposes of this Section 8(a), in the event that an Option is amended to
reduce the exercise price, the date of grant of such Option shall thereafter be
considered to be the date of such amendment.
(b) The Fair Market Value shall be determined by the Board in good
faith; provided, however, that where there is a public market for the Common
Stock, the Fair Market Value per Share shall be the mean of the bid and asked
prices (or the closing price per share if the Common Stock is listed on the
National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System) of the Common Stock for the date of grant, as reported
in the Wall Street Journal (or, if not so reported, as otherwise reported by the
NASDAQ System) or, in the event the Common Stock is listed on a stock exchange,
the Fair Market Value per Share shall be the closing price on such exchange on
the date of grant of the Option, as reported in the Wall Street Journal.
(c) The Administrator shall determine the acceptable form of
consideration for exercising an Option, including the method of payment. The
Administrator shall determine the acceptable form of consideration at the time
of grant. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) 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 (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
(v) 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 and
any tax withholding resulting from such exercise;
(vi) any combination of the foregoing methods of payment; or
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(vii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by applicable laws.
(d) Prior to issuance of the Shares upon exercise of an Option, the
Optionee shall pay or make adequate provision for any federal or state
withholding obligations of the Company, if applicable.
9. Exercise of Option.
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(a) Procedure for Exercise; Rights as a Stockholder. Any Option
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granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board at the time of grant, including performance criteria
with respect to the Company and/or the Optionee, 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 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 by the person entitled to exercise the Option 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 Board, consist of any
consideration and method of payment allowable under Section 8(c) 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. The Company shall issue (or cause to
be issued) such stock certificate as promptly as practicable upon 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 may 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.
(b) Termination of Status as an Employee. In the event of termination
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of an Optionee's Continuous Status as an Employee with the Company, such
Optionee may, but only within thirty (30) days after the date of such
termination (or such other period as is set out by the Administrator in the
Option Agreement, but in no event later than the expiration date of the term of
such Option as set forth in the Option Agreement), exercise the Option to the
extent that Optionee was entitled to exercise it at the date of such
termination. To the extent that Optionee was not entitled to exercise the Option
at the date of such termination, or if Optionee does not exercise such Option to
the extent so entitled within the time specified herein, the Option shall
terminate.
(c) Disability of Optionee. Notwithstanding the provisions of Section
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9(b) above, in the event of termination of an Optionee's Continuous Status as an
Employee as a result of his total and permanent disability (as defined in
Section 22(e)(3) of the Code), he may exercise his Option to the extent he was
entitled to exercise it at the date of such termination within six (6) months
from the date of such termination (or such other period as is specified in the
grant, but in no event later than the date of expiration of the term of such
Option as set forth in the Option Agreement). To the extent that the Optionee
was not
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entitled to exercise the Option at the date of termination, or does not exercise
such Option (to the extent exercisable) within the time specified herein, the
Option shall terminate.
(d) Death of Optionee. Notwithstanding the provisions of Section 9(b)
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above, in the event of the death of an Optionee:
(i) during the term of the Option, who is at the time of his
death an Employee of the Company and who shall have been in Continuous Status as
an Employee since the date of grant of the Option, the Option may be exercised,
at any time within six (6) months following the date of death ((or such other
period as is specified in the grant, but in no event later than the date of
expiration of the term of such Option as set forth in the Option Agreement), by
the Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, as to all
of the Optioned Stock, including Shares as to which it would not otherwise be
exercisable, and such Shares shall be fully vested and not subject to any
repurchase option; or
(ii) during the post-termination exercise period specified in the
grant with respect to terminations under Section 9(b) above, at any time within
six (6) months following the date of death (or such other period as is
determined by the Administrator, but in no event later than the date of
expiration of the term of such Option as set forth in the Option Agreement), by
the Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent of the right to
exercise that had accrued at the date of termination.
10. Non-Transferability of Options. Except as otherwise designated by the
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Administrator, an Option 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.
11. Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset
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Sale or Change of Control.
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(a) Changes in Capitalization. Subject to any required action by the
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stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect 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 of Common Stock subject to an Option.
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(b) Dissolution or Liquidation. In the event of the proposed
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dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option shall terminate as of a
date fixed by the Board and give each Optionee the right to exercise his or her
Option as to all or any part of the Optioned Stock, including Shares as to which
the Option would not otherwise be exercisable.
(c) Merger or Asset Sale. In the event of a merger of the Company
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with or into another corporation or the sale of substantially all of the assets
of the Company:
(i) Each outstanding Option shall be assumed or an equivalent
option substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. Any Shares subject to a repurchase option of the Company
shall be exchanged for the consideration (whether stock, cash, or other
securities or property) received in the merger or asset sale by the holders of
the Common Stock for the successor corporation or a parent or subsidiary of such
successor corporation for each Share held on the effective date of the
transaction and such consideration shall, in the case of securities of the
successor corporation, be subject to a repurchase option with terms consistent
to the Company's repurchase option and in the case of any other property shall
be subject to vesting according to the schedule for the lapse of the repurchase
option.
(ii) In the event that the successor corporation refuses to
assume or substitute for the Option, the Optionee shall have the right to
exercise the Option as to all of the Optioned Stock, including Shares as to
which it would not otherwise be exercisable, and such Shares shall be fully
vested and not subject to any repurchase option. In the event that the successor
corporation fails to assume the restricted stock purchase agreement pursuant to
which the Optionee purchased unvested Shares, the Company's repurchase option
shall lapse and the shares shall be fully vested. If an Option is 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 shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option shall terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option confers the right to purchase or receive,
for each Share of Optioned Stock subject to the Option 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
Common Stock 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, provide for
the consideration to be received upon the exercise of the Option, for each Share
of Optioned Stock subject to the Option, 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 Common Stock in the merger or sale of
assets.
12. Stock Withholding to Satisfy Withholding Tax Obligations. At the
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discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with the exercise of an Option, which tax liability is subject to tax
withholding under applicable tax laws, and the Optionee is obligated to pay the
Company an amount required to be withheld under applicable tax laws, the
Optionee may satisfy the withholding tax obligation by electing
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to have the Company withhold from the Shares to be issued upon exercise of the
Option 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
determined (the "Tax Date").
All elections by an Optionee to have Shares withheld for this purpose shall
be made in writing in a form acceptable to the Administrator and shall be
subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax Date;
(b) once made, the election shall be irrevocable as to the particular
Shares of the Option as to which the election is made;
(c) all elections shall be subject to the consent of the
Administrator;
(d) if the Optionee is subject to Rule 16b-3, the election must
comply with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
In the event the election to have Shares withheld is made by an Optionee
and the Tax Date is deferred under Section 83 of the Code because no election is
filed under Section 83(b) of the Code, the Optionee shall receive the full
number of Shares with respect to which the Option is exercised but such Optionee
shall be unconditionally obligated to tender back to the Company the proper
number of Shares on the Tax Date.
13. Time of Granting Options. The date of grant of an Option shall, for
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all purposes, be the date on which the Board makes the determination granting
such Option. Notice of the determination shall be given to each Employee to whom
an Option is so granted within a reasonable time after the date of such grant.
14. Amendment and Termination of the Plan.
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(a) Amendment and Termination. The Board may amend or terminate the
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Plan from time to time in such respects as the Board may deem advisable;
provided that the following changes shall require approval of the stockholders
of the Company in the manner described in Section 18 of the Plan: (i) changes in
the designation of the class of persons eligible to be granted Options; and/or
(ii) the reduction of the exercise price of any Option to the then current Fair
Market Value if the Fair Market Value of the Common Stock covered by such Option
shall have declined since the date the Option was granted.
(b) Effect of Amendment or Termination. Any such amendment or
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termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
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15. Conditions Upon Issuance of Shares. Shares shall not be issued
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pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option 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 by any of
the aforementioned relevant provisions of law.
16. Reservation of Shares. The Company, during the term of this Plan,
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will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. 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.
17. Option Agreement. Options shall be evidenced by written option
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agreements in such form as the Board shall approve.
18. Stockholder Approval. Any required stockholder approval obtained at a
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duly held stockholders' meeting, may be obtained by the affirmative vote of the
holders of a majority of the outstanding Shares of the Company present or
represented and entitled to vote thereon.
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MERCURY INTERACTIVE CORPORATION
2000 SUPPLEMENTAL STOCK OPTION PLAN
NOTICE OF STOCK OPTION GRANT
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[Optionee's Name]
[Address]
You have been granted an Option, consisting of the Stock Option Agreement
attached hereto as Exhibit A, Notice of Stock Option Beneficiary(ies) attached
hereto as Exhibit B and this Notice of Stock Option Grant (together, the "Option
Agreement") to purchase Common Stock of MERCURY INTERACTIVE CORPORATION (the
"Company") as follows:
Date of Grant [x]
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Vesting Commencement Date [x]
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Option Price Per Share $ [x]
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Total Number of Shares Granted [x]
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Total Price of Shares Granted $ [x]
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Type of Option ____ Incentive Stock Option
____ Nonqualified Stock Option
Term/Expiration Date 10 years/ [x]
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Exercise Schedule:
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This Option may be exercised in whole or in part, in accordance with the
Vesting Schedule set out below.
Vesting Schedule
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Date of Vesting Number of Shares
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Vesting Date 25%(_________)
Thereafter, monthly on the last day of each month, 1/48 (_____) of the
total number of Shares until fully vested. In the event of fractional
Shares, the monthly number of Shares shall be adjusted accordingly to
the nearest whole Share.
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Termination Period:
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Option may be exercised for thirty (30) days after termination of
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employment or consulting relationship except as set out in Sections 6 and 7 of
the Stock Option Agreement (but in no event later than the Expiration Date).
Form of Exercise:
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Exercise of this Option shall be on a properly executed Exercise Notice in
the form provided by the Company, along with (i) cash, (ii) check or (iii) if by
broker sale, delivery of such documentation as the Plan Administrator and the
broker shall require to effect delivery of the sale or loan proceeds required to
pay the exercise price and any tax withholding resulting from such exercise.
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THIS OPTION IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL
OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S 2000 SUPPLEMENTAL STOCK OPTION
PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY
RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY,
NOR SHALL IT INTERFERE IN ANY WAY WITH HIS RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE HIS EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and certain information
related to it and represents that he or she is familiar with the terms and
provisions of the Plan and this Option Agreement. Optionee accepts this Option
Agreement subject to all such terms and provisions. Optionee has reviewed the
Plan and this Option Agreement in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option Agreement and fully
understands all provisions of the Option Agreement.
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the 2000 SUPPLEMENTAL STOCK OPTION PLAN and the Option
Agreement, each of which are attached and made a part of this document.
OPTIONEE: MERCURY INTERACTIVE CORPORATION,
a Delaware corporation
______________________________ By _______________________________
Signature
______________________________ Title ____________________________
Print Name
Dated: _______, 20____ Dated: _______, 20____
I am unmarried or reside in a separate property state___.
Spousal consent attached____.
I am married and have previously filed a spousal consent with the Company_____.
<PAGE>
CONSENT OF SPOUSE
-----------------
The undersigned spouse of Optionee has read and hereby approves the terms and
conditions of the Mercury Interactive Corporation 2000 Supplemental Stock Option
Plan (the "Plan") and this Option Agreement. In consideration of the Company's
granting his or her spouse the right to purchase Shares as set forth in the Plan
and this Option Agreement, the undersigned hereby agrees to be irrevocably bound
by the terms and conditions of the Plan and this Option Agreement and any other
option in which the undersigned may have an interest and further agrees that any
community property interest shall be similarly bound. The undersigned hereby
appoints the undersigned's spouse as attorney-in-fact for the undersigned with
respect to any amendment or exercise of rights under the Plan and this Option
Agreement and any other option in which the undersigned may have an interest.
____________________________
Spouse of Optionee
<PAGE>
EXHIBIT A TO NOTICE OF GRANT
MERCURY INTERACTIVE CORPORATION
STOCK OPTION AGREEMENT
FOR THE 2000 SUPPLEMENTAL STOCK OPTION PLAN
1. Grant of Option. Mercury Interactive Corporation, a Delaware
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corporation ("the Company"), has granted to the Optionee named in the Notice of
Grant (the "Optionee"), an option (the "Option") to purchase a total number of
shares of Common Stock (the "Shares") set forth in the Notice of Grant, at the
exercise price per share set forth in the Notice of Grant (the "Exercise
Price"), and in all respects subject to the terms, definitions and provisions of
the 2000 Supplemental Stock Option Plan (the "Plan") adopted by the Company,
which is incorporated herein by reference. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings herein.
This Option is A Nonstatutory Stock Option.
2. Exercise of Option. This Option shall be exercisable during its term
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in accordance with the provisions of Section 9 of the Plan as follows:
(a) Right to Exercise.
-----------------
(i) Subject to subsections 2 (a) (ii), (iii) and (iv)
below, this Option shall be exercisable cumulatively, as set forth in the Notice
of Grant; provided, however, that the vesting schedule shall temporarily cease
during any period of time that the Optionee's employment is subject to an
approved leave of absence in excess of thirty (30) days and recommences
thereafter. This Option may be exercised in whole or in part at any time as to
Shares which have not yet vested under the vesting schedule; provided, however,
that the Optionee shall execute as a condition to such exercise of this Option,
the Restricted Stock Purchase Agreement attached hereto as Exhibit A.
(ii) This Option may not be exercised for a fraction
of a share.
(iii) In the event of Optionee's death, disability or
other termination of employment, the exercisability of the Option is governed by
Sections 5, 6 and 7 below, subject to the limitations contained in subsection
2(a)(iv).
(iv) In no event may this Option be exercised after the
date of expiration of the term of this Option as set forth in Section 9 below.
<PAGE>
(b) Method of Exercise. This Option shall be exercisable by written
notice which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised, and such other
representations and agreements with respect to such Shares of Common Stock as
may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by the Optionee and shall be delivered in person
or by certified mail to the Secretary of the Company. The written notice shall
be accompanied by payment of the Exercise Price. This Option shall be deemed to
be exercised upon the receipt by the Company of such written notice accompanied
by the Exercise Price.
No share will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares may then be listed.
Assuming such compliance, for income tax purposes the Shares shall be considered
transferred to the Optionee on the date on which the Option is exercised with
respect to such Shares.
3. Method of Payment.
-----------------
(a) Forms of Consideration Authorized. Payment of the Exercise
Price shall consist of: (i) cash; (ii) check; (iii) by means of a Cashless
Exercise, as defined in this Section 3(b); or (iv) by any combination of the
foregoing.
(b) A "Cashless Exercise" means the assignment in a form
acceptable to the Company of the proceeds of a sale or loan with respect to some
or all of the shares of Stock acquired upon the exercise of the Option pursuant
to a program or procedure approved by the Company (including, without
limitation, through an exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve
System). The Company reserves, at any and all times, the right, in the Company's
sole and absolute discretion, to decline to approve or terminate any such
program or procedure.
4. Restrictions on Exercise. This Option may not be exercised until such
------------------------
time as the Plan has been approved by the stockholders of the company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.
5. Termination of Status as an Employee. In the event of termination of
------------------------------------
Optionee's Continuous Status as an Employee, the Optionee may, but only within
thirty days after the date of such termination (but in no event later than the
date of expiration of the term of this Option as set forth in Section 9 below),
exercise this Option to the extent
<PAGE>
exercisable at the date of such termination. To the extent this Option was not
exercisable at the date of such termination, or if the Optionee does not
exercise this Option within the time specified herein, the Option shall
terminate.
6. Disability of Optionee. Notwithstanding the provisions of Section 5
----------------------
above, in the event of termination of Optionee's Continuous Status as an
Employee as a result of Optionee's total and permanent disability (as defined in
Section 22 (e) (3) of the Code), the Optionee may, but only within six months
days from the date of termination of employment (but in no event later than the
date of expiration of the term of this Option as set forth in Section 9 below),
exercise this Option to the extent exercisable at the date of such termination.
To the extent that the Option was not exercisable at the date of termination, or
if the Optionee does not exercise such Option within the time specified herein,
the Option shall terminate.
7. Death of Optionee. In the event of the death of Optionee:
-----------------
(a) during the term of this Option and while an Employee of the
Company and having been in continuous status as an Employee since the date of
grant of the Option, the Option may be exercised in full even as to shares which
otherwise would not have been vested, at any time within six months following
the date of death (but in no event later than the date of expiration of the term
of this Option as set forth in Section 9 below), by Optionee's estate or by a
person who acquired the right to exercise; or
(b) within thirty days after the termination of Optionee's
Continuous Status as an Employee, the Option may be exercised, at any time
within six months following the date of death (but in no event later than the
date of expiration of the term of this Option as set forth in Section 9 below),
by Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent of the right to
exercise what had accrued at the date of termination.
8. Non-Transferability of Option; Successors and Assigns. This Option
-----------------------------------------------------
may not be transferred in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of Optionee
only by him. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
9. Term of Option. This Option may not be exercised more than ten (10)
--------------
years (five years if Optionee owns, immediately before this Option is granted,
stock representing more than 10 percent of the total combined voting power of
all classes of stock of the Company or of any Parent or Subsidiary) from the
date of grant of this Option, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.
10. Taxation Upon Exercise of Option. Optionee understands that, upon
--------------------------------
exercising a Nonstatutory Stock Option, the Optionee will be treated as having
received
<PAGE>
compensation income (taxable at ordinary income tax rates) for tax purposes in
an amount equal to the excess of the then fair market value of the Shares over
the Exercise Price. If the Optionee is an employee, the Company will be required
to withhold from Optionee's compensation, or collect from Optionee and pay to
the applicable taxing authorities an amount equal to a percentage of this
compensation income. The Optionee shall satisfy his or her tax withholding
obligation arising upon the exercise of this Option by one or some combination
of the following methods: (i) by cash payment, or (ii) out of Optionee's current
compensation, or (iii) in the case of a Cashless Exercise, the Company shall
withhold such taxes from the proceeds of the sale of the Shares.
THE ABOVE TAX SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
11. Designation of Beneficiary. The Employee shall have the right to
--------------------------
appoint any individual or legal entity in writing, on Exhibit B to the Notice of
Grant, as his or her beneficiary to receive any Option (to the extent not
previously exercised or forfeited) under this Agreement upon the Employee's
death. Such designation under this Agreement may be revoked by the Employee at
any time and a new beneficiary may be appointed by the Employee by execution and
submission to the Stock Administration Department of the Company of a revised
Exhibit B to the Notice of Grant. In order to be effective, a designation of
beneficiary must be completed by the Employee on Exhibit B and received by the
Stock Administration Department of the Company, prior to the date of the
Employee's death. In the absence of such designation, the Employee's beneficiary
shall be the person designated under the Employee's will or as defined by the
applicable state laws of the decedent's distribution.
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES SUBJECT TO THIS
OPTION IS EARNED ONLY BY CONTINUING EMPLOYMENT AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN
BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION
OF EMPLOYMENT BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH HIS OR HER
RIGHT OR THE COMPANY'S RIGHT TO TERMINATE HIS OR HER EMPLOYMENT AT ANY TIME,
WITH OR WITHOUT CAUSE.
<PAGE>
EXHIBIT B TO NOTICE OF GRANT
NOTICE OF STOCK OPTION BENEFICIARY(IES)
FOR THE MERCURY INTERACTIVE CORPORATION
2000 SUPPLEMENTAL STOCK OPTION PLAN
If I shall cease to be an Employee of Mercury Interactive Corporation (the
"Company"), or of a Parent or a Subsidiary of the Company by reason of my death,
or if I shall die after I have terminated my employment with the Company, a
Parent or a Subsidiary, but, prior to the expiration of the Option (as provided
in the Notice of Grant and Stock Option Agreement), then all rights to the
Option granted under the Notice of Grant and Stock Option Agreement that I
hereby hold upon my death, to the extent not previously terminated or forfeited,
shall be transferred in the manner provided for in the Plan and the Agreement to
the following beneficiary(ies) as well as the obligation to make the payments of
the exercise price of such stock options due to Mercury Interactive upon the
exercise of any such options:
NAME OF BENEFICIARY (Please print):
______________________________________________
(First) (Middle) (Last)
__________________________ _______________________________________
(Relationship)
_______________________________________
_______________________________________
(Address)
NAME OF BENEFICIARY (Please print):
--------------------------------------------------------------
(First) (Middle) (Last)
___________________________ __________________________________________
(Relationship)
__________________________________________
__________________________________________
(Address)
Unless otherwise specified in writing above, the rights my Options shall be
divided equally among all of the above named beneficiaries.
Employee's Social Security Number: _________________________________________
<PAGE>
Employee's Address: ----------------------------------------------
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----------------------------------------------
I UNDERSTAND THAT THIS DESIGNATION OF BENEFICIARY(IES) SHALL REMAIN IN EFFECT
UNLESS TERMINATED IN WRITING BY ME.
Dated: __________________ ___________________________
Signature of Employee
2
