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EXHIBIT 99.1
QRS CORPORATION
1993 STOCK OPTION/STOCK ISSUANCE PLAN
(AS AMENDED AND RESTATED THROUGH MARCH 22, 2000)
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QRS CORPORATION
1993 STOCK OPTION/STOCK ISSUANCE PLAN
(AS AMENDED AND RESTATED THROUGH MARCH 22, 2000)
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1993 Stock Option/Stock Issuance Plan ("Plan") is intended to
promote the interests of QRS Corporation, a Delaware corporation (the
"Corporation"), by providing (i) key employees (including officers) of the
Corporation (or its parent or subsidiary corporations) who are responsible for
the management, growth and financial success of the Corporation (or its parent
or subsidiary corporations), (ii) the non-employee members of the Corporation's
Board of Directors and (iii) consultants and other independent contractors who
provide valuable services to the Corporation (or its parent or subsidiary
corporations) with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation (or its parent or
subsidiary corporations).
B. The Discretionary Option Grant and Stock Issuance Programs under this
Plan became effective on the date on which the shares of the Corporation's
Common Stock were first registered under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"). Such date is hereby
designated as the Effective Date for those two programs. The Automatic Option
Grant Program under this Plan became effective immediately upon the execution
and final pricing of the Underwriting Agreement for the initial public offering
of the Corporation's Common Stock. The execution date of such Underwriting
Agreement is hereby designated as the Effective Date of the Automatic Option
Grant Program.
C. This Plan shall serve as the successor to the Corporation's amended and
restated 1990 Stock Option Plan (the "1990 Plan"), and no further option grants
or stock issuances shall be made under the 1990 Plan from and after the
Effective Date of this Plan. All options outstanding under the 1990 Plan on the
Effective Date of the Discretionary Option Grant Program are hereby incorporated
into this Plan and shall accordingly be treated as outstanding options under
this Plan. However, each outstanding option so incorporated shall continue to be
governed solely by the express terms and conditions of the instrument evidencing
such grant, and no provision of this Plan shall be deemed to affect or otherwise
modify the rights or obligations of the holders of such incorporated options
with respect to their acquisition of shares of the Corporation's Common Stock
thereunder.
D. All share numbers in this February 2000 restatement reflect the 3-for-2
split of the Common Stock which was effected on July 12, 1999.
II. DEFINITIONS
A. For purposes of the Plan, the following definitions shall be in effect:
BOARD: the Corporation's Board of Directors.
CODE: the Internal Revenue Code of 1986, as amended.
COMMITTEE: the committee of two (2) or more non-employee Board members
appointed by the Board to administer the Plan.
COMMON STOCK: shares of the Corporation's common stock.
CHANGE IN CONTROL: a change in ownership or control of the Corporation
effected through either of the following transactions:
a. any person or related group of persons (other than the Corporation
or a person that directly or indirectly controls, is controlled by, or is
under common control with, the Corporation) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 of the
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Securities Exchange Act of 1934, as amended) of securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation's stockholders; or
b. there is a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the Board
members (rounded up to the next whole number) ceases, by reason of one or
more proxy contests for the election of Board members, to be comprised of
individuals who either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for election
as Board members during such period by at least a majority of the Board
members described in clause (A) who were still in office at the time such
election or nomination was approved by the Board.
CORPORATE TRANSACTION: any of the following stockholder-approved
transactions to which the Corporation is a party:
a. a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which is
to change the State in which the Corporation is incorporated,
b. the sale, transfer or other disposition of all or substantially all
of the assets of the Corporation in complete liquidation or dissolution of
the Corporation, or
c. any reverse merger in which the Corporation is the surviving entity
but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities are
transferred to a person or persons different from those who held such
securities immediately prior to such merger.
EMPLOYEE: an individual who performs services while in the employ of the
Corporation or one or more parent or subsidiary corporations, subject to the
control and direction of the employer entity not only as to the work to be
performed but also as to the manner and method of performance.
FAIR MARKET VALUE: the fair market value per share of Common Stock
determined in accordance with the following provisions:
a. If the Common Stock is not at the time listed or admitted to trading
on any national stock exchange but is traded on the Nasdaq National Market,
the Fair Market Value shall be the closing selling price per share on the
date in question, as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market and published in THE WALL
STREET JOURNAL. If there is no reported closing selling price for the Common
Stock on the date in question, then the closing selling price on the last
preceding date for which such quotation exists shall be determinative of
Fair Market Value.
b. If the Common Stock is at the time listed or admitted to trading on
any national stock exchange, then the Fair Market Value shall be the closing
selling price per share on the date in question on the exchange determined
by the Plan Administrator to be the primary market for the Common Stock, as
such price is officially quoted in the composite tape of transactions on
such exchange and published in THE WALL STREET JOURNAL. If there is no
reported sale of Common Stock on such exchange on the date in question, then
the Fair Market Value shall be the closing selling price on the exchange on
the last preceding date for which such quotation exists.
HOSTILE TAKE-OVER: a change in ownership of the Corporation effected
through the acquisition, directly or indirectly, by any person or related group
of persons (other than the Corporation or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Corporation) of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made
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directly to the Corporation's stockholders which the Board does not recommend
such stockholders to accept.
OPTIONEE: any person to whom an option is granted under either the
Discretionary Option Grant or Automatic Option Grant Program in effect under the
Plan.
PARTICIPANT: any person who receives a direct issuance of Common Stock
under the Stock Issuance Program in effect under the Plan.
PLAN ADMINISTRATOR: the Committee in its capacity as the administrator of
the Plan.
PERMANENT DISABILITY OR PERMANENTLY DISABLED: the inability of the Optionee
or the Participant to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment expected to result in
death or to be of continuous duration of twelve (12) months or more.
SERVICE: the performance of services on a periodic basis to the Corporation
(or any parent or subsidiary corporation) in the capacity of an Employee, a
non-employee member of the board of directors or an independent consultant or
advisor, except to the extent otherwise specifically provided in the applicable
stock option or stock issuance agreement.
TAKE-OVER PRICE: the GREATER of (a) the Fair Market Value per share of
Common Stock on the date the option is surrendered to the Corporation in
connection with a Hostile Take-Over or (b) the highest reported price per share
of Common Stock paid by the tender offeror in effecting such Hostile Take-Over.
However, if the surrendered option is an incentive stock option under the
Federal tax laws, the Take-Over Price shall not exceed the clause (a) price per
share.
The following provisions shall be applicable in determining the parent and
subsidiary corporations of the Corporation:
Any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation shall be considered to be a PARENT
of the Corporation, provided each such corporation in the unbroken chain
(other than the Corporation) owns, at the time of the determination, stock
possessing 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.
Each corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation shall be considered to be a
SUBSIDIARY of the Corporation, provided each such corporation (other than
the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing 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.
III. STRUCTURE OF THE PLAN
A. STOCK PROGRAMS. The Plan shall be divided into three separate
components: the Discretionary Option Grant Program specified in Article Two, the
Automatic Option Grant Program specified in Article Three and the Stock Issuance
Program specified in Article Four. Under the Discretionary Option Grant Program,
eligible individuals may, at the discretion of the Plan Administrator, be
granted options to purchase shares of Common Stock in accordance with the
provisions of Article Two. Under the Automatic Option Grant Program,
non-employee members of the Corporation's Board of Directors (the "Board") will
receive at periodic intervals special option grants to purchase shares of Common
Stock in accordance with the provisions of Article Three. Under the Stock
Issuance Program, eligible individuals may be issued shares of Common Stock
directly, either through the immediate purchase of such shares at a price not
less than the Fair Market Value of the shares at the time of issuance or as a
bonus tied to the performance of services or the Corporation's attainment of
financial objectives, without any cash payment required of the recipient.
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B. GENERAL PROVISIONS. Unless the context clearly indicates otherwise, the
provisions of Articles One and Five shall apply to the Discretionary Option
Grant Program, the Automatic Option Grant Program and the Stock Issuance Program
and shall accordingly govern the interests of all individuals under the Plan.
IV. ADMINISTRATION OF THE PLAN
A. Both the Discretionary Option Grant Program and the Stock Issuance
Program shall be administered by the Committee. Members of the Committee shall
serve for such period of time as the Board may determine and shall be subject to
removal by the Board at any time.
B. The Committee as Plan Administrator shall have full power and authority
(subject to the express provisions of the Plan) to establish rules and
regulations for the proper administration of the Discretionary Option Grant and
Stock Issuance Programs and to make such determinations under, and issue such
interpretations of, the provisions of such programs and any outstanding option
grants or stock issuances thereunder as it may deem necessary or advisable.
Decisions of the Plan Administrator shall be final and binding on all parties
who have an interest in the Discretionary Option Grant or Stock Issuance Program
or any outstanding option or share issuance thereunder.
C. Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the express terms and conditions of
Article Three, and the Committee as Plan Administrator shall exercise no
discretionary functions with respect to option grants made pursuant to that
program.
V. OPTION GRANTS AND STOCK ISSUANCES
A. The persons eligible to participate in the Discretionary Option Grant
Program under Article Two or the Stock Issuance Program under Article Four are
as follows:
(i) officers and other key employees of the Corporation (or its parent
or subsidiary corporations) who render services which contribute to the
management, growth and financial success of the Corporation (or its parent
or subsidiary corporations);
(ii) non-employee Board members; and
(iii) those consultants or other independent contractors who provide
valuable services to the Corporation (or its parent or subsidiary
corporations).
B. Non-employee Board members shall also be eligible to receive automatic
option grants pursuant to the provisions of Article Three.
C. The Plan Administrator shall have full authority to determine, (I) with
respect to the option grants made under the Plan, which eligible individuals are
to receive option grants, the number of shares to be covered by each such grant,
the status of the granted option as either an incentive stock option ("Incentive
Option") which satisfies the requirements of Code Section 422 or a non-statutory
option not intended to meet such requirements, the time or times at which each
granted option is to become exercisable and the maximum term for which the
option may remain outstanding and (II), with respect to stock issuances under
the Stock Issuance Program, the number of shares to be issued to each
Participant, the vesting schedule (if any) to be applicable to the issued
shares, and the consideration to be paid by the individual for such shares.
VI. STOCK SUBJECT TO THE PLAN
A. Shares of Common Stock shall be available for issuance under the Plan and
shall be drawn from either the Corporation's authorized but unissued shares of
Common Stock or from reacquired shares of Common Stock, including shares
repurchased by the Corporation on the open market. The maximum number of shares
of Common Stock which may be issued over the term of the Plan shall not
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exceed 4,700,000 shares, subject to adjustment from time to time in accordance
with the provisions of this Section VI. Such authorized share reserve is
comprised of (i) the number of shares which remained available for issuance, as
of the Effective Date, under the 1990 Plan as last approved by the Corporation's
stockholders prior to such Effective Date, including the shares subject to the
outstanding options incorporated into this Plan and any other shares which would
have been available for future option grant under the 1990 Plan as last approved
by the stockholders (estimated to be 1,083,000 shares in the aggregate),
(ii) an increase of 192,000 shares authorized by the Board under this Plan as of
the Effective Date, (iii) an additional increase of 750,000 shares authorized by
the Board on February 27, 1995 and approved by the stockholders at the 1995
Annual Meeting, (iv) a further increase of an additional 750,000 shares
authorized by the Board on February 16, 1996 and approved by the stockholders at
the 1996 Annual Meeting, (v) an additional increase of another 525,000 shares
authorized by the Board on February 16, 1998 and approved by the stockholders at
the 1998 Annual Meeting, (vi) an additional increase of 600,000 shares
authorized by the Board on February 15, 1999 and approved by the stockholders at
the 1999 Annual Meeting, and (vii) an additional increase of 800,000 shares
authorized by the Board on February 22, 2000, subject to stockholder approval at
the 2000 Annual Meeting.
B. To the extent one or more outstanding options under the 1990 Plan which
have been incorporated into this Plan are subsequently exercised, the number of
shares issued with respect to each such option shall reduce, on a
share-for-share basis, the number of shares available for issuance under this
Plan.
C. Should one or more outstanding options under this Plan (including
outstanding options under the 1990 Plan incorporated into this Plan) expire or
terminate for any reason prior to exercise in full, then the shares subject to
the portion of each option not so exercised shall be available for subsequent
option grants under the Plan. Unvested shares issued under the Plan and
subsequently cancelled or repurchased by the Corporation, at the original option
exercise or direct issue price paid per share, pursuant to the Corporation's
repurchase rights under the Plan shall be added back to the number of shares of
Common Stock reserved for issuance under the Plan and shall accordingly be
available for reissuance through one or more subsequent option grants or direct
stock issuances under the Plan. However, the shares subject to any option or
portion thereof surrendered in accordance with Section IV of Article Two or
Section III of Article Three shall reduce on a share-for-share basis the number
of shares of Common Stock available for subsequent option grants under the Plan.
In addition, should the exercise price of an option under the Plan (including
any option incorporated from the Predecessor Plan) be paid with shares of Common
Stock or should shares of Common Stock otherwise issuable under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise of an option or the vesting of a stock issuance
under the Plan, then the number of shares of Common Stock available for issuance
under the Plan shall be reduced by the gross number of shares for which the
option is exercised or which vest under the stock issuance, and not by the net
number of shares of Common Stock issued to the holder of such option or stock
issuance.
D. In no event may any one individual participating in the Plan be granted
stock options, separately exercisable stock appreciation rights and direct stock
issuances for more than 750,000 shares in the aggregate over the term of the
Plan. However, any stock options, stock appreciation rights or direct stock
issuances granted prior to January 1, 1994 shall not be taken into account for
purposes of such limitation.
E. Should any change be made to the Common Stock issuable under the Plan by
reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one individual participating in the Plan may be granted
stock options, separately exercisable stock
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appreciation rights and direct stock issuances in the aggregate over the term of
the Plan, (iii) the number and/or class of securities for which automatic option
grants are to be subsequently made to each new or continuing non-employee Board
member under the Automatic Option Grant Program, (iv) the number and/or class of
securities and price per share in effect under each option outstanding under
either the Discretionary Option Grant or Automatic Option Grant Program and
(v) the number and/or class of securities and price per share in effect under
each outstanding option incorporated into this Plan from the 1990 Plan. Such
adjustments to the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.
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ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Discretionary Option Grant Program shall be
authorized by action of the Plan Administrator and may, at the Plan
Administrator's discretion, be either Incentive Options or non-statutory
options. Individuals who are not Employees of the Corporation or its parent or
subsidiary corporations may only be granted non-statutory options. Each granted
option shall be evidenced by one or more instruments in the form approved by the
Plan Administrator; PROVIDED, however, that each such instrument shall comply
with the terms and conditions specified below. Each instrument evidencing an
Incentive Option shall, in addition, be subject to the applicable provisions of
Section II of this Article Two.
A. OPTION PRICE.
1. The option price per share shall be fixed by the Plan Administrator
but in no event shall be less than one hundred percent (100%) of the Fair
Market Value of such Common Stock on the grant date.
2. The option price shall become immediately due upon exercise of the
option and, subject to the provisions of Section I of Article Five and the
instrument evidencing the grant, shall be payable in one of the following
alternative forms specified below:
- full payment in cash or check drawn to the Corporation's order;
- full payment in shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date
(as such term is defined below);
- full payment in a combination of shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date and cash or check drawn to the Corporation's
order; or
- full payment through a broker-dealer sale and remittance procedure
pursuant to which the Optionee (I) shall provide irrevocable
instructions to a designated brokerage firm to effect the immediate
sale of the purchased shares and remit to the Corporation, out of the
sale proceeds available on the settlement date, sufficient funds to
cover the aggregate option price payable for the purchased shares plus
all applicable Federal and State income and employment taxes required
to be withheld by the Corporation in connection with such purchase and
(II) shall provide directives to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm
in order to complete the sale transaction.
For purposes of this subparagraph (2), the Exercise Date shall be the date
on which written notice of the option exercise is delivered to the Corporation.
Except to the extent the sale and remittance procedure is utilized in connection
with the exercise of the option, payment of the option price for the purchased
shares must accompany such notice.
B. TERM AND EXERCISE OF OPTIONS. Each option granted under this
Discretionary Option Grant Program shall be exercisable at such time or times
and during such period as is determined by the Plan Administrator and set forth
in the instrument evidencing the grant. No such option, however, shall have a
maximum term in excess of ten (10) years from the grant date.
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C. TERMINATION OF SERVICE.
1. The following provisions shall govern the exercise period applicable
to any outstanding options held by the Optionee at the time of cessation of
Service or death.
- Should an Optionee cease Service for any reason (including death or
Permanent Disability) while holding one or more outstanding options
under this Article Two, then none of those options shall (except to the
extent otherwise provided pursuant to subparagraph C.(3) below) remain
exercisable for more than a thirty-six (36)-month period (or such
shorter period determined by the Plan Administrator and set forth in
the instrument evidencing the grant) measured from the date of such
cessation of Service.
- Any option held by the Optionee under this Article Two and exercisable
in whole or in part on the date of his or her death may be subsequently
exercised by the personal representative of the Optionee's estate or by
the person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and
distribution. Such exercise, however, must occur prior to the EARLIER
of (i) the third anniversary of the date of the Optionee's death (or
such shorter period determined by the Plan Administrator and set forth
in the instrument evidencing the grant) or (ii) the specified
expiration date of the option term. Upon the occurrence of the earlier
event, the option shall terminate and cease to be outstanding.
- During the applicable post-Service period, the option may not be
exercised in the aggregate for more than the number of shares (if any)
in which the Optionee is vested at the time of cessation of Service.
Upon the expiration of the limited post-Service exercise period or (if
earlier) upon the specified expiration date of the option term, each
such option shall terminate and cease to be outstanding with respect to
any vested shares for which it has not otherwise been exercised.
However, each outstanding option shall immediately terminate and cease
to be outstanding, at the time of the Optionee's cessation of Service,
with respect to any shares for which it is not otherwise at that time
exercisable or in which Optionee is not otherwise vested.
- Under no circumstances, however, shall any such option be exercisable
after the specified expiration date of the option term.
- Should (i) the Optionee's Service be terminated for misconduct
(including, but not limited to, any act of dishonesty, willful
misconduct, fraud or embezzlement) or (ii) the Optionee make any
unauthorized use or disclosure of confidential information or trade
secrets of the Corporation or its parent or subsidiary corporations,
then in any such event all outstanding options held by the Optionee
under this Article Two shall terminate immediately and cease to be
outstanding.
2. The Plan Administrator shall have complete discretion, exercisable
either at the time the option is granted or at any time while the option
remains outstanding, to permit one or more options held by the Optionee
under this Article Two to be exercised, during the limited post-Service
exercise period applicable under subparagraph (1) above, not only with
respect to the number of vested shares of Common Stock for which each such
option is exercisable at the time of the Optionee's cessation of Service but
also with respect to one or more subsequent installments of vested shares
for which the option would otherwise have become exercisable had such
cessation of Service not occurred.
(3) The Plan Administrator shall also have full power and authority to
extend the period of time for which the option is to remain exercisable
following the Optionee's cessation of Service or death from the limited
period in effect under subparagraph (1) above to such greater period of
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time as the Plan Administrator shall deem appropriate. In no event, however,
shall such option be exercisable after the specified expiration date of the
option term.
D. STOCKHOLDER RIGHTS. An Optionee shall have no stockholder rights with
respect to any shares covered by the option until such individual shall have
exercised the option and paid the option price for the purchased shares.
E. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. However, a Non-Statutory Option
may, in connection with the Optionee's estate plan, be assigned in whole or in
part during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate.
F. REPURCHASE RIGHTS. The shares of Common Stock acquired upon the
exercise of any Article Two option grant may be subject to repurchase by the
Corporation in accordance with the following provisions:
a. The Plan Administrator shall have the discretion to authorize the
issuance of unvested shares of Common Stock under this Article Two. Should
the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase any or all of those unvested
shares at the option price paid per share. The terms and conditions upon
which such repurchase right shall be exercisable (including the period and
procedure for exercise and the appropriate vesting schedule for the
purchased shares) shall be established by the Plan Administrator and set
forth in the instrument evidencing such repurchase right.
b. All of the Corporation's outstanding repurchase rights under this
Article Two shall automatically terminate, and all shares subject to such
terminated rights shall immediately vest in full, upon the occurrence of a
Corporate Transaction, except to the extent: (i) any such repurchase right
is expressly assigned to the successor corporation (or parent thereof) in
connection with the Corporate Transaction or (ii) such termination is
precluded by other limitations imposed by the Plan Administrator at the time
the repurchase right is issued.
c. The Plan Administrator shall have the discretionary authority,
exercisable either before or after the Optionee's cessation of Service, to
cancel the Corporation's outstanding repurchase rights with respect to one
or more shares purchased or purchasable by the Optionee under this
Discretionary Option Grant Program and thereby accelerate the vesting of
such shares in whole or in part at any time.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under this Article Two. Incentive Options may only be
granted to individuals who are Employees of the Corporation. Options which are
specifically designated as "non-statutory" options when issued under the Plan
shall NOT be subject to such terms and conditions.
A. DOLLAR LIMITATION. The aggregate Fair Market Value (determined as of
the respective date or dates of grant) of the Common Stock for which one or more
options granted to any Employee under this Plan (or any other option plan of the
Corporation or its parent or subsidiary corporations) may for the first time
become exercisable as incentive stock options under the Federal tax laws during
any one calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent
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the Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as incentive stock options under the Federal tax
laws shall be applied on the basis of the order in which such options are
granted. Should the number of shares of Common Stock for which any Incentive
Option first becomes exercisable in any calendar year exceed the applicable One
Hundred Thousand Dollar ($100,000) limitation, then that option may nevertheless
be exercised in that calendar year for the excess number of shares as a
non-statutory option under the Federal tax laws.
B. 10% STOCKHOLDER. If any individual to whom an Incentive Option is
granted is the owner of stock (as determined under Section 424(d) of the
Internal Revenue Code) possessing ten percent (10%) or more of the total
combined voting power of all classes of stock of the Corporation or any one of
its parent or subsidiary corporations, then the option price per share shall not
be less than one hundred and ten percent (110%) of the Fair Market Value per
share of Common Stock on the grant date, and the option term shall not exceed
five (5) years, measured from the grant date.
Except as modified by the preceding provisions of this Section II, the
provisions of Articles One, Two and Five of the Plan shall apply to all
Incentive Options granted hereunder.
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of any Corporate Transaction, each option which is at the
time outstanding under this Article Two shall automatically accelerate so that
each such option shall, immediately prior to the specified effective date for
the Corporate Transaction, become fully exercisable with respect to the total
number of shares of Common Stock at the time subject to such option and may be
exercised for all or any portion of such shares. However, an outstanding option
under this Article Two shall NOT so accelerate if and to the extent: (i) such
option is, in connection with the Corporate Transaction, either to be assumed by
the successor corporation or parent thereof or to be replaced with a comparable
option to purchase shares of the capital stock of the successor corporation or
parent thereof, (ii) such option is to be replaced with a cash incentive program
of the successor corporation which preserves the option spread existing at the
time of the Corporate Transaction and provides for subsequent payout in
accordance with the same vesting schedule applicable to such option, or
(iii) the acceleration of such option is subject to other limitations imposed by
the Plan Administrator at the time of the option grant. The determination of
option comparability under clause (i) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive.
B. Upon the consummation of the Corporate Transaction, all outstanding
options under this Article Two shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation or its parent company.
C. Each outstanding option under this Article Two which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have been
issued to the option holder, in consummation of such Corporate Transaction, had
such person exercised the option immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the option price
payable per share, PROVIDED the aggregate option price payable for such
securities shall remain the same. In addition, the class and number of
securities available for issuance under the Plan following the consummation of
the Corporate Transaction shall be appropriately adjusted. To the extent the
actual holders of the Corporation's outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Corporate
Transaction, the successor corporation may, in connection with the assumption of
the outstanding options under the Discretionary Option Grant Program, substitute
one or more shares of its own common stock with a fair market value equivalent
to the cash consideration paid per share of Common Stock in such Corporate
Transaction.
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D. The Plan Administrator shall have the discretion, exercisable either in
advance of any actually-anticipated Corporate Transaction or at the time of an
actual Corporate Transaction, to provide (upon such terms as it may deem
appropriate) for the automatic acceleration of one or more outstanding options
under this Article Two which are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time, in the event the
Optionee's Service should subsequently terminate within a designated period
following the effective date of such Corporate Transaction. The Plan
Administrator may also structure one or more option grants under this
Article Two so that those options will automatically accelerate at the time of a
Corporate Transaction, whether or not those options are to be assumed or
replaced by successor corporation.
E. The grant of options under this Article Two shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
F. The Plan Administrator shall have the discretionary authority,
exercisable either in advance of any actually-anticipated Change in Control or
at the time of an actual Change in Control, to provide for the automatic
acceleration of one or more outstanding options under this Article Two (and the
termination of one or more of the Corporation's outstanding repurchase rights
under this Article Two) upon the occurrence of the Change in Control. The Plan
Administrator shall also have full power and authority to condition any such
option acceleration (and the termination of any outstanding repurchase rights)
upon the subsequent termination of the Optionee's Service within a specified
period following the Change in Control.
G. Any options accelerated in connection with the Change in Control shall
remain fully exercisable until the expiration or sooner termination of the
option term.
H. The exercisability as incentive stock options under the Federal tax laws
of any options accelerated under this Section III in connection with a Corporate
Transaction or Change in Control shall remain subject to the dollar limitation
of Section II of this Article Two.
IV. STOCK APPRECIATION RIGHTS
A. Provided and only if the Plan Administrator determines in its discretion
to implement the stock appreciation right provisions of this Section IV, one or
more Optionees may be granted the right, exercisable upon such terms and
conditions as the Plan Administrator may establish, to surrender all or part of
an unexercised option under this Article Two in exchange for a distribution from
the Corporation in an amount equal to the excess of (i) the Fair Market Value
(on the option surrender date) of the number of shares in which the Optionee is
at the time vested under the surrendered option (or surrendered portion thereof)
over (ii) the aggregate option price payable for such vested shares.
B. No surrender of an option shall be effective hereunder unless it is
approved by the Plan Administrator. If the surrender is so approved, then the
distribution to which the Optionee shall accordingly become entitled under this
Section IV may be made in shares of Common Stock valued at Fair Market Value on
the option surrender date, in cash, or partly in shares and partly in cash, as
the Plan Administrator deems appropriate.
C. If the surrender of an option is rejected by the Plan Administrator,
then the Optionee shall retain whatever rights the Optionee had under the
surrendered option (or surrendered portion thereof) on the option surrender date
and may exercise such rights at any time prior to the LATER of (i) five
(5) business days after the receipt of the rejection notice or (ii) the last day
on which the option is otherwise exercisable in accordance with the terms of the
instrument evidencing such option, but in no event may such rights be exercised
more than ten (10) years after the date of the option grant.
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D. One or more officers of the Corporation subject to the short-swing profit
restrictions of the Federal securities laws may, in the Plan Administrator's
sole discretion, be granted limited stock appreciation rights in tandem with
their outstanding options under the Plan. Upon the occurrence of a Hostile
Take-Over, the officer will have a thirty (30)-day period in which he or she may
surrender any outstanding options with such a limited stock appreciation right
to the Corporation, to the extent such options are at the time exercisable for
fully-vested shares of Common Stock. The officer shall in return be entitled to
a cash distribution from the Corporation in an amount equal to the excess of
(i) the Take-Over Price of the vested shares of Common Stock at the time subject
to each surrendered option over (ii) the aggregate exercise price payable for
such vested shares. The cash distribution payable upon such option surrender
shall be made within five (5) days following the consummation of the Hostile
Take-Over. At the time such limited stock appreciation right is granted, the
Plan Administrator shall pre-approve the subsequent exercise of that right in
accordance with the terms of this Paragraph D. Accordingly, no further approval
of the Plan Administrator or the Board shall be required at the time of the
actual option surrender and cash distribution. Any unsurrendered portion of the
option shall continue to remain outstanding and become exercisable in accordance
with the terms of the instrument evidencing such grant.
E. The shares of Common Stock subject to any option surrendered for an
appreciation distribution pursuant to this Section IV shall NOT be available for
subsequent option grant under the Plan.
ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
The following provisions set forth the terms and conditions of the Automatic
Option Grant Program as amended by the Board on February 22, 2000, subject to
stockholder approval at the 2000 Annual Meeting. Stockholder approval of the
February 2000 restatement shall also constitute pre-approval of each option
grant made under this amended Automatic Option Grant Program on or after the
date of the 2000 Annual Stockholders Meeting and the subsequent exercise of that
option in accordance with the terms of such program as set forth below.
I. ELIGIBILITY
The individuals eligible to receive automatic option grants pursuant to the
provisions of this Article Three program shall be limited to (i) those
individuals who are first elected or appointed as non-employee Board members on
or after the date of the 2000 Annual Stockholders Meeting, whether through
appointment by the Board or election by the Corporation's stockholders, and
(ii) those individuals who continue to serve as non-employee Board members after
the date of the 2000 Annual Stockholders Meeting. In no event, however, shall a
clause (i) non-employee Board member be eligible to participate in the Automatic
Option Grant Program if such individual has at any time been in the prior employ
of the Corporation (or any parent or subsidiary corporation). Any non-employee
Board member eligible to participate in the Automatic Option Grant Program
pursuant to the foregoing criteria shall be designated an Eligible Director for
purposes of this Plan.
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. GRANT DATES. Option grants shall be made under this amended and restated
Article Three on the dates specified below:
(i) Each Eligible Director who first becomes a non-employee Board member
on or after the date of the 2000 Annual Stockholders Meeting, whether
through election by the Corporation's stockholders or appointment by the
Board, shall automatically be granted, at the time of such
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initial election or appointment, a non-statutory stock option to purchase
15,000 shares of Common Stock upon the terms and conditions of this
Article Three.
(iii) On the first trading day in January each year, beginning with
calendar year 2000, each individual who is at the time serving as a
non-employee Board member will automatically be granted an option to
purchase 15,000 shares of Common Stock, and each individual who is also at
the time serving as a Chairperson of any Board committee will automatically
be granted a second option for an additional 15,000 shares, provided in each
instance that such individual has served as a non-employee Board member for
at least six (6) months. There shall be no limit on the number of such
15,000-share option grants any one non-employee Board member or Chairperson
may receive over his or her period of Board service. Pursuant to a further
amendment to the Automatic Option Grant Program authorized by the Board on
March 22, 2000, the number of shares of Common Stock subject to each such
option grant made to the continuing non-employee Board members and the
continuing Chairpersons shall be reduced to 10,000 shares per individual
non-employee Board member and to an additional 10,000 shares per continuing
Chairperson, effective with the option grants to be made on January 2, 2001.
The number of shares for which the automatic grants are to be made to each
newly-elected or continuing Eligible Director shall be subject to periodic
adjustment pursuant to the applicable provisions of Section V.C of
Article One.
B. EXERCISE PRICE. The exercise price per share of Common Stock subject to
each automatic option grant made under this Article Three shall be equal to one
hundred percent (100%) of the Fair Market Value per share of Common Stock on the
automatic grant date.
C. PAYMENT.
The exercise price shall be payable in one of the alternative forms
specified below:
(i) full payment in cash or check made payable to the Corporation's
order; or
(ii) full payment in shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation's reported earnings
and valued at Fair Market Value on the Exercise Date; or
(iii) full payment in a combination of shares of Common Stock held for
the requisite period necessary to avoid a charge to the Corporation's
reported earnings and valued at Fair Market Value on the Exercise Date and
cash or check payable to the Corporation's order; or
(iv) full payment through a sale and remittance procedure pursuant to
which the non-employee Board member (I) shall provide irrevocable written
instructions to a designated brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares and shall (II) concurrently
provide written directives to the Corporation to deliver the certificates
for the purchased shares directly to such brokerage firm in order to
complete the sale transaction.
The Exercise Date shall be the date on which written notice of the option
exercise is delivered to the Corporation. Except to the extent the sale and
remittance procedure is utilized for the exercise of the option, payment of the
option price for the purchased shares must accompany the exercise notice.
D. OPTION TERM. Each automatic grant under this Article Three shall have a
maximum term of ten (10) years measured from the automatic grant date.
------------------------
(1) Prior to the February 2000 restatement, each automatic option grant made
under this Article Three was to become exercisable in a series of four (4)
successive equal annual installments
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E. EXERCISABILITY. Each automatic grant shall become exercisable over the
Optionee's period of service on the Board as follows: (i) the option will become
exercisable for twenty-five percent (25%) of the option shares upon the
Optionee's completion of six (6) months of Board service measured from after the
automatic grant date, and (ii) the option will become exercisable for the
balance of the option shares in a series of thirty-six (36) successive equal
monthly installments upon the Optionee's completion of each of the next
thirty-six (36) months of Board service thereafter.(1) The exercisability of
each automatic grant shall be subject to acceleration in accordance with the
provisions of Section II.G and Section III of this Article Three.
F. LIMITED-TRANSFERABILITY. During the lifetime of the Optionee, each
automatic option grant, together with the limited stock appreciation right
pertaining to such option, shall be exercisable only by the Optionee and shall
not be assignable or transferable by the Optionee other than (i) a transfer of
the option effected by will or by the laws of descent and distribution following
Optionee's death or (ii) an assignment of the option in whole or in part during
the Optionee's lifetime to one or more members of the Optionee's immediate
family or to a trust established exclusively for one or more such family
members, to the extent such assignment is effected for estate planning purposes.
The assigned portion may only be exercised by the person or persons who acquire
a proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem appropriate.
G. TERMINATION OF BOARD SERVICE.
1. Should the Optionee cease service as a Board member cease for any reason
(other than death or Permanent Disability) while holding one or more automatic
option grants under this Article Three, then such individual shall have a six
(6)-month period following the date of such cessation of Board service in which
to exercise each such option for any or all of the shares of Common Stock for
which the option is exercisable at the time of such cessation of Board service.
However, each such option shall immediately terminate and cease to be
outstanding, at the time of such cessation of Board service, with respect to any
shares for which the option is not otherwise at that time exercisable.
2. Should the Optionee die within six (6) months after cessation of Board
service, then each outstanding automatic option grant held by the Optionee at
the time of death may subsequently be exercised, for any or all of the shares of
Common Stock for which such option is exercisable at the time of the Optionee's
cessation of Board service (less any option shares subsequently purchased by the
Optionee prior to death), by the personal representative of the Optionee's
estate or by the person or persons to whom the option is transferred pursuant to
the Optionee's will or in accordance with the laws of descent and distribution.
Any such exercise must occur within twelve (12) months after the date of the
Optionee's death.
3. Should the Optionee die or become permanently disabled while serving as
a Board member, then each automatic option grant held by such Optionee under
this Article Three shall accelerate in full, and the Optionee (or the
representative of the Optionee's estate or the person or persons to whom the
option is transferred upon the Optionee's death) shall have a twelve (12)-month
period following the date of the Optionee's cessation of Board service in which
to exercise each such option for any or all of the shares of Common Stock
subject to that option at the time of such cessation of Board service.
over the Optionee's period of service on the Board, with the first such
installment to become exercisable six (6) months after the automatic grant
date. The new vesting schedule for the automatic option grants is subject to
stockholder approval at the 2000 Annual Meeting. If such stockholder
approval is obtained, then the new vesting schedule will be in effect for
all currently outstanding options under the Automatic Option Grant Program
and for all future option grants made under such program.
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4. In no event shall any automatic grant under this Article Three remain
exercisable after the specified expiration date of the ten (10)-year option
term. Upon the expiration of the applicable post-service exercise period under
subparagraph 1, 2 or 3 above or (if earlier) upon the expiration of the ten
(10)-year option term, the automatic grant shall terminate and cease to be
outstanding for any unexercised shares for which the option was otherwise
exercisable at the time of the Optionee's cessation of Board service.
H. STOCKHOLDER RIGHTS. The holder of an automatic option grant under this
Article Three shall have none of the rights of a stockholder with respect to any
shares subject to such option until such individual shall have exercised the
option and paid the exercise price for the purchased shares.
I. REMAINING TERMS. The remaining terms and conditions of each automatic
option grant shall be as set forth in the prototype Non-statutory Stock Option
Agreement attached as Exhibit A to the Plan.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, each automatic option grant at
the time outstanding under this Article Three shall automatically accelerate so
that each such option shall, immediately prior to the specified effective date
for the Corporate Transaction, become fully exercisable with respect to the
total number of shares of Common Stock at the time subject to such option and
may be exercised for all or any portion of such shares. Upon the consummation of
the Corporate Transaction, all automatic option grants under this Article Three
shall terminate and cease to be outstanding.
B. In the event of any Change in Control of the Corporation, each automatic
option grant at the time outstanding under this Article Three shall
automatically accelerate so that each such option shall, immediately prior to
the specified effective date for the Change in Control, become fully exercisable
with respect to the total number of shares of Common Stock at the time subject
to such option and may be exercised for all or any portion of such shares.
C. The Optionee shall have the right, exercisable at any time during the
thirty (30)-day period immediately following a Hostile Take-Over, to surrender
each option held by him or her under this Article Three to the Corporation. The
Optionee shall in return be entitled to a cash distribution from the Corporation
in an amount equal to the excess of (i) the Take-Over Price of the shares of
Common Stock at the time subject to the surrendered option (whether or not the
option is otherwise at the time exercisable for such shares) over (ii) the
aggregate exercise price payable for such shares. Such cash distribution shall
be paid within five (5) days following the consummation of the Hostile
Take-Over. Stockholder approval of this February 2000 Restatement at the 2000
Annual Meeting shall constitute pre-approval of each such option surrender right
granted under this Automatic Option Grant Program on or after the date of such
Annual Meeting and the subsequent exercise of each such right in accordance with
the terms and provisions of this Section III.C. No additional approval or
consent of the Plan Administrator or the Board shall be required at the time of
the actual option surrender and cash distribution.
D. Each outstanding option under this Automatic Option Grant Program which
is assumed in connection with the Corporate Transaction or is otherwise to
continue in effect shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply and pertain to the number and class of
securities which would have been issued to the option holder, in consummation of
such Corporate Transaction, had such person exercised the option immediately
prior to such Corporate Transaction. Appropriate adjustments shall also be made
to the option price payable per share, PROVIDED the aggregate option price
payable for such securities shall remain the same. In addition, the class and
number of securities available for issuance under the Plan following the
consummation of the Corporate Transaction shall be appropriately adjusted. To
the extent the actual holders of the Corporation's outstanding Common Stock
receive cash consideration for their Common Stock in
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consummation of the Corporate Transaction, the successor corporation may, in
connection with the assumption of the outstanding options under the Automatic
Option Grant Program, substitute one or more shares of its own common stock with
a fair market value equivalent to the cash consideration paid per share of
Common Stock in such Corporate Transaction.
D. The shares of Common Stock subject to each option surrendered in
connection with the Hostile Take-Over shall NOT be available for subsequent
option grant under this Plan.
E. The automatic option grants outstanding under this Article Three shall
in no way affect the right of the Corporation to adjust, reclassify, reorganize
or otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
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ARTICLE FOUR
STOCK ISSUANCE PROGRAM
I. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares may be issued under the Stock Issuance Program through direct and
immediate purchases without any intervening stock option grants. The issued
shares shall be evidenced by a Stock Issuance Agreement ("Issuance Agreement")
that complies with the terms and conditions of this Article Four.
A. CONSIDERATION.
1. Shares of Common Stock drawn from the Corporation's authorized but
unissued shares of Common Stock ("Newly Issued Shares") shall be issued under
the Stock Issuance Program for one or more of the following items of
consideration which the Plan Administrator may deem appropriate in each
individual instance:
(i) cash or check drawn to the Corporation's order;
(ii) a promissory note payable to the Corporation's order in one or more
installments, which may be subject to cancellation in whole or in part upon
terms and conditions established by the Plan Administrator; or
(iii) past services rendered to the Corporation or any parent or
subsidiary corporation.
2. All Newly Issued Shares shall be issued for consideration with a value
less not less than one-hundred percent (100%) of the Fair Market Value of such
shares at the time of issuance.
3. Shares of Common Stock reacquired by the Corporation and held as
treasury shares ("Treasury Shares") may be issued under the Stock Issuance
Program for such consideration (including one or more of the items of
consideration specified in subparagraph 1. above) as the Plan Administrator may
deem appropriate, provided such consideration is in an amount not less than the
Fair Market Value of the Treasury Shares at the time of issuance. Treasury
Shares may, in lieu of any cash consideration, be issued subject to such vesting
requirements tied to the Participant's period of future Service or the
Corporation's attainment of specified performance objectives as the Plan
Administrator may establish at the time of issuance. The Treasury Share
provisions shall be in effect only for such period or periods (if any) during
which the Corporation is incorporated under the laws of the State of Delaware.
B. VESTING PROVISIONS.
1. Shares of Common Stock issued under the Stock Issuance Program may, in
the absolute discretion of the Plan Administrator, be fully and immediately
vested upon issuance or may vest in one or more installments over the
Participant's period of Service. The elements of the vesting schedule applicable
to any unvested shares of Common Stock issued under the Stock Issuance Program,
namely:
(i) the Service period to be completed by the Participant or the
performance objectives to be achieved by the Corporation,
(ii) the number of installments in which the shares are to vest,
(iii) the interval or intervals (if any) which are to lapse between
installments, and
(iv) the effect which death, Permanent Disability or other event
designated by the Plan Administrator is to have upon the vesting schedule,
shall be determined by the Plan Administrator and incorporated into the
Issuance Agreement executed by the Corporation and the Participant at the
time such unvested shares are issued.
2. The Participant shall have full stockholder rights with respect to any
shares of Common Stock issued to him or her under the Plan, whether or not his
or her interest in those shares is vested.
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Accordingly, the Participant shall have the right to vote such shares and to
receive any regular cash dividends paid on such shares. Any new, additional or
different shares of stock or other property (including money paid other than as
a regular cash dividend) which the Participant may have the right to receive
with respect to his or her unvested shares by reason of any stock dividend,
stock split, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration or by reason of any Corporate Transaction
shall be issued, subject to (i) the same vesting requirements applicable to his
or her unvested shares and (ii) such escrow arrangements as the Plan
Administrator shall deem appropriate.
3. Should the Participant cease to remain in Service while holding one or
more unvested shares of Common Stock under the Stock Issuance Program, then
those shares shall be immediately surrendered to the Corporation for
cancellation, and the Participant shall have no further stockholder rights with
respect to those shares. To the extent the surrendered shares were previously
issued to the Participant for consideration paid in cash or cash equivalent
(including the Participant's purchase-money promissory note), the Corporation
shall repay to the Participant the cash consideration paid for the surrendered
shares and shall cancel the unpaid principal balance of any outstanding
purchase-money note of the Participant attributable to such surrendered shares.
The surrendered shares may, at the Plan Administrator's discretion, be retained
by the Corporation as Treasury Shares or may be retired to authorized but
unissued share status. Treasury Shares will only be an available election during
the period or periods (if any) the Corporation is incorporated under the laws of
the State of Delaware.
4. The Plan Administrator may in its discretion elect to waive the
surrender and cancellation of one or more unvested shares of Common Stock (or
other assets attributable thereto) which would otherwise occur upon the
non-completion of the vesting schedule applicable to such shares. Such waiver
shall result in the immediate vesting of the Participant's interest in the
shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.
II. CORPORATE TRANSACTIONS/CHANGE IN CONTROL
A. Upon the occurrence of any Corporate Transaction, all of the
Corporation's outstanding repurchase rights under this Article Three shall
automatically terminate, and all shares subject to such terminated rights shall
immediately vest in full, except to the extent: (i) any such repurchase right is
expressly assigned to the successor corporation (or parent thereof) in
connection with the Corporate Transaction or (ii) such termination is precluded
by other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.
B. The Plan Administrator shall have the discretionary authority,
exercisable either in advance of any actually-anticipated Change in Control or
at the time of an actual Change in Control, to provide for the immediate and
automatic vesting of one or more unvested shares outstanding under the Stock
Issuance Program at the time of such Change in Control. The Plan Administrator
shall also have full power and authority to condition any such accelerated
vesting upon the subsequent termination of the Participant's Service within a
specified period following the Change in Control.
III. SHARE ESCROW/TRANSFER RESTRICTIONS
A. Unvested shares may, in the Plan Administrator's discretion, be held in
escrow by the Corporation until the Participant's interest in such shares vests
or may be issued directly to the Participant with restrictive legends on the
certificates evidencing such unvested shares. To the extent an escrow
arrangement is utilized, the unvested shares and any securities or other assets
issued with respect to such shares (other than regular cash dividends) shall be
delivered in escrow to the
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Corporation to be held until the Participant's interest in such shares (or other
securities or assets) vests. Alternatively, if the unvested shares are issued
directly to the Participant, the restrictive legend on the certificates for such
shares shall read substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE
ACCORDINGLY SUBJECT TO (I) CERTAIN TRANSFER RESTRICTIONS AND (II)
CANCELLATION OR REPURCHASE IN THE EVENT THE REGISTERED HOLDER (OR HIS/HER
PREDECESSOR IN INTEREST) CEASES TO REMAIN IN THE CORPORATION'S SERVICE. SUCH
TRANSFER RESTRICTIONS AND THE TERMS AND CONDITIONS OF SUCH CANCELLATION OR
REPURCHASE ARE SET FORTH IN A STOCK ISSUANCE AGREEMENT BETWEEN THE
CORPORATION AND THE REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST)
DATED, , A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF
THE CORPORATION.".
B. The Participant shall have no right to transfer any unvested shares of
Common Stock issued to him or her under the Stock Issuance Program. For purposes
of this restriction, the term "transfer" shall include (without limitation) any
sale, pledge, assignment, encumbrance, gift, or other disposition of such
shares, whether voluntary or involuntary. Upon any such attempted transfer, the
unvested shares shall immediately be cancelled in accordance with substantially
the same procedure in effect under Section I.B.3 of this Article Four, and
neither the Participant nor the proposed transferee shall have any rights with
respect to such cancelled shares. However, the Participant shall have the right
to make a gift of unvested shares acquired under the Stock Issuance Program to
his or her spouse or issue, including adopted children, or to a trust
established for such spouse or issue, provided the donee of such shares delivers
to the Corporation a written agreement to be bound by all the provisions of the
Stock Issuance Program and the Issuance Agreement applicable to the gifted
shares.
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ARTICLE FIVE
MISCELLANEOUS
I. LOANS OR INSTALLMENT PAYMENTS
A. The Plan Administrator may, in its discretion, assist any Optionee or
Participant (including an Optionee or Participant who is an officer of the
Corporation) in the exercise of one or more options granted to such Optionee
under the Discretionary Option Grant Program or the purchase of one or more
shares issued to such Participant under the Stock Issuance Program,
including the satisfaction of any Federal and State income and employment
tax obligations arising therefrom, by (i) authorizing the extension of a
loan from the Corporation to such Optionee or Participant or
(ii) permitting the Optionee or Participant to pay the option price or
purchase price for the purchased Common Stock in installments over a period
of years. The terms of any loan or installment method of payment (including
the interest rate and terms of repayment) shall be upon such terms as the
Plan Administrator specifies in the applicable option or issuance agreement
or otherwise deems appropriate under the circumstances. Loans or installment
payments may be authorized with or without security or collateral. However,
the maximum credit available to the Optionee or Participant may not exceed
the option or purchase price of the acquired shares plus any Federal and
State income and employment tax liability incurred by the Optionee or
Participant in connection with the acquisition of such shares.
B. The Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under this financial assistance program
shall be subject to forgiveness by the Corporation in whole or in part upon
such terms and conditions as the Plan Administrator may deem appropriate.
II. AMENDMENT OF THE PLAN AND AWARDS
A. The Board has complete and exclusive power and authority to amend or
modify the Plan (or any component thereof) in any or all respects
whatsoever. However, no such amendment or modification shall adversely
affect rights and obligations with respect to options at the time
outstanding under the Plan, nor adversely affect the rights of any
Participant with respect to Common Stock issued under the Stock Issuance
Program prior to such action, unless the Optionee or Participant consents to
such amendment. In addition, certain amendments may require stockholder
approval pursuant to applicable laws or regulations.
B. (i) Options to purchase shares of Common Stock may be granted under
the Discretionary Option Grant Program and (ii) shares of Common Stock may
be issued under the Stock Issuance Program, which are in both instances in
excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under the Discretionary Option
Grant Program or the Stock Issuance Program are held in escrow until
stockholder approval is obtained for a sufficient increase in the number of
shares available for issuance under the Plan. If such stockholder approval
is not obtained within twelve (12) months after the date the first such
excess option grants or excess share issuances are made, then (I) any
unexercised excess options shall terminate and cease to be exercisable and
(II) the Corporation shall promptly refund the purchase price paid for any
excess shares actually issued under the Plan and held in escrow, together
with interest (at the applicable Short Term Federal Rate) for the period the
shares were held in escrow.
III. TAX WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock upon the
exercise of stock options for such shares or the vesting of such shares under
the Plan shall be subject to the satisfaction of all applicable Federal, State
and local income and employment tax withholding requirements.
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The Plan Administrator may, in its discretion and in accordance with the
provisions of this Section III of Article Five and such supplemental rules as
the Plan Administrator may from time to time adopt (including the applicable
safe-harbor provisions of SEC Rule 16b-3), provide any or all holders of
non-statutory options (other than the automatic grants made pursuant to
Article Three of the Plan) or unvested shares under the Plan with the right to
use shares of the Corporation's Common Stock in satisfaction of all or part of
the Federal, State and local income and employment withholding taxes to which
such holders may become subject in connection with the exercise of their options
or the vesting of their shares (the "Withholding Taxes"). Such right may be
provided to any such holder in either or both of the following formats:
(a) STOCK WITHHOLDING: The holder of the non-statutory option or
unvested shares may be provided with the election to have the
Corporation withhold, from the shares of Common Stock otherwise
issuable upon the exercise of such non-statutory option or the
vesting of such shares, a portion of those shares with an
aggregate Fair Market Value equal to the percentage of the
applicable Withholding Taxes (not to exceed one hundred percent
(100%)) designated by the holder.
(b) STOCK DELIVERY: The Plan Administrator may, in its
discretion, provide the holder of the non-statutory option or the
unvested shares with the election to deliver to the Corporation,
at the time the non-statutory option is exercised or the shares
vest, one or more shares of Common Stock previously acquired by
such individual (other than in connection with the option exercise
or share vesting triggering the Withholding Taxes) with an
aggregate Fair Market Value equal to the percentage of the
Withholding Taxes incurred in connection with such option exercise
or share vesting (not to exceed one hundred percent (100%))
designated by the holder.
IV. EFFECTIVE DATE AND TERM OF PLAN
A. This Plan as successor to the Corporation's 1990 Stock Option Plan
became effective as of the applicable Effective Date for each of the equity
incentive programs in effect hereunder, and no further option grants or
stock issuances shall be made under the 1990 Plan from and after such
Effective Date. Each option issued and outstanding under the 1990 Plan
immediately prior to the Effective Date of the Discretionary Option Grant
Program shall be incorporated into this Plan and treated as an outstanding
option under this Plan, but each such option shall continue to be governed
solely by the terms and conditions of the instrument evidencing such grant,
and nothing in this Plan shall be deemed to affect or otherwise modify the
rights or obligations of the holders of such options with respect to their
acquisition of shares of Common Stock thereunder.
B. The option/vesting acceleration provisions of Section III of
Article Two relating to Corporate Transactions and Changes in Control may,
in the Plan Administrator's discretion, be extended to one or more stock
options outstanding under the 1990 Plan on the Effective Date of the
Discretionary Option Grant Program, but which do not otherwise provide for
such acceleration.
C. The Plan was subsequently amended by the Board on February 27, 1995
to increase the number of shares of Common Stock authorized for issuance
under the Plan by an additional 750,000 shares, and such amendment was
approved by the stockholders at the 1995 Annual Meeting on May 22, 1995. The
Plan was further amended by the Board on February 16, 1996 to increase the
number of shares of Common Stock authorized for issuance under the Plan by
another 750,000 shares, and such amendment was approved by the stockholders
at the 1996 Annual Meeting.
D. In February 1998, the Board further amended and restated the Plan
(the "February 1998 Restatement") to effect the following revisions:
(i) increase the number of shares of Common
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Stock reserved for issuance over the term of the Plan by an additional
525,000 shares 3,300,000 shares, (ii) render the non-employee Board members
(including those serving as the Plan Administrator) eligible to receive
option grants under the Discretionary Option Grant and Stock Issuance
Programs, (iii) allow unvested shares issued under the Plan and subsequently
repurchased by the Corporation at the option exercise or direct issue price
paid per share to be reissued under the Plan, (iv) remove certain
restrictions on the eligibility of non-employee Board members to serve as
Plan Administrator and (v) effect a series of additional changes to the
provisions of the Plan (including the stockholder approval requirements and
the option transferability restrictions) in order to take advantage of the
recent amendments to Rule 16b-3 of the Securities and Exchange Commission
which exempts certain officer and director transactions under the Plan from
the short-swing liability provisions of the federal securities laws. The
February 1998 Restatement was approved by the stockholders at the 1998
Annual Meeting. All option grants and stock issuances made prior to the
February 1998 Restatement shall remain outstanding in accordance with the
terms and conditions of the respective instruments evidencing those options
or issuances, and nothing in the February 1998 Restatement shall be deemed
to modify or in any way affect those outstanding options or issuances.
E. In February 1999, the Board further amended and restated the Plan
(the "February 1999 Restatement") to effect the following revisions:
(i) increase the number of shares of Common Stock reserved for issuance over
the term of the Plan by an additional 600,000 shares to 3,900,000 shares,
(ii) increase the number of shares of Common Stock subject to both the
initial and annual option grants made to non-employee Board members under
the Automatic Option Grant Program from 7,500 shares to 15,000 shares,
(iii) implement new automatic option grant for an additional 15,000 shares
to be made each year to each non-employee Board member serving as the
Chairperson of any Board committee and (iv) change the date on which the
annual automatic option grants are to be made to the non-employee Board
members and Chairpersons from the date of the Annual Stockholders Meeting to
the first trading day in January each year, beginning with calendar year
2000. The February 1999 Restatement was approved by the stockholders at the
1999 Annual Meeting, and no option grants made on the basis of the
February 1999 Restatement became exercisable in whole or in part, and no
shares of Common Stock were be issued on the basis of such restatement,
until stockholder approval of the restatement was obtained at the 1999
Annual Meeting. All option grants and stock issuances made prior to the
February 1999 Restatement shall remain outstanding in accordance with the
terms and conditions of the respective instruments evidencing those options
or issuances, and nothing in the February 1999 Restatement shall be deemed
to modify or in any way affect those outstanding options or issuances.
F. The Plan was amended and restated on February 22, 2000 (the
"February 2000 Restatement") to effect the following changes, subject to
stockholder approval at the 2000 Annual Meeting:
(i) increase the maximum number of shares of Common Stock authorized
for issuance under the Plan by an additional 800,000 shares so that the
authorized share reserve is thereby increased from 3,900,000 shares to
4,700,000 shares of Common Stock;
(ii) change the vesting schedule in effect for all currently
outstanding options under the Automatic Option Grant Program for
non-employee Board members and all future option grants made under that
program so that each of those options will become exercisable for
twenty-five percent (25%) of the option shares upon the Optionee's
completion of six (6) months of Board service measured from after the
automatic grant date and will become exercisable for the balance of the
option shares in a series of thirty-six (36) successive equal monthly
installments upon the Optionee's completion of each of the next
thirty-six (36)-months of Board service thereafter; and
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(iii) extend the term of the Plan through December 31, 2005.
No option grants or direct stock issuances shall be made on the basis of the
share increases authorized by the February 2000 Restatement unless and until
that restatement is approved by the stockholders at the 2000 Annual Meeting.
F. The Plan shall terminate upon the EARLIER of (i) December 31,
2005(2) or (ii) the date on which all shares available for issuance under
the Plan shall have been issued or cancelled pursuant to the exercise,
surrender or cash-out of the options granted under the Plan or the issuance
of shares (whether vested or unvested) under the Stock Issuance Program. If
the date of termination is determined under clause (i) above, then all
option grants and unvested stock issuances outstanding on such date shall
thereafter continue to have force and effect in accordance with the
provisions of the instruments evidencing such grants or issuances.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
pursuant to option grants or stock issuances under the Plan shall be used for
general corporate purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any stock option or
stock appreciation right under the Plan, the issuance of any shares under
the Stock Issuance Program, and the issuance of Common Stock upon the
exercise of the stock options or stock appreciation rights granted hereunder
shall be subject to the Corporation's procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the
Plan, the stock options and stock appreciation rights granted under it, and
the Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance
with all applicable requirements of Federal and State securities laws,
including the filing and effectiveness of the Form S-8 registration
statement for the shares of Common Stock issuable under the Plan, and all
applicable listing requirements of any securities exchange on which stock of
the same class is then listed.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the Plan, nor any
action taken by the Plan Administrator hereunder, nor any provision of the Plan
shall be construed so as to grant any individual the right to remain in the
employ or service of the Corporation (or any parent or subsidiary corporation)
for any period of specific duration, and the Corporation (or any parent or
subsidiary corporation retaining the services of such individual) may terminate
such individual's employment or service at any time and for any reason, with or
without cause.
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(2) The December 31, 2005 termination date of the Plan is subject to
stockholder approval of the February 2000 restatement at the 2000 Annual
Meeting. In the absence of such stockholder approval, the termination date will
remain December 31, 2003.
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VIII. MISCELLANEOUS PROVISIONS
A. Except to the extent otherwise expressly provided in the Plan, the
right to acquire Common Stock or other assets under the Plan may not be
assigned, encumbered or otherwise transferred by any Optionee or
Participant.
B. The provisions of the Plan relating to the exercise of options and
the vesting of shares shall be governed by the laws of the State of
California without resort to that State conflict-of-laws rules.
C. The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Participants and Optionees, the
legal representatives of their respective estates, their respective heirs or
legatees and their permitted assignees.
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