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Exhibit 10.4
Natural MicroSystems Corporation
2000 Equity Incentive Plan
1. INTRODUCTION AND PURPOSE
(a) This 2000 Equity Incentive Plan (the "2000 Plan" or "the Plan")
supersedes the Natural MicroSystems Corporation ("the Company") 1993 Stock
Option Plan and the Company's 1993 Non-employee Directors Stock Option Plan
(collectively the "1993 Plans") for all awards made after the date the 2000 Plan
is adopted by the Board of Directors of the Company and approved by the
Company's stockholders. Options granted under the 1993 Plans prior to the
approval of the 2000 Plan shall be governed by the terms of the 1993 Plans.
(b) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company, and its Affiliates,
may be given an opportunity to benefit from increases in value of the stock of
the Company through the granting of (i) Incentive Stock Options, (ii)
Nonstatutory Stock Options, (iii) Stock Bonuses, (iv) rights to purchase
Restricted Stock, (v) Stock Appreciation Rights, and (vi) other awards based
upon the Company's Common Stock on such terms and conditions as the Board may
determine.
(c) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company and
its Affiliates, to secure and retain the services of new Employees, Directors
and Consultants, and to provide incentives for such persons to exert maximum
efforts for the success of the Company.
(d) The Company intends that the Stock Awards issued under the Plan shall,
in the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c)
hereof, be either (i) Options granted pursuant to Section 6 hereof, including
Incentive Stock Options and Nonstatutory Stock Options, (ii) Stock Bonuses or
rights to purchase restricted stock granted pursuant to Section 7 hereof, (iii)
Stock Appreciation Rights granted pursuant to Section 8 hereof or (iv) other
stock based awards granted pursuant to Section 9 hereof. All Options shall be
separately designated Incentive Stock Options or Nonstatutory Stock Options at
the time of grant, and shall be in such form as required pursuant to Section 6
hereof.
2. DEFINITIONS AND RULES OF INTERPRETATION
(a) Definitions.
For the purpose of the Plan. the following terms shall have the respective
meanings set forth below, unless the subject matter or context is inconsistent
therewith:
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(i) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined
in Sections 424(e) and (f) respectively, of the Code.
(ii) "BOARD" means the Board of Directors of the Company.
(iii) "CODE" means the Internal Revenue Code of 1986, as amended.
(iv) "COMMITTEE" means the Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.
(v) "COMPANY" means Natural MicroSystems Corporation.
(vi) "COMPANY COMMON STOCK" means shares of the common stock of the
Company.
(vii) "CONCURRENT STOCK APPRECIATION RIGHT" or "CONCURRENT RIGHT"
means a right granted pursuant to subsection 8(b)(ii) hereof.
(viii) "CONSULTANT" means any person, including an advisor, engaged by
the Company or an Affiliate to render consulting services and who is
compensated for such services, provided that the term Consultant shall not
include Directors in their capacity as such.
(ix) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT"
means the employment or relationship as an Employee, Director or Consultant
is not interrupted or terminated by the Company or any Affiliate. The
Board, in its sole discretion, may determine whether Continuous Status as
an Employee, Director or Consultant shall be considered interrupted in the
case of any leave of absence approved by the Board, including sick leave,
military leave, or any other personal leave; provided, however, that for
purposes of Incentive Stock Options and Stock Appreciation Rights
appurtenant thereto, any such leave may not exceed ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute.
(x) "DIRECTOR" means a member of the Board.
(xi) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(xii) "EMPLOYEE" means any person, including Officers and Directors,
employed as a common law employee by the Company or any Affiliate. Neither
service as a Director nor payment of a director's fee by the Company shall
be sufficient to constitute a person as an Employee.
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(xiii) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(xiv) "FAIR MARKET VALUE" means the closing price per share on the
date of grant of the option as reported by a nationally recognized stock
exchange, or, if the Common Stock is not listed on such an exchange, as
reported by the National Association of Securities Dealers Automated
Quotation System, Inc. (NASDAQ), or, if the Common Stock is not quoted on
NASDAQ, the fair market value as determined by the Committee.
(xv) "INCENTIVE STOCK OPTION" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(xvi) "INDEPENDENT STOCK APPRECIATION RIGHT" or "INDEPENDENT RIGHT"
means a right granted under subsection 8(b)(iii) hereof.
(xvii) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not
a current Employee or Officer of the Company or its parent or subsidiary,
does not receive compensation (directly or indirectly) from the Company or
its parent or subsidiary for services rendered as a Consultant or in any
capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K (or
any successor regulation of similar import) promulgated pursuant to the
Securities Act (Regulation S-K)), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K (or any successor regulation of similar import); or (ii) is
otherwise considered a non-employee director for purposes of Rule 16b-3 of
the Exchange Act.
(xviii) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(xix) "OFFICER" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(xx) "OPTION" means a stock option granted pursuant to the Plan.
(xxi) "OPTION AGREEMENT" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an
individual Option grant. Each Option Agreement shall be subject to the
terms and conditions of the Plan.
(xxii) "OPTIONEE" means an Employee, Director or Consultant who holds
an outstanding Option.
(xxiii) "OUTSIDE DIRECTOR" means for any given date of grant a
Director who either (i) is not then a current employee of the Company or an
affiliated corporation (within
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the meaning of Treasury regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an affiliated corporation
receiving compensation for prior services (other than benefits under a tax
qualified pension plan) during the then current taxable year, was not an
officer of the Company or an affiliated corporation at any time, and is not
then currently receiving direct or indirect remuneration from the Company
or an affiliated corporation for services in any capacity other than as a
Director, and (ii) is otherwise considered an outside director for purposed
of Section 162(m) of the Code.
(xxiv) "PLAN" or "2000 PLAN" means this 2000 Equity Incentive Plan,
as the same may be amended from time to time.
(xxv) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3.
(xxvi) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(xxvii) "STOCK APPRECIATION RIGHT" means any of the various types of
rights which may be granted under Section 8 hereof.
(xxviii) "STOCK AWARD" means any right granted under the Plan,
including any Option, any stock bonus, any right to purchase restricted
stock, and any Stock Appreciation Right.
(xxix) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions
of an individual Stock Award grant. Each Stock Award Agreement shall be
subject to the terms and conditions of the Plan.
(xxx) "STOCK BONUS" means any stock bonus of the type which may be
granted under Section 7 hereof.
(xxxi) "TANDEM STOCK APPRECIATION RIGHT" or "TANDEM RIGHT" means a
right granted under subsection 8(b)(i) hereof.
The foregoing terms are not the exclusive definitions as used in the
Plan and reference is made to other capitalized terms defined in the
context of their first use herein.
(b) Rules of Interpretation.
(i) The headings and subheadings used herein or in any Option or other
instrument evidencing a Stock Award are solely for convenience of reference
and shall not constitute a part of the Plan or such document or affect the
meaning, construction or effect of any provision thereof.
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(ii) All definitions set forth herein shall apply to the singular as
well as the plural form of such defined term, and all references to the
masculine gender shall include reference to the feminine or neuter gender
and vice versa, as the context may require.
(iii) Reference to "including" means including without limiting the
generality of any description preceding such term.
(iv) Unless otherwise expressly stipulated, any reference in the Plan
to any statute, act, regulation or specific provision thereof shall also
extend to any amendment, restatement or other modification to such statute,
act, regulation or specific provision thereof or any successor statute,
act, regulation or provision of similar import.
(v) Unless otherwise expressly provided, any reference in the Plan
to any specific provision of any statute or act shall include any
regulations promulgated thereunder from time to time and interpretations
thereof as may be applicable to the Plan.
3. ADMINISTRATION
(a) The Plan shall be administered by the Committee.
(b) The Committee shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how Stock Awards
shall be granted; whether a Stock Award will be an Incentive Stock Option,
a Nonstatutory Stock Option, a Stock Bonus, a right to purchase restricted
stock, a Stock Appreciation Right, another stock-based award or a
combination of the foregoing; the provisions of each Stock Award granted
(which need not be identical), including the time or times when a person
shall be permitted to receive stock pursuant to a Stock Award; whether a
person shall be permitted to receive stock upon exercise of an Independent
Stock Appreciation Right; and the number of shares with respect to which
Stock Awards shall be granted to each such person.
(ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Committee, in the exercise of this power, may correct
any defect, omission or inconsistency in any Stock Award Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the
Stock Award Agreement fully effective.
(iii) Generally, to exercise such powers and to perform such acts as
the Committee deems necessary or expedient to promote the best interests of
the Company and which are not in
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conflict with the provisions of the Plan.
(c) Administration of the Plan shall be delegated to a committee composed
of not fewer than two (2) members (the "Committee"), all of the members of which
Committee shall be Non-Employee Directors and Outside Directors. The Committee
shall have, in connection with the administration of the Plan, the powers set
forth in the Plan; subject, however, to such resolutions, not inconsistent with
the provisions of the Plan, as may be adopted from time to time by the Board.
The Board may abolish the Committee at any time and vest in the Board the
administration of the Plan. Notwithstanding anything in this Section 3 to the
contrary, at any time the Board or the Committee may delegate to a committee of
one or more officers of the Company the authority to grant Stock Awards to
eligible persons who are not then subject to Section 16 of the Exchange Act and
to eligible persons with respect to whom the Company does not wish to comply
with Section 162(m) of the Code.
(d) The Board shall have the authority to correct any defect, omission or
inconsistency in the Plan and to amend the Plan as provided in Section 16. The
Board shall have the authority to appoint the Committee and to fill any vacancy
created on the Committee by reason of the death, resignation or removal of any
member thereof by appointing an eligible successor.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 14 hereof relating to adjustments
upon changes in stock, the number of shares of stock that may be issued pursuant
to Stock Awards under the Plan shall be equal to 2,500,000 shares of Company
Common Stock plus any shares of Company Common Stock represented by awards
granted under the 1993 Plans which, after adoption of the Plan by the Board, are
forfeited, expire or are canceled without delivery of shares of stock. If any
Stock Award shall for any reason expire or otherwise terminate without having
been exercised in full, the Company common Stock not purchased shall again
become available for issuance under the Plan. Notwithstanding the foregoing,
Shares of Company Common Stock subject to Stock Appreciation Rights exercised in
accordance with Section 8 hereof shall not be available for subsequent issuance
under the Plan.
(b) The Company Common Stock subject to the Plan may consist in whole or in
part of authorized but unissued shares or treasury shares. Subject to
subsections 4(a), 4(c) and 4(d) hereof, not more than 250,000 shares of Company
Common Stock in the aggregate may be subject to Stock Bonuses and purchases of
restricted stock (provided for in Section 7), Stock Appreciation Rights
(provided for in Section 8), and other awards (provided for in Section 9).
(c) For each share of Company Common Stock subject to Stock Bonuses and
purchases of restricted stock (provided for in Section 7), Stock Appreciation
Rights (provided for in Section 8), and other awards (provided for in Section
9), the number of Shares of Company Common Stock which shall be subject to a
nonstatutory Stock Option granted under subsection 6(b) at an
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exercise price less than one hundred percent (100%) of Fair Market Value shall
be reduced by two shares of Company Common Stock.
(d) For each two shares of Company Common Stock subject to a nonstatutory
Stock Option granted under subsection 6(b) at an exercise price less than one
hundred percent (100%) of Fair Market Value, the aggregate number of shares of
Company Common Stock subject to Stock Bonuses and purchases of restricted stock
(provided for in Section 7), Stock Appreciation Rights (provided for in Section
8), and other awards (provided for in Section 9) shall be reduced by one share
of Company Common Stock.
5. ELIGIBILITY.
(a) Incentive Stock Options and Stock Appreciation rights appurtenant
thereto may be granted only to Employees. Other Stock Awards may be granted to
Employees, Directors or Consultants.
(b) No person shall be eligible for the grant of an Incentive Stock Option
if, at the time of grant, such person owns (or is deemed to own pursuant to
Section 424(d) of the Code) Company Common Stock possessing more than ten
percent (10%) of the total combined voting power of all classes of capital stock
of the Company or of any of its Affiliates unless the exercise price of such
Incentive Stock Option is at least one hundred ten percent (110%) of the Fair
Market Value of such Company Common Stock at the date of grant and the Incentive
Stock Option is not exercisable after the expiration of five (5) years from the
date of grant.
(c) No person shall be eligible to be granted Stock Awards covering more
than 250,000 shares of Company Common Stock in any calendar year, subject to
appropriate adjustment for stock subdivisions, combinations, dividends and
similar capital changes.
6. OPTION PROVISIONS
Each Option Agreement shall be in such form and shall contain such terms
and conditions as the Committee shall deem appropriate. The provisions of
separate Options need not be identical, but each Option Agreement shall include
(through incorporation of provisions hereof by reference in the Option or
otherwise) the substance of each of the following provisions except as otherwise
specifically provided elsewhere in the Plan.
(a) TERM. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) PRICE. Subject to subsection 5(b) hereof, the exercise price of each
Incentive Stock Option shall be not less than one hundred percent (100%) of the
Fair Market Value of the Company Common Stock subject to the Option on the date
the Option is granted. The exercise
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price of each Nonstatutory Stock Option shall be set by the Committee at the
time each Option is granted, but in no event shall (i) any exercise price be
less than fifty percent (50%) of such Fair Market Value and (ii) subject to
subsections 4(c) and 4(d), not more than 500,000 shares of Company Common Stock
shall be subject to a Nonstatutory Stock Option at an exercise price less than
one hundred percent (100%) of such Fair Market Value.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either: (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Committee, either at the time of the grant or exercise of
the Option, (A) by delivery to the Company of other Company Common Stock, (B)
according to a deferred payment or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other Common Stock of the
Company) with the person to whom the Option is granted or to whom the Option is
transferred pursuant to subsection 6(d) hereof, or (C) in any other form of
legal consideration that may be acceptable to the Committee including delivery
of a promissory note of the Optionee to the Company on terms determined by the
Committee.
In the case of any deferred payment arrangement, interest shall be payable
at least annually and shall be charged at the minimum rate of interest necessary
to avoid the treatment as interest, under any applicable provisions of the Code,
of any amounts other than amounts stated to be interest under the deferred
payment arrangement.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the Incentive Stock Option
is granted only by such person. A Nonstatutory Stock Option may be transferred
upon such terms and conditions as are set forth in the Option Agreement, as the
Committee shall determine in its sole discretion.
(e) VESTING. The total number of shares of stock subject to an Option may,
but need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that from time to time during each of
such installment periods, the Option may become exercisable (vest) with respect
to some or all of the shares allotted to that period, and may be exercised with
respect to some or all of the shares allotted to such period and/or any prior
period as to which the Option became vested but was not fully exercised. The
Option may be subject to such other terms and conditions on the time or times
when it may be exercised (which may be based on performance or other criteria)
as the Committee may deem appropriate. During the remainder of the term of the
Option (if its term extends beyond the end of the installment periods), the
Option may be exercised from time to time with respect to any shares then
remaining subject to the Option. The provisions of this subsection 6(e) are
subject to any Option provisions governing the minimum number of shares as to
which an Option may be exercised.
(f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR CONSULTANT.
In the event an Optionee's Continuous Status as an Employee, Director or
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Consultant terminates (other than upon the Optionee's death, Disability or
retirement), the Optionee may exercise his or her Option, but only within such
period of time ending on the earlier of (i) three (3) months after termination
of the Optionee's Continuous Status as an Employee Director or Consultant or
such longer or shorter period of time specified in the Option Agreement, or (ii)
the expiration of the Options term, and only to the extent that the Optionee was
entitled to exercise it at the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement).
In the event of the retirement of an Optionee from the Company pursuant to
the Company's retirement policy then in effect, or if there be none, then as
determined by the Committee in its sole discretion, he or she may exercise his
or her Option during the period ending twelve (12) months after his or her
retirement date (or three (3) months in the case of an Incentive Stock Option).
If, at the date of termination, the Optionee is not entitled to exercise his or
her entire Option, the shares covered by the unexercisable portion of the Option
shall revert to and again become available for issuance under the Plan. If,
after termination, the Optionee does not exercise his or her Option within the
time specified in the Option Agreement, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.
An Optionee's Option Agreement may also provide that if the exercise of the
Option following the termination of the Optionees Continuous Status as an
Employee, Director or Consultant (other than upon the Optionee's death or
disability) would be prohibited at any time solely because the issuance of
shares would violate the registration requirements under the Securities Act,
then the Option shall terminate on the earlier of (i) the expiration of the term
of the Option set forth in the first paragraph of this subsection 6(f), or (ii)
the expiration of a period of three (3) months after the termination of the
Optionee's Continuous Status as an Employee, Director or Consultant during which
the exercise of the Option would not be in violation of such registration
requirements.
Notwithstanding the preceding, in the event an Optionee's employment with
(or services to) the Company is terminated by it for cause (as determined by the
Company), the Option shall terminate on the date of termination and the shares
covered by such Option shall revert to and again become available for issuance
under the Plan.
As used herein, "cause" shall mean (x) any material breach by the Optionee
of any agreement to which the Optionee and the Company are both parties, (y) any
act or omission to act by the Optionee which may have a material and adverse
effect on the Company's business or on the Optionee's ability to perform
services for the Company, including, without limitation, the commission of any
crime (other than ordinary traffic violations), or (z) any material misconduct
or material neglect of duties by the Optionee in connection with the business or
affairs of the Company or any affiliate of the Company.
(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status as
an
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Employee, Director or Consultant terminates as a result of the Optionee's
Disability, the Optionee may exercise his or her Option, but only within such
period of time ending on the earlier of (i) the date twelve (12) months
following such termination (or such longer or shorter period of time as
specified in the Option Agreement), or (ii) the expiration of the term of the
Option as set forth in the Option Agreement). If, after the date of termination,
the Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the shares covered by such Option shall
revert to and again become available for issuance under the Plan.
(h) DEATH OF OPTIONEE. In the event of a death of an Optionee during, or
within a period specified in the Option Agreement after the termination of, the
Optionee's Continuous Status as an Employee, Director or Consultant, the Option
may be exercised by the Optionee's estate, by a person who acquired the right to
exercise the Option by bequest or inheritance, or by a person designated to
exercise the option upon the Optionee's death pursuant to subsection 6(d)
hereof, but only within the period ending on the earlier of (i) the date twelve
(12) months following the date of death (or such longer or shorter period
specified in the Option Agreement) or (ii) the expiration of the term of such
Option as set forth in the Option Agreement. If, at the time of death, the
Optionee was not entitled to exercise his or her entire Option, the shares
covered by the unexercisable portion of the Option shall revert to and again
become available under the Plan. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate, and the shares
covered by such Option shall revert to and again become available for issuance
under the Plan.
(i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject to
the Option prior to the full vesting of the Option; provided, however, any
unvested shares shall be subject to a repurchase right in the Company at the
Exercise Price in the event of the termination of the Optionee's Continuous
Status as an Employee, Director or Consultant prior to the time(s) such option
would have become vested.
(j) WITHHOLDING. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any minimum required rate of federal, state
or local tax withholding relating to the exercise of such Option by any of the
following means or by a combination of such means: (1) tendering a cash payment;
(2) authorizing the Company to withhold shares from the shares of the Common
Stock otherwise issuable to the Participant as a result of the exercise of the
Option; or (3) delivering to the Company owned and unencumbered shares of the
Common Stock of the Company.
(k) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Committee to make or not to make grants of Options hereunder, the Committee
shall have the authority (but not an obligation) to include as part of any
Option Agreement a provision entitling the Optionee to a further Option (a
Re-Load Option) in the event the Optionee exercises the Option evidenced by the
Option Agreement, in whole or in part, by surrendering other shares of Company
Common Stock in accordance with the Plan and the terms and conditions of the
Option Agreement. Any
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such Re-Load Option (i) shall be for a number of shares equal to the number of
shares surrendered as part or all of the exercise price of such Option, (ii)
shall have an expiration date which is the same as the expiration date of the
Option the exercise of which gave rise to such Re-Load Option; and (iii) shall
have an exercise price which is equal to one hundred percent (100%) of the Fair
Market Value of the Common Stock subject to the Re-Load Option on the date of
exercise of the original Option or, in the case of a Re-Load Option which is an
Incentive Stock Option and which is granted to a 10% stockholder (as described
in subsection 5(b) hereof), shall have an exercise price which is equal to one
hundred ten percent (110%) of the Fair Market Value of the Company Common Stock
subject to the Re-Load Option on the date of exercise of the original Option and
shall have a term which is no longer than five (5) years.
Any such Re-Load Option may be an Incentive Option or a Nonstatutory Stock
Option, as the Committee may designate at the time of the grant of the original
Option; provided, however, that the designation of any Re-Load Option as an
incentive Stock Option shall be subject to the one hundred thousand dollar
($100,000) annual limitation on exercisability of Incentive Stock Options
described in subsection 13(d) hereof and in Section 422(d) of the Code. There
shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option shall
be subject to the availability of sufficient shares under subsection 4(a) hereof
and shall be subject to such other terms and conditions as the Committee may
determine which are not inconsistent with the express provisions of the Plan
regarding the terms of the Options.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each Stock Bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Committee shall deem
appropriate. The terms and conditions of Stock Bonus or restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate agreements need not be identical, but each Stock Bonus or restricted
stock purchase agreement shall include (through incorporation of provisions
herein by reference in the agreement or otherwise) the substance of each of the
following provisions as appropriate:
(a) PURCHASE PRICE. The purchase price under each restricted stock purchase
agreement shall be such amount as the Committee shall determine and designate in
such agreement. Notwithstanding the foregoing, the Committee may determine that
eligible participants in the Plan may be granted a Stock Award pursuant to a
Stock Bonus agreement in consideration for past services actually rendered to
the Company for its benefit.
(b) TRANSFERABILITY. Except as otherwise provided elsewhere in the Plan, no
rights under a Stock Bonus or restricted stock purchase agreement shall be
assignable by any participant under the Plan, either voluntarily or by operation
of law, except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the rights are granted
only by such person. The person to whom the Stock Award is granted, may, by
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delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of such person, shall
thereafter be entitled to exercise the rights held by such person under the
Stock Bonus or restricted stock purchase agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to a Stock
Award in the form of a stock purchase agreement shall be paid either: (i) in
cash at the time of purchase; (ii) at the discretion of the Committee, according
to a deferred payment or other arrangement with the person to whom the stock is
sold; or (iii) in any other form of legal consideration that may be acceptable
to the Committee in its discretion; including delivery of a promissory note of
the Optionee to the Company on terms determined by the Committee.
Notwithstanding the foregoing, the Committee may grant a Stock Award pursuant to
a Stock Bonus agreement in consideration for past services actually rendered to
the Company or for its benefit.
(d) VESTING. Shares of Company Common Stock sold or awarded under the Plan
may, but need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Committee.
(e) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR CONSULTANT.
In the event a Participants Continuous Status as an Employee, Director or
Consultant terminates, the Company may repurchase or otherwise reacquire any or
all of the shares of Company Common Stock held by that person which have not
vested as of the date of termination under the terms of the Stock Bonus or
restricted stock purchase agreement between the Company and such person.
8. STOCK APPRECIATION RIGHTS
(a) The Committee shall have full power and authority, exercisable in its
sole discretion, to grant Stock Appreciation Rights to Employees or Directors of
or Consultants to, the Company or its Affiliates under the Plan. Each such right
shall entitle the holder to a distribution based on the appreciation in the Fair
Market Value per share of a designated amount of Company Common Stock.
(b) Three types of Stock Appreciation Rights shall be authorized for
issuance under the Plan:
(i) TANDEM STOCK APPRECIATION RIGHTS. Tandem rights will be granted
appurtenant to an Option and will require the holder to elect between the
exercise of the underlying Option for shares of Company Common Stock and
the surrender, in whole or in part, of such Option for an appreciation
distribution equal to the excess of (A) the Fair Market Value (on the date
of Option surrender) of vested shares of Company Common Stock purchasable
under the surrendered Option over (B) the aggregate exercise price payable
for such shares.
<PAGE>
(ii) CONCURRENT STOCK APPRECIATION RIGHTS. Concurrent rights will be
granted appurtenant to an Option and may apply to all or any portion of the
shares of Company Common Stock subject to the underlying Option and will be
exercised automatically at the same time the Option is exercised for those
shares. The appreciation distribution to which the holder of such
concurrent right shall be entitled upon exercise of the underlying Option
shall be in an amount equal to the excess of (A) the aggregate Fair Market
Value (at date of exercise) of the vested shares purchased under the
underlying Option with such concurrent rights over (B) the aggregate
exercise price paid for those shares.
(iii) INDEPENDENT STOCK APPRECIATION RIGHTS. Independent Rights may be
granted independently of any Option and will entitle the holder upon
exercise to an appreciation distribution equal in amount to the excess of
(A) the aggregate Fair Market Value (at date of exercise) of a number of
shares of Company Common Stock equal to the number of vested share
equivalents exercised at such time (as described in subsection 8(c)(iii))
hereof over (B) the aggregate Fair Market Value of such number of shares of
Company Common Stock at the date of grant.
(c) The terms and conditions applicable to each Tandem Right, Concurrent
Right and Independent Right shall be as follows:
(i) TANDEM RIGHTS:
A. Tandem rights may be tied to either Incentive Stock Options
or Nonstatutory Stock Options. Each such right shall, except as
specifically set forth below, be subject to the same terms and
conditions applicable to the particular Option to which it pertains.
If Tandem Rights are granted appurtenant to an Incentive Stock Option,
they shall satisfy any applicable Treasury Regulations so as not to
disqualify such Option as an Incentive Stock Option under the Code.
B. The appreciation distribution payable on the exercised Tandem
Right shall be in cash in an amount equal to the excess of (i) the
Fair Market Value (on the date of the Option surrender) of the number
of shares of Company Common Stock covered by that portion of the
surrender Option in which the optionee is vested over (ii) the
aggregate exercise price payable for such vested shares.
(ii) CONCURRENT RIGHTS:
A. Concurrent Rights may be tied to any or all of the shares of
Company Common Stock subject to any Incentive Stock Option or
Nonstatutory Stock Option grant made under the Plan. A Concurrent
Right shall, except as specifically set forth below, be subject to the
same terms and conditions applicable to the particular option grant to
which it pertains.
<PAGE>
B. A Concurrent Right shall be automatically exercised at the
same time as the underlying Option is exercised with respect to the
particular shares of Company Common Stock to which the Concurrent
Right pertains.
C. The appreciation distribution payable on an exercised
Concurrent Right shall be in cash in an amount equal to such portion
as shall be determined by the Board or the Committee at the time of
the grant of the excess of (i) the aggregate Fair Market Value (on the
date the Option is exercised) of the vested shares of Company Common
Stock purchased under the underlying Option which have Concurrent
Rights appurtenant to them over (ii) the aggregate exercise price paid
for such shares.
(iii) INDEPENDENT RIGHTS:
A. Independent Rights shall, except as specifically set forth
below, be subject to the same terms and conditions applicable to
Nonstatutory Stock Options as set forth in Section 6 hereof. They
shall be denominated in share equivalents.
B. The appreciation distribution payable on the exercised
Independent Right shall be in cash in an amount equal to the excess of
(I) the aggregate Fair Market Value (on the date of the exercise of
the Independent Right) of a number of shares of Company Common Stock
equal to the number of share equivalents in which the holder is vested
under such Independent Right, and with respect to which the holder is
exercising the Independent Right on such date, over (II) the aggregate
Fair Market Value (on the date of the grant of the Independent Right)
of such number of shares of Company Common Stock.
(iv) TERMS APPLICABLE TO TANDEM RIGHTS, CONCURRENT RIGHTS AND
INDEPENDENT RIGHTS:
A. To exercise any outstanding Tandem, Concurrent or Independent
Right, the holder must provide written notice of exercise to the
Company in compliance with the provisions of the instrument evidencing
such right.
B. If a Tandem, Concurrent or Independent Right is granted to an
individual who is at the time subject to Section 16(b) of the Exchange
Act (a Section 16(b) Insider), then the instrument of grant shall
incorporate all the terms and conditions at the time necessary to
assure that the subsequent exercise of such right shall qualify for
the safe-harbor exemption from short-swing profit liability provided
by Rule 16b-3.
C. Except as otherwise provided in this Section 8, no limitation
shall exist on the aggregate amount of cash payments the Company may
make under the Plan in connection with the exercise of Tandem,
Concurrent or Independent Rights.
<PAGE>
9. OTHER STOCK AWARDS.
The Committee shall have the right to grant rights other than those types
described above based upon Company Common Stock having such terms and conditions
as the Committee may determine, including the grant of shares based upon certain
conditions and grant of securities convertible into Company Common Stock.
10. CANCELLATION AND RE-GRANT OF OPTIONS.
(a) Subject to prior approval by the Company's stockholders, the Board or
the Committee shall have the authority to effect, at any time and from time to
time, with the consent of the affected holders of Options and/or Stock
Appreciation Rights, the repricing of any outstanding Options and/or Stock
Appreciation Rights under the Plan and the grant in substitution therefor of new
Options and/or Stock Appreciation Rights under the Plan covering the same or
different numbers of shares of Company Common Stock, but having an exercise
price per share not less than eighty five percent (85%) of the Fair Market Value
(one hundred percent (100%) of the Fair Market Value in the case of an Incentive
Stock Option) or, in the case of an Incentive Stock Option granted to a 10%
stockholder (as described in subsection 5(b) hereof) not less than one hundred
ten percent (110%) of the Fair Market Value) per share of Company Common Stock
on the new grant date. Notwithstanding the foregoing, the Committee may grant an
Option and/or Stock Appreciation Right with an exercise price lower than that
set forth above if such Option and/or Stock Appreciation Right is granted as
part of a transaction to which section 424(a) of the Code applies.
(b) Shares of Company Common Stock subject to an Option or Stock
Appreciation Right canceled under this Section 10 shall continue to be counted
against the maximum award of Options and Stock Appreciation Rights permitted to
be granted to a person pursuant to subsection 5(c) hereof. The repricing of an
Option and/or Stock Appreciation Right under this Section 10, resulting in a
reduction of the exercise price, shall be deemed to be a cancellation of the
original Option and/or Stock Appreciation Right and the grant of a substitute
Option and/or Stock Appreciation Right; in the event of such repricing, both the
original and the substituted Options and Stock Appreciation rights shall be
counted against the maximum awards of Options and Stock Appreciation Rights
permitted to be granted to a person pursuant to subsection 5(c) hereof. The
provisions of this subsection 10(b) shall be applicable only to the extent
required by Section 162(m) of the Code.
11. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep available
at all times the
<PAGE>
number of shares of Company Common Stock required to satisfy such Stock Awards
up to the number of shares of Company Common Stock authorized under the Plan.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of Company Common Stock under the Stock Awards; provided,
however, that this undertaking shall not require the Company to register under
the Securities Act either the Plan, any Stock Award or any stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of Company Common Stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell Company Common Stock under such
Stock Awards unless and until such authority is obtained.
12. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Company Common Stock pursuant to Stock Awards
shall constitute general funds of the Company.
13. MISCELLANEOUS.
(a) The Committee shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or any
part thereof will vest, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.
(b) Neither an Optionee nor any person to whom an Option is transferred
under subsection 6(d) hereof shall be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares of Company Common Stock
subject to such Option unless and until such person has satisfied all
requirements for exercise of the Option pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Stock Award granted
pursuant thereto shall confer upon any Employee, Director, Consultant, Optionee,
or other holder of Stock Awards any right to continue in the employ of the
Company or any Affiliate (or to continue acting as Director or Consultant) or
shall affect the right of the Company or any Affiliate to terminate the
employment or relationship as a Director or Consultant of any Employee,
Director, Consultant or Optionee, with or without cause.
(d) To the extent that the aggregate Fair Market Value (determined at the
time of grant) of Company Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar
year under all plans of the Company and its
<PAGE>
Affiliates exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
(e) The Committee shall be authorized to establish procedures pursuant to
which Participants may elect to defer the gain realized upon exercise of a stock
option, or such gain derived from other stock based awards granted under the
Plan.
14. EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN.
(a) If any change is made in the Company Common Stock subject to the Plan,
or subject to any Stock Award, without receipt of consideration by the Company
(through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of shares subject to options and Stock Appreciation
Rights pursuant to subsection 5(c) hereof, and the outstanding Stock Awards will
be appropriately adjusted in the class(es) and number of shares and price per
share of stock subject to such outstanding Stock Awards. Such adjustments shall
be made by the Board or Committee, the determination of which shall be final,
binding and conclusive. Notwithstanding the preceding however, the conversion of
any convertible securities of the Company shall not be treated as "transaction
not involving the receipt of consideration by the Company."
(b) In the event of: (1) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (2) a merger or consolidation in
which the Company is not the surviving corporation; or (3) a reverse merger in
which the Company is the surviving corporation but the shares of Company Common
Stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, then, at the sole discretion of the Committee and to the extent
permitted by applicable law: (i) any surviving corporation or an Affiliate of
such surviving corporation shall assume any Stock Awards and such Stock Awards
shall continue in full force and effect if such surviving corporation and its
Affiliates is willing to do so, or at the sole discretion of the Committee, and
with respect to Stock Awards held by persons who are then determined by the
Committee to be in Continuous Status as Employees, Directors or Consultants (ii)
the Board may waive any discretionary limitations imposed pursuant to Section 6
hereof so that all Stock Awards from and after a date prior to the effective
date of such merger, consolidation, liquidation or sale, as the case may be,
specified by the Board, shall be exercisable in full; or (iii) all outstanding
Stock Awards may be cancelled by the Board as of the effective date of any such
merger, consolidation, liquidation or sale provided that notice of such
cancellation shall be given to each holder of a Stock Award, and each holder of
an Award shall have the right to exercise such Award in full (without regard to
any discretionary limitations imposed pursuant hereto) during the 30-day
<PAGE>
period preceding the effective date of such merger, consolidation, liquidation
or sale; or (iv) all outstanding Awards may be cancelled by the Board as of the
date of any such merger, consolidation, liquidation or sale provided that notice
of such cancellation shall be given to each holder of a Award, and each holder
of a Award shall have right to exercise such Award but only to the extent
exercisable in accordance with any discretionary limitations imposed pursuant
hereto prior to the effective date of such merger, consolidation, liquidation or
sale.
15. GRANT OF OPTIONS IN CONNECTION WITH CERTAIN ACQUISITIONS.
The Board may grant Options under the Plan upon assumption of or in
substitution for incentive stock options or non-statutory stock options granted
under plans of other employers, if such grant occurs by reason of a corporate
merger, consolidation, separation, reorganization, or liquidation to which the
Company is a party, or by reason of the acquisition of property or stock of
another corporation by the Company; provided that, with respect to any Incentive
Stock Option, such transaction is a transaction to which Section 424(a) of the
Code applies. The Board may impose such terms and conditions upon the grant of
any Incentive Stock Options under this Section 15 as are necessary to ensure
that the assumption or substitution will not constitute a modification of the
Option under Section 424(h) of the Code, even though any such term or condition
would otherwise be inconsistent with the provisions of this Plan. Options
granted under the provisions of this Section 15 may be granted at a price less
than the Fair Market Value of the Common Stock on the date such Option is
granted, so long as the ratio of the Option price to the Fair Market Value of
the Common Stock is no more favorable to the Optionee than the ratio of the
Option price to the Fair Market Value of the stock subject to the old option
immediately before such assumption or substitution. Except as otherwise
specifically provided in the agreement setting forth the terms and conditions of
such Option, the provisions of this Plan shall govern any Options granted under
this Section 15. Nothing in this Section 15 shall be deemed to authorize the
grant of Options under the Plan for a number of shares in excess of the number
set forth in Section 4, nor to limit in any way the authority of the Board to
grant assumed or substituted Options in connection with such transactions other
than under the Plan.
16. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 14 hereof relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary for
the Plan to satisfy the requirements of the Nasdaq National Market or any
similar organization or of any national securities exchange upon which shares of
Company Common Stock are listed or eligible for trading.
(b) The Board may in its sole discretion submit any other amendments to the
Plan for stockholder approval, including, but not limited to, amendments to the
Plan intended to satisfy
<PAGE>
the requirements of Section 162(m) of the Code and the regulations promulgated
thereunder regarding the exclusion of performance-based compensation from the
limit on corporate deductibility of compensation paid to certain executive
officers.
(c) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the provision of the Code and
the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.
(d) Rights and obligations under any Stock Award granted before amendment
of the Plan shall not be altered or impaired by any amendment of the Plan unless
(i) the Company requests the consent of the persons to whom the Stock Award was
granted and (ii) such person consents in writing.
(e) The Committee at any time, and from time to time, may amend the terms
of any one or more Stock Awards; provided, however, that the rights and
obligations under any Stock Award shall not be altered or impaired by any such
amendment unless (i) the Company requests the consent of the person to whom the
Stock Award was granted and (ii) such person consents in writing.
17. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on April 27, 2010. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any Stock Award granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
with consent of the person to whom the Stock Award was granted.
18. GOVERNING LAW.
The provisions of the Plan and all Stock Awards made hereunder shall be
governed by and interpreted in accordance with the internal laws of the
Commonwealth of Massachusetts without regard to any applicable conflicts of law
principles thereof.
*******
Adopted by the Board of Directors on March 7, 2000.
Approved by the Company's Stockholders on April 28, 2000
