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EXHIBIT 4.01
APPS.COM, INC.
1999 EQUITY INCENTIVE PLAN
This Plan (this "Plan") of Apps.com, Inc. (the "Company") provides that
awards ("Awards") of Options or Restricted Stock (both as hereinafter defined)
for up to 1,060,000 shares (the "Shares") of the Company's Common Stock, $0.01
par value per share (the "Stock"), may be granted to employees of the Company
and its subsidiaries, as defined below, and to others who are in a position to
make significant contributions to the success of the Company and its
subsidiaries ("Participants"). Options granted pursuant to this Plan may be
either incentive stock options ("Incentive Options") as defined in Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), or options that
are not Incentive Options ("Nonqualified Options"), or both (collectively,
"Options"). "Restricted Stock" means Shares awarded to a Participant under
Section 9 of this Plan pursuant to an Award that entitles the Participant to
acquire Shares for a purchase price (which may be zero if permissible under
applicable law).
1. PURPOSE. The purposes of this Plan are to attract, retain and
motivate employees and others who are in a position to contribute significantly
to the success of the Company, its parent and subsidiaries (if any), to reward
such contributions, and to encourage Participants to advance the long term
interests of the Company and its subsidiaries through ownership of the Company's
Stock.
2. ADMINISTRATION.
(a) Board of Directors. The Plan shall be administered by the
Board of Directors of the Company (the "Board"). The Board, subject to the
express provisions of this Plan, shall determine those persons to be granted
Awards, the times when Awards shall be granted, the number of Shares subject to
each Award, and the terms and conditions of each Award, including whether each
Award is an Incentive Option, a Nonqualified Option or Restricted Stock. The
terms and conditions of an Award shall be set forth in a written agreement (an
"Award Agreement") approved by the Board and delivered or made available to the
Participant as soon as practicable following the effective date of such Award as
specified by the Board and set forth in the Award Agreement (the "Grant Date").
An Option granted pursuant to this Plan shall be presumed to be a Nonqualified
Option unless expressly designated an Incentive Option in the applicable Award
Agreement. The Board shall establish the form of agreements or instruments
granting Awards and any other agreements or instruments under this Plan, and the
rules and regulations for the administration of this Plan, and may amend and
rescind such agreements, instruments, rules and regulations. Notwithstanding the
foregoing, the Board may accelerate (i) the vesting or payment of any Award
(including an Incentive Stock Option), (ii) the lapse of restrictions on any
Award (including an Award of Restricted Stock) and (iii) the date on which any
Option first becomes exercisable. The Board shall interpret this Plan and decide
any questions and settle all controversies and disputes that may arise in
connection with this Plan, and such determinations of the Board shall be
conclusive and shall bind all parties. Subject to Section 17, the Board may,
both generally and in particular instances, waive compliance by a Participant
with any obligation to be performed under an Award and waive any condition or
provision of an Award, except that in the case of an Incentive Option the Board
may not (other than in accordance with Section 5) grant any such waiver if such
waiver would cause the Incentive Option to no longer qualify as an Incentive
Option under Section 422 of the Code.
(b) Committee. The Board may, in its discretion, delegate its
powers with respect to this Plan to a committee of the Board (the "Committee"),
in which event all references to the Board hereunder shall be deemed to refer to
the Committee. The Committee shall be appointed by the Board and shall be
composed solely of two or more directors. A majority of the members of the
Committee shall constitute a quorum, and all determinations of the Committee
shall be made by a majority of its members. Any
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determination of the Committee under this Plan may be made without notice or
meeting of the Committee by a writing signed by all of the members of the
Committee.
(c) Public Company Committee. From and after the date of the
first registration of an equity security of the Company under Section 12 of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), if the
Board shall elect to delegate its powers with respect to this Plan to a
Committee pursuant to the provisions of Subsection (b) above, the Committee
shall be composed solely of two or more directors, each of whom shall be a
"Non-Employee Director", as such term is defined from time to time in Rule 16b-3
promulgated under the Exchange Act, and each of whom shall be an "outside
director" within the meaning of Section 162(m) of the Code.
3. EFFECTIVE DATE AND TERM. This Plan shall become effective upon
adoption by the Board or approval by the stockholders by at least a majority
vote at a duly held meeting (or by written consent as provided by applicable
law), whichever is earlier, but shall not become effective unless stockholder
approval is obtained within twelve (12) months before or after the adoption of
this Plan by the Board. The Board may grant Awards under this Plan prior to such
approval, but any such Award shall become effective as of the date of grant only
upon such approval and, accordingly, no such Award may be exercisable prior to
such approval. This Plan shall terminate ten years after its effective date.
4. SHARES SUBJECT TO THE PLAN. The Shares shall be reserved for issuance
upon the exercise of Options granted, or the issuance Shares of Restricted Stock
awarded, under this Plan. Shares subject to an Option which expires or is
terminated, and Shares of Restricted Stock forfeited by a Participant or
repurchased by the Company, may again be subjected to an Award under this Plan.
Shares delivered under this Plan may be authorized but unissued Stock or
treasury Stock. No fractional Shares shall be issued under this Plan. Any
fractional Shares which, but for this Section, would have been issued shall be
deemed to have been issued and immediately sold to the Company for their Fair
Market Value, and the Participant shall receive from the Company cash in lieu of
such fractional Shares.
5. CHANGES IN CAPITAL STOCK. In the event of a stock dividend, stock
split or combination of shares, recapitalization or other change in the
Company's capital stock, the number and kind of shares of stock or securities of
the Company subject to Awards then outstanding or subsequently granted under
this Plan, the maximum number of shares or securities that may be delivered
under this Plan, the exercise price, and other relevant provisions shall be
adjusted appropriately in a manner determined by the Board to be equitable,
whose determination shall be binding. The Board may also adjust the number of
Shares subject to outstanding Awards, the exercise price of outstanding Awards
and the terms of outstanding Awards to take into consideration material changes
in accounting practices or principles, consolidations or mergers, acquisitions
or dispositions of stock or property or any other event if it is determined by
the Board that such adjustment is appropriate to avoid distortion in the
operation of this Plan, provided that no such adjustment shall be made in the
case of an Incentive Option if it would constitute a modification, extension or
renewal of the Option within the meaning of Section 424(h) of the Code, unless
the Participant consents. If any person owning Restricted Stock receives new or
additional or different securities in connection with a corporate transaction or
stock dividend described in this Section 5 as a result of owning such Restricted
Stock, such securities shall be subject to all of the conditions and
restrictions applicable to the Restricted Stock with respect to which such
securities were issued. Notwithstanding any provision to the contrary, no
adjustments shall be made pursuant to this Section 5 with respect to Incentive
Options unless the Board, after consulting with counsel for the Company,
determines that (i) such adjustments would not constitute a modification,
"extension" or "renewal" of such Incentive Options as such terms are defined in
Section 424 of the Code, and (ii) either that such adjustments would not cause
any adverse tax consequences for the holders of such Incentive Options or the
holders of such Incentive Options consent to the adjustment. No adjustments to
Incentive Options shall be made for dividends paid in cash or in property other
than securities of the Company.
6. ELIGIBILITY. All employees of the Company and its subsidiaries, as
well as those other persons or entities who, in the opinion of the Board, are in
a position to contribute significantly to
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the success of the Company, its parent or subsidiaries (if any), including,
without limitation, nonemployee Directors, consultants, advisers, independent
contractors, and other service providers, shall be eligible to receive Awards
under this Plan. A "subsidiary" for purposes of this Plan shall be a subsidiary
corporation as defined in Section 424(f) of the Code. Incentive Options shall be
granted only to "employees" as defined in the applicable provisions of the Code
and regulations thereunder. Receipt of Awards under this Plan or of awards under
any other employee benefit plan of the Company or any of its subsidiaries shall
not preclude an employee from receiving Awards or additional Awards under this
Plan. In granting Awards the Board may include or exclude previous participants
in this Plan as the Board may determine.
7. PROVISIONS APPLICABLE TO OPTION AWARDS.
(a) Number of Shares. The aggregate fair market value
(determined as of the time of grant) of the Shares with respect to which
Incentive Options are exercisable for the first time by an employee during any
calendar year (under this Plan and all other stock option plans of the Company
or its subsidiaries or any parent corporation) shall not exceed $100,000.
(b) Exercise Price. The exercise price of each Award shall be
determined by the Board but, in the case of an Incentive Option, shall not be
less than 100% (110% in the case of an Incentive Option granted to a ten-percent
stockholder) of the fair market value of the stock subject to the Option on the
date of grant; nor shall the exercise price of any Award be less, in the case of
an original issue of authorized stock, than par value. For this purpose, (i)
"fair market value" shall be determined by the Board in good faith on a basis
consistent with the provisions of Section 422 of the Code and the regulations
promulgated thereunder, and (ii) "ten percent stockholder" shall mean any
employee who at the time of grant owns directly, or is deemed to own by reason
of the attribution rules set forth in Section 424(d) of the Code, more than 10%
of the total combined voting power of all classes of stock of the Company or of
any of its parent or subsidiary corporations.
(c) Duration, Vesting and Conditions of Exercise. Each Option
shall be exercisable during such period or periods as the Board may determine,
but in no case after the expiration of ten years (five years in the case of an
Incentive Option granted to a "ten percent stockholder" as defined in (b) above)
from the date of grant. In the discretion of the Board, options may be
exercisable (i) in full upon grant or (ii) over or after a period of time
conditioned on satisfaction of certain Company, division, group, office,
individual or other performance criteria, including the continued performance of
services to the Company or its subsidiaries. In the case of an Option not
immediately exercisable in full, the Board may at any time accelerate the time
at which all or any part of the Option may be exercised.
8. EXERCISE OF OPTIONS. Any exercise of an Option shall be in writing
pursuant to a written instrument in the form prescribed by the Board, signed by
the proper person and delivered to the Company, accompanied by (a) such
documents as may be required by this Plan, by such written instrument, or by the
Board, and (b) payment as required by such written instrument for the number of
Shares for which the Option is exercised. In addition, each exercise of an
Option shall be subject to such additional conditions as may be required by the
Board, including without limitation those described in Section 10 of this Plan.
No exercise of an Option shall be effective, and the Company shall not be
obligated to deliver any Shares, until all requirements and conditions for
exercise have been met to the satisfaction of the Board.
9. PROVISIONS APPLICABLE TO RESTRICTED STOCK AWARDS
(a) Awards of Restricted Stock. The Board may award Shares of
Restricted Stock, subject to such conditions as the Board may determine to be
appropriate (including a Company right during a specified period or periods (the
"Restricted Period") to repurchase the Shares at their original purchase price
or to require forfeiture of the Shares if the purchase price was zero and if
permissible under applicable law), and in connection therewith may determine the
purchase price, if any, therefor, the length of any Restricted Period, the
conditions under which the Shares may be forfeited to or repurchased by the
Company, and any other terms and conditions
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of the Awards. The Board may modify or waive any restrictions, terms and
conditions with respect to any Restricted Stock. Shares of Restricted Stock may
be issued for whatever consideration is determined by the Board, subject to
applicable law.
(b) Transferability. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as permitted by
the Board, during the Restricted Period.
(c) Evidence of Award. Shares of Restricted Stock shall be
evidenced in such manner as the Board may determine. Any certificates issued in
respect of Shares of Restricted Stock shall be registered in the name of the
Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company. At
the expiration of the Restricted Period, the Company shall deliver the
certificates and stock power to the Participant.
(d) Shareholder Rights. A Participant shall have all the rights
of a shareholder with respect to Restricted Stock awarded, including voting and
dividend rights, unless otherwise provided in the Award Agreement.
10. CONDITIONS TO ISSUANCE OF SHARES. Except as waived by the Board in a
particular case, all the following conditions shall be complied with as a
condition to the issuance of Shares under this Plan:
(a) Legal and Regulatory Matters. The delivery of Shares shall
be subject to (i) compliance with applicable federal and state laws and
regulations, (ii) if the outstanding Shares are listed at the time on any stock
exchange, compliance with the listing requirements of such exchange and (iii)
the Company's counsel's approval of all other legal matters in connection with
the issuance and delivery of the Shares. If the sale of the Shares has not been
registered under the Securities Act, the Company may require, as a condition to
delivery of the Shares, such representations or agreements as counsel for the
Company may consider appropriate to avoid violation of such Act and may require
that the certificates evidencing the Shares bear an appropriate legend
restricting transfer.
(b) Listing and Registration of Shares. If at any time the Board
shall determine that the listing, registration or qualification of the Shares
covered by any Award upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of or in connection with the granting of
such Award or the issuance or purchase of Shares thereunder, such Award may not
be exercised in whole or in part unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board.
(c) Tax Undertakings. In the case of an Award that is not an
Incentive Option, the Board may require the Participant to remit to the Company
an amount sufficient to satisfy any federal, state or local withholding tax
requirements (or make other arrangements satisfactory to the Company with regard
to such taxes, including withholding from regular cash compensation, providing
other security to the Company, or remitting or foregoing the receipt of
property, including Stock, having a fair market value (as determined by the
Board in good faith in its discretion) on the date of exercise sufficient to
meet such potential liability) prior to the delivery of any Shares in respect of
such Award. In the case of an Incentive Option, if at the time the Option is
exercised the Board determines that under applicable law and regulations the
Company could be liable for the withholding of any federal or state tax with
respect to a disposition of the Shares received upon exercise, the Board may
require the Participant to agree (i) to inform the Company promptly of any
disposition (within the meaning of Section 424(c) of the Code and the
regulations thereunder) of Shares received upon exercise, and (ii) to give such
security as the Board deems adequate to meet the potential liability of the
Company for the withholding of tax, and to augment such security from time to
time in any amount reasonably deemed necessary by the Board to preserve the
adequacy of such security.
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(d) Evidence of Authority. If an Option is exercised by the
legal representative of a deceased Participant or by a person to whom the Option
has been transferred by the Participant's will or by applicable laws of descent
and distribution, the Company shall not be obligated to deliver Shares until
satisfied as to the authority of the person exercising the Option.
(e) Restrictions on Transfer of Stock. If the sale of Shares has
not been registered under the Securities Act of 1933, as amended, or under
applicable state securities laws, the Company may require, as a condition to
issuance of Shares, such representations or agreements from the Participant as
counsel for the Company may consider appropriate to avoid violation of such Act
or such state securities laws and may require that the certificates evidencing
such Shares bear an appropriate legend restricting transfer. In addition, the
Board may require as conditions to the issuance of any Shares that the
Participant agree in writing to (i) restrictions on the transfer of Shares, (ii)
a right of first refusal of the Company to repurchase Shares in the event the
holder desires to sell such Shares, and (iii) a right of the Company to
repurchase Shares in the event of termination of employment or death or
disability. Such restrictions and rights on the part of the Company shall be
identified in the Award Agreement.
11. PAYMENT FOR SHARES.
(a) Exercise Price. The price for Shares issued in respect of an
Award shall be paid prior to delivery of evidence thereof, and may be paid as
follows: (i) in cash or by certified check, bank draft or money order payable to
the order of the Company; (ii) if permitted by the terms of the Award Agreement,
by the delivery of shares of Stock having a fair market value (as determined by
the Board in good faith in its reasonable discretion) on the date of exercise
equal to the exercise price; or (iii) by a combination of cash and Stock;
provided, however, that payment of the exercise price by delivery of shares of
Common Stock of the Company owned by such Participant may be made only if such
payment does not result in a charge to earnings for financial accounting
purposes as determined by the Board, unless the Board otherwise permits such
payment by delivery of shares of Common Stock.
(b) Promissory Note. To the extent permitted by any applicable
margin regulations of the Board of Governors of the Federal Reserve System and
other provisions of applicable law, an Award Agreement may permit the price for
Shares to be paid by payment of at least the par value by a combination of cash
and Stock as provided above, and delivery to the Company of the Participant's
promissory note for the balance of the price. Unless otherwise specified by the
Board in the Award Agreement, such note (i) shall bear interest at least equal
to the Applicable Federal Rate, as determined under Section 1274(d) of the Code
and published by the Internal Revenue Service on a monthly basis, in effect for
the month of purchase, (ii) shall be a full recourse note, (iii) shall be
secured by a pledge of the Shares so purchased, and (iv) shall be payable in
equal annual installments of principal and interest over a period of not more
than five years after the date of purchase (except that any such note shall be
payable on demand in the event of termination of employment). Any such
promissory note shall be in a form satisfactory to the Company.
12. NO RIGHTS AS STOCKHOLDER. Participants shall not have the rights of
stockholders with regard to Options granted under this Plan, except as to Shares
actually purchased pursuant to such Options.
13. NONTRANSFERABILITY OF OPTIONS. Each Option granted under this Plan
shall be transferable only by will or the laws of descent and distribution and
shall be exercisable during the lifetime of the person to whom the Option is
granted only by such person. Except as permitted by the preceding sentence, no
Option granted under this Plan or any of the rights and privileges thereby
conferred shall be transferred, assigned, pledged, hypothecated or otherwise
disposed of in any way (by operation of law or otherwise), and no such Option,
right or privilege shall be subject to execution, attachment or similar process.
Upon any attempt to so transfer, assign, pledge, hypothecate or otherwise
dispose of any such Option, right or privilege contrary to the provisions
hereof, or upon the levy of any attachment or similar process upon such Option,
right or privilege, the Option and such rights and
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privileges shall immediately become null and void. Notwithstanding the above
provisions of this Section 13, any Option granted under this Plan may be pledged
or hypothecated to secure an obligation to the Company.
14. TERMINATION OF EMPLOYMENT; DEATH OR DISABILITY.
(a) Termination In General. Upon termination of the employment
of a Participant, any unexercised Options shall terminate immediately, except as
provided in Subsections (b), (c) and (d) below. For purposes of this Section 14,
employment shall not be considered terminated (i) in the case of sick leave or
other bona fide leave of absence approved for purposes of this Plan by the
Board, so long as the employee's right to re-employment is guaranteed either by
statute or by contract, or (ii) in the case of a transfer of employment among
the Company and its parent or subsidiaries (if any), or to the employment of a
corporation (or a parent or subsidiary corporation of such corporation) issuing
or assuming an Option, which in the case of an Incentive Option is a transaction
to which Section 424(a) of the Code applies. For all purposes of this Section
14, the term "employment" shall include the continuing relationships of
Participants to the Company as Directors, consultants, advisers, independent
contractors and other service providers; provided, however, that notwithstanding
the foregoing, in the discretion of the Board, the Award Agreement granting
Options to any of the foregoing persons may provide that the Option may remain
in force and effect notwithstanding the termination of the relationship between
any such person and the Company.
(b) Termination Not For Cause. If such termination was not "for
cause" (as hereinafter defined), the Participant may exercise any Option which
was otherwise exercisable on the date of termination for a period ending on the
earlier of (i) the expiration of three months after the date of such
termination, (ii) the expiration date of such Option as fixed pursuant to the
first sentence of Section 7(c), and (iii) the termination of such Option
pursuant to the provisions of Section 15. For purposes hereof, the term "for
cause" shall mean only (i) the willful or reckless failure by the Participant to
perform his duties under, or willful or reckless violation of, any written
employment or consulting agreement (other than a failure resulting from the
Participant's death or disability), which failure or violation shall not have
been cured within the cure period, if any, provided in such agreement; (ii) the
commission by the Participant of an act of fraud or theft against the Company or
any of its subsidiaries; or (iii) the conviction of the Participant of (or the
plea by the Participant of nolo contendere to) any felony.
(c) Death. If termination of employment results from the
Participant's death, any Option which was otherwise exercisable by such
Participant as of the time immediately before his or her death shall be
exercisable by the Participant's estate or by any person who acquired the Option
by bequest or inheritance for a period ending on the earlier of (i) one year
after the death of the Participant, (ii) the expiration date of such Option as
fixed pursuant to the first sentence of Section 7(c), and (iii) the termination
of such Option pursuant to the provisions of Section 15. The Board may permit
any Option to be exercised for up to the total number of Shares subject to the
Option, or grant an Option which by its terms is exercisable for up to the total
number of Shares subject to the Option, at any time within one year after the
death of the Participant, consistent with the above provisions.
(d) Disability. If the termination of employment results from
the Participant's disability, any Option which was otherwise exercisable by such
Participant immediately prior to the termination of his employment shall be
exercisable by him or her (or his or her legal representative) for a period
ending on the earlier of (i) one year after such termination, (ii) the
expiration date of such Option as fixed pursuant to the first sentence of
Section 7(c), and (iii) the termination of such Option pursuant to the
provisions of Section 15. The Board may permit any Option to be exercised for up
to the total number of Shares subject to the Option, or grant an Option which by
its terms is exercisable for up to the total number of Shares subject to the
Option, at any time within one year after termination of employment, consistent
with the above provisions. The term "disability" shall for this purpose be
defined as such term is defined in Section 22(e)(3) of the Code.
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15. REORGANIZATIONS; DISSOLUTION.
(a) Substitute Options. If by reason of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization, or
liquidation the Board shall authorize the issuance or assumption of a stock
option in a transaction to which Section 424(a) of the Code applies, then,
notwithstanding any other provision of this Plan, the Board may grant an option
upon such terms and conditions as it may deem appropriate for the purpose of
assumption of the old option, or substitution of a new option for the old
option, in conformity with the provisions of said Section 424(a) of the Code and
the Regulations thereunder, and any such option shall not reduce the number of
shares otherwise available for issuance under this Plan.
(b) Termination of Options. In the event of a Change in Control
of the Company (as defined in subsection (c), below), and in anticipation
thereof if required by the circumstances, the Board, in its sole discretion, may
(i) accelerate the exercisability, prior to the effective date of such Change in
Control, of all outstanding Options granted under this Plan (and redesignate as
Nonqualified Options any Options or portions thereof that were originally
designated as Incentive Options but that no longer so qualify under Section 422
of the Code), (ii) arrange, if there is a surviving or acquiring corporation,
subject to the consummation of a Change of Control, to have that corporation or
an affiliate of that corporation grant to employees and other Participants
replacement options with substantially similar or, if not adverse to the
Participants, different provisions with respect to exercisability (upon which
grant the Options granted under this Plan shall immediately terminate and be of
no further force or effect) which, however, in the case of Incentive Options,
satisfy, in the determination of the Board, the requirements of Section 424(a)
of the Code, (iii) cancel all outstanding Options in exchange for consideration
in cash or in kind in an amount equal to the value of the Shares, as determined
by the Board in good faith, the Participant would have received had the Option
been exercised (to the extent then exercisable or to a greater extent, including
in full, as the Board may determine) less the Option price therefor (upon which
cancellation such Options shall immediately terminate and be of no further force
or effect), (iv) permit the purchaser of the Company's stock or assets to
deliver to the Participants the same kind of consideration that is delivered to
the stockholders of the Company in cancellation of such Options in an amount
equal to the value of the Shares, as determined by the Board in good faith, the
Participant would have received had the Option been exercised (to the extent
then exercisable or to a greater extent, including in full, as the Board may
determine), less the Option price therefor, or (v) take any combination (or
none) of the foregoing actions.
(c) Definition of "Change of Control". For purposes of this
Plan, a "Change in Control" shall mean and include any of the following:
(i) a merger or consolidation of the Company with or
into any other corporation or other business entity in which the Company is the
surviving corporation (except one in which the holders of capital stock of the
Company immediately prior to such merger or consolidation continue to hold at
least a majority of the outstanding securities having the right to vote in an
election of the Board of Directors ("Voting Stock") of the Company); or any such
merger or consolidation in which the Company is not the surviving corporation;
(ii) a sale, lease, exchange or other transfer (in one
transaction or a related series of transactions) of all or substantially all of
the Company's assets;
(iii) the acquisition by any person or any group of
persons (other than the Company, any of its direct or indirect subsidiaries, or
any trustee, fiduciary or other person or entity holding securities under any
employee benefit plan or trust of the Company or any of its direct or indirect
subsidiaries) acting together in any transaction or related series of
transactions, of such number of shares of the Company's Voting Stock as causes
such person, or group of persons, to own beneficially, directly or indirectly,
as of the time immediately after such transaction or series of transactions, 50%
or more of the combined voting power of the Voting Stock of the Company other
than as a result of an acquisition of
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securities directly from the Company, or solely as a result of an acquisition of
securities by the Company which by reducing the number of shares of the Voting
Stock outstanding increases the proportionate voting power represented by the
Voting Stock owned by any such person to 50% or more of the combined voting
power of such Voting Stock; and
(iv) a change in the composition of the Company's Board
of Directors following a tender offer or proxy contest, as a result of which
persons who, immediately prior to a tender offer or proxy contest, constituted
the Company's Board of Directors shall cease to constitute at least a majority
of the members of the Board of Directors.
(d) Dissolution or Liquidation. Upon the dissolution or
liquidation of the Company, all outstanding Options granted under this Plan
shall terminate, but each Participant shall have the right, immediately prior to
such dissolution or liquidation, to exercise his or her Options to the extent
then exercisable.
16. EMPLOYMENT RIGHTS AND OTHER BENEFITS. Neither the adoption of this
Plan nor the grant of Awards shall confer upon any employee any right to
continued employment with the Company or any parent or subsidiary or affect in
any way the right of the Company or such parent or subsidiary to terminate the
employment of an employee at any time. Except as specifically provided by the
Board in any particular case, the loss of existing or potential profit in Awards
granted under this Plan shall not constitute an element of damages in the event
of termination of the employment of an employee even if the termination is in
violation of an obligation of the Company to the employee by contract or
otherwise. Nothing in this Plan shall restrict the authority of the Board to
grant stock options or to award bonuses or other benefits to employees or others
otherwise than pursuant to this Plan. For purposes of this Section 16, the term
"employee" shall include those persons granted Awards pursuant to this Plan who
are not employees of the Company, and the term "employment" shall include the
arrangement or relationship between the Company and any such person.
17. DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION. The Board
may at any time abandon this Plan or discontinue granting Awards under this
Plan. With the consent of the Participant, the Board may at any time modify or
cancel an existing Option in whole or in part and grant another Option for such
number of shares as the Board specifies. The Board may at any time amend this
Plan for the purpose of satisfying the requirements of Section 422 of the Code
or of any changes in applicable laws or regulations or for any other purpose
which may at the time be permitted by law, or may at any time terminate this
Plan as to any further grants of Awards, provided that (except to the extent
expressly required or permitted herein above) no such amendment shall, without
the approval of the stockholders of the Company by at least a majority vote at a
duly held meeting (or by written consent as provided by applicable law), (a)
increase the maximum number of shares for which Awards may be granted under this
Plan, (b) change the group of employees eligible to receive Awards under this
Plan, (c) reduce the price at which Incentive Options may be granted, (d) extend
the time within which Awards may be granted, (e) alter this Plan in such a way
that Incentive Options already granted hereunder would not be considered
Incentive Options under Section 422 of the Code, (f) amend the provisions of
this Section 17, or (g) make any other change in this Plan which requires
stockholder approval under applicable law or regulations, including any approval
requirement which is a prerequisite for exemptive relief under Section 16 of the
Exchange Act. The termination or any modification or amendment of this Plan
shall not adversely affect the rights of any Participant under any Award
previously granted without his or her consent.
18. COMPLIANCE WITH RULE 16b-3. It is intended that the provisions of
this Plan and any Option granted hereunder to a person subject to the reporting
requirements of Section 16(a) of the Exchange Act shall comply in all respects
with the terms and conditions of Rule 16b-3 promulgated under the Exchange Act
or any successor provisions thereto. Any Award Agreement granting Options shall
contain such provisions as are necessary or appropriate to assure such
compliance. To the extent that any provision hereof is found not to be in
compliance with such Rule, such provision shall be deemed to be
17
<PAGE> 9
modified so as to be in compliance with such Rule or, if such modification is
not possible, shall be deemed to be null and void, as it relates to a recipient
subject to Section 16(a) of the Exchange Act.
ADOPTED by the Board of Directors of Apps.com, Inc. as of the 17th day
of November, 1999.
APPROVED by the stockholders of Apps.com, Inc. as of the 17th day of
November, 1999.
18
