1996 Stock Incentive Plan - FreeMarkets OnLine Inc.
FREEMARKETS ONLINE, INC.
1996 STOCK INCENTIVE PLAN
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TABLE OF CONTENTS
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1. Purpose..............................................................1
2. Definitions..........................................................1
3. Scope of the Plan....................................................5
4. Administration.......................................................6
5. Eligibility..........................................................8
6. Conditions to Grants.................................................8
(a) General Conditions..........................................8
(b) Grant of Options and Option Price...........................8
(c) Grant of Incentive Stock Options............................8
(d) Grant of Stock Appreciation Rights.........................10
7. No Employment Rights................................................10
8. Non-transferability.................................................10
(a) Exercise of Options........................................10
(b) Exercise of Stock Appreciation Rights......................11
(c) Special Rules for Section 16 Persons.......................12
(d) Full Vesting upon Change of Control........................12
10. Termination.........................................................12
(a) For Cause..................................................12
(b) On Account of Death or Disability..........................12
(c) On Account of Retirement...................................12
(d) Any Other Reason...........................................12
(e) Extension of Term..........................................13
11. Securities Law Matters..............................................13
12. Funding.............................................................13
13. Rights as a Stockholder.............................................13
14. Nature of Payments..................................................13
15. Adjustments.........................................................14
16. Amendment of the Plan...............................................14
17. Termination of the Plan.............................................14
18. No Illegal Transactions.............................................14
19. Controlling Law.....................................................15
20. Severability........................................................15
21. Effective Date......................................................15
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FREEMARKETS ONLINE, INC.
1996 STOCK INCENTIVE PLAN
Introduction.
FreeMarkets OnLine, Inc., a Delaware corporation (the "Company"),
hereby establishes the FreeMarkets OnLine, Inc. 1996 Stock Incentive Plan (the
"Plan").
1. Purpose.
The purpose of the Plan is to advance the interest of the Company by
encouraging and enabling the acquisition of a larger personal financial interest
in the Company, thereby strengthening the commitment to the success of the
Company and the desire to remain employed or retained by the Company and its
Subsidiaries, by those employees, independent contractors, directors and others
upon whose judgment and efforts the Company is largely dependent for the
successful conduct of its operations. It is anticipated that the acquisition of
such financial interest will stimulate the efforts of such persons on behalf of
the Company and encourage stockholder and entrepreneurial perspectives through
stock ownership. It is also anticipated that the opportunity to obtain such
financial interest will prove attractive to promising new employees and will
assist the Company in attracting such employees.
2. Definitions.
As used in the Plan, terms defined parenthetically immediately after
their use shall have the respective meanings provided by such definitions, and
the terms set forth below shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
(a) "Award" means options and/or stock appreciation rights granted
under the Plan.
(b) "Award Agreement" has the meaning specified in Section 4(c)(ii).
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means
(i) conviction of the Grantee of a felony which is, in the
opinion of the Committee, likely to result in injury of a material
nature to the Company or a Subsidiary;
(ii) the material violation by the Grantee of written policies
of the Company or a Subsidiary;
(iii) the gross and habitual negligence by the Grantee in the
performance of the Grantee's duties to the Company or its Subsidiaries;
or
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(iv) the willful and intentional action or omission to act in
connection with the Grantee's duties to the Company or a Subsidiary
resulting, in the opinion of the Committee, in injury of a material
nature to the Company or a Subsidiary.
(e) "Change of Control" means any of the following:
(i) the acquisition, after the date of the adoption of the
Plan by the Board, directly or indirectly, by any person, entity or
"group" within the meaning of Section 1 3(d)(3) or 14(d)(2) of the 1934
Act (other than by the Company or any of its Subsidiaries or any
employee benefit plan of the Company or any of its Subsidiaries) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of 50% or more of either the then-outstanding
shares of Stock or the combined voting power of the Company's
then-outstanding voting securities entitled to vote generally in the
election of directors ("Voting Power"); except that, for purposes
hereof, no such person, entity or group shall be deemed to have
acquired (1) any securities acquired by the Company or a Subsidiary or
any employee benefit plan (or any related trust) of the Company or any
Subsidiary, (2) any securities acquired pursuant to a benefit plan of
the Company or a Subsidiary, (3) any securities issuable pursuant to an
option, warrant or right owned by such person, entity or group as of
the close of business on the business day immediately preceding the
date of the adoption of the Plan by the Board, (4) any securities that
were otherwise beneficially owned by such person, entity or group as of
the close of business on the business day immediately preceding the
date of the adoption of the Plan by the Board and (5) any securities
issued in connection with either (x) a stock split, stock dividend or
similar recapitalization or reorganization with respect to shares owned
immediately prior to the date of the adoption of the Plan by the Board
and (y) any shares covered by the foregoing exceptions; provided,
however, that no Change of Control shall be deemed to have occurred
solely by reason of any such acquisition by a corporation with respect
to which, after such acquisition, more than 50% of both the
then-outstanding common shares of such corporation and the Voting Power
of such corporation are then- beneficially owned, directly or
indirectly, by the persons who were the beneficial owners of the Stock
and voting securities of the Company immediately before such
acquisition in substantially the same proportions as their respective
ownership, immediately before such acquisition, of the then-outstanding
shares of Stock or the Voting Power of the Company, as the case may be;
or
(ii) individuals who, as of the Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
who becomes a director after the Effective Date whose election or
nomination for election by the Company's stockholders was approved by
at least a majority of the Incumbent Board (other than an election or
nomination of' an
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individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the
directors of the Company (as such terms are used in Rule 14a-11 under
the 1934 Act)) shall be deemed to be members of the Incumbent Board; or
(iii) the approval by the stockholders of the Company of (A) a
merger, reorganization or consolidation with respect to which persons
who were the respective beneficial owners of the Stock and Voting Power
of the Company immediately before such merger, reorganization or
consolidation do not, immediately thereafter, beneficially own,
directly or indirectly, more than 50% of, respectively, the
then-outstanding common shares and the Voting Power of the corporation
resulting from such merger, reorganization or consolidation, (B) a
liquidation or dissolution of the Company or (C) the sale or other
disposition of all or substantially all of the assets of the Company;
provided, however, that for the purposes of this clause (iii) the votes
of all Section 16 Persons shall be disregarded in determining whether
stockholder approval has been obtained.
Notwithstanding the foregoing, (a) a Change of Control shall be deemed not to
have occurred with respect to any Section 16 Person if such Section 16 Person
is, by agreement (written or otherwise), a participant on such Section 16
Person's own behalf in a transaction which causes the Change of Control to occur
and (b) an IPO shall not be deemed to be a Change of Control.
(f) "Change of Control Value" means the Fair Market Value of a share of
Stock on the date of a Change of Control.
(g) "Code" means the Internal Revenue Code of 1986, as amended, and
regulations and rulings thereunder. References to a particular section of the
Code shall include references to successor provisions.
(h) "Committee" means the committee of the Board appointed pursuant to
Section 4(a).
(i) "Company" has the meaning ascribed to such term in the introductory
paragraph.
(j) "Disability" means, for purposes of the exercise of an incentive
stock option after termination of employment, a permanent and total disability
within the meaning of Section 422(e)(3) of the Code, and for all other purposes,
a mental or physical condition which, in the opinion of the Committee, renders a
Grantee unable or incompetent to carry out the job responsibilities which such
Grantee held or the tasks to which such Grantee was assigned at the time the
disability was incurred, which condition is expected to be permanent or for an
indefinite duration exceeding one year.
(k) "Effective Date" has the meaning ascribed to such term in
Section 21.
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(l) "Fair Market Value" with respect to the Stock means,
(i) as of any applicable date (other than on the IPO Date):
(A) if the security is listed for trading on the New
York Stock Exchange, the closing price, regular way, of the
security as reported on the New York Stock Exchange Composite
Tape, or if no such reported sale of the security shall have
occurred on such date, on the next preceding date on which
there was such a reported sale, or
(B) if the security is not so listed, but is listed
on another national securities exchange or authorized for
quotation on the National Association of Securities Dealers
Inc.'s NASDAQ National Market System ("NASDAQ/NMS"), the
closing price, regular way, of the security on such exchange
or NASDAQ/NMS, as the case may be, or if no such reported sale
of the security shall have occurred on such date, on the next
preceding date on which there was such a reported sale, or
(C) if the security is not listed for trading on a
national securities exchange or authorized for quotation on
NASDAQ/NMS, the average of the closing bid and asked prices as
reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or, if no such prices
shall have been so reported for such date, on the next
preceding date for which such prices were so reported, or
(D) if the security is not listed for trading on a
national securities exchange or is not authorized for
quotation on NASDAQ/NMS or NASDAQ, the fair market value of
the security as determined in good faith by the Board; and
(ii) as of the IPO Date, the price to the public pursuant to
the form of final prospectus used in connection with the IPO, as
indicated on the cover page of such prospectus or otherwise.
(m) "Grant Date" means the date as determined in accordance with
Section 6(a)(i).
(n) "Grantee" means an individual who has been granted an Award.
(o) "including" or "includes" means "including, without limitation," or
"includes, without limitation", respectively.
(p) "IPO" means an initial public offering of Stock.
(q) "IPO Date" means the effective date of the underwriting agreement
between the Company and the underwriters of the IPO.
(r) "Minimum Consideration" means $.01 per share of Stock or such other
amount that is from time to time considered to be capital for purposes of
Section 154 of the Delaware General Corporation Law.
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(s) "1934 Act" means the Securities Exchange Act of 1934, as amended,
and regulations and rulings thereunder. References to a particular section or,
or rule under, the 1934 Act shall include references to successor provisions.
(t) "Option Price" means the per share purchase price of Stock subject
to an option.
(u) "Plan" has the meaning ascribed to such term in the introductory
paragraph.
(v) "Retirement" means a termination of employment with the Company and
its Subsidiaries, other than for Cause, at any time after attaining age 60.
(w) "SEC" means the Securities and Exchange Commission.
(x) "Section 16 Person" means a person, whether or not a Grantee, who
is potentially subject to liability under Section 16(b) of the 1934 Act with
respect to transactions involving equity securities of the Company, irrespective
of whether such person was subject to such liability at the time of the grant of
any particular Award.
(y) "Stock" means the common stock, $.01 par value, of the Company.
(z) "Subsidiary" means, for purposes of grants of incentive stock
options, a corporation as defined in Section 424(f) of the Code (with the
Company being treated as the employer corporation for purposes of such
definition) and, for all other purposes, a corporation with respect to which the
Company owns, directly or indirectly, 25% or more of the then-outstanding common
shares.
(aa) 10% Owner" means a person who owns stock (including stock treated
as owned under Section 424(d) of the Code) possessing more than 10% of the total
combined voting power of all classes of stock of the Company.
(bb) "Termination" has the meaning ascribed to such term in
Section 4(c)(iv).
3. Scope of the Plan.
(a) Subject to Section 15, the aggregate number of shares of Stock
which may be issued or delivered and as to which stock options may be granted
under the plan is 2,200 shares. Such shares may be treasury shares or
newly-issued shares, as may be determined from time to time by the Board or the
Committee.
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(b) If and to the extent that an Award shall expire or terminate for
any reason without having been exercised in full, or shall be forfeited,
without, in either case, the Grantee having enjoyed any of the benefits of stock
ownership (other than dividends that are likewise forfeited or voting rights),
the shares of Stock associated with such Award shall become available for other
Awards.
4. Administration.
(a) Subject to Section 4(b), the Plan shall be administered by a the
Compensation Committee of the Board (the "Committee") which shall consist of not
less than three persons who are directors of the Company. Membership on the
Committee shall from time to time (A) be increased or decreased and (B) shall be
subject to such limitations, in each case as the Board deems appropriate to
permit transactions in Stock pursuant to the Plan to be exempt from potential
liability under Section 16(b) of the 1934 Act pursuant to Rule 16b-3 thereunder.
(b) The Board may reserve to itself or delegate to another committee of
the Board any or all of the authority and responsibility of the Committee with
respect to Awards to Grantees who are not Section 16 Persons at the time any
such delegated authority or responsibility is exercised. Such other committee
may consist of two or more directors who may, but need not be, officers or
employees of the Company or of any of its Subsidiaries. To the extent that the
Board has reserved to itself or delegated to such other committee the authority
and responsibility of the Committee, all references to the Committee in the Plan
shall be to the Board or such other committee.
(c) The Committee or the Board or other committee of the Board, as the
case may be, shall have full and final authority and sole discretion, but
subject to the express provisions of the Plan, as follows:
(i) to grant Awards and determine the Grant Date and term
thereof;
(ii) to determine (A) when and to whom Awards may be granted,
and (B) the terms and conditions applicable to each Award, including
the Option Price of an option, whether an option shall qualify as an
incentive stock option, the benefit payable under any stock
appreciation right and any limits on the percentage of Awards which may
from time to time be exercised by a Grantee, all of which shall be set
forth in the written agreements by which all Awards shall be evidenced
("Award Agreements") which need not be identical;
(iii) to interpret the Plan and to make all determinations
necessary or advisable for the administration of the Plan;
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(iv) to prescribe, amend, and rescind rules relating to the
Plan, including rules with respect to the exercisability and
nonforfeitability of Awards upon a Grantee's termination of employment
or other separation from the Company or any of its Subsidiaries (a
"Termination");
(v) to determine any restrictions or conditions (including (A)
imposing restrictions with respect to stock acquired upon exercise of
an option, which restrictions may continue beyond the Grantee's
Termination and (B) requiring the Grantee to grant to one or more
persons an irrevocable proxy to vote, to execute and deliver written
consents or otherwise act with respect to stock acquired upon exercise
of an option) of the Award Agreements;
(vi) to cancel, with the consent of the Grantee, outstanding
Awards and to grant new Awards in substitution therefor;
(vii) to accelerate the exercisability (including
exercisability with a period of less than one year after the Grant
Date) of, and to accelerate or waive any or all of the restrictions and
conditions applicable to, any Award or any group of Awards for any
reason and at any time, including in connection with a Termination
(other than Termination for Cause) or a Change of Control;
(viii) to extend the time during which any Award or group of
Awards may be exercised;
(ix) to amend, with the consent of the Grantee, Award
Agreements in respect of Awards which have not been exercised;
provided, however, that the consent of the Grantee shall not be
required for any amendment which (A) does not adversely affect the
rights of the Grantee, or (B) is necessary or advisable (as determined
by the Committee) to carry out the purpose of the Award as a result of
any new or change in existing applicable law, regulation, ruling or
judicial decision;
(x) to take any action at any time before the exercise of an
option (whether or not an incentive stock option), without the consent
of the Grantee, to prevent such option from being treated as an
incentive stock option;
(xi) to impose such additional conditions, restrictions, and
limitations upon the grant, exercise or retention of Awards as the
Committee may, before or concurrently with the grant thereof, deem
appropriate;
(xii) to approve the manner of payment and determine the terms
related thereto by a Grantee in connection with an Award;
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(xiii) to require written investment representations by a
Grantee as provided in Section 12;
(xiv) to make equitable adjustment of Awards as provided in
Section 15;
(xv) to cancel stock appreciation rights; and
(xvi) to take any other action with respect to any matters
relating to the Plan for which it is responsible.
The determination of the Committee on all matters relating to the Plan or any
Award Agreement shall be conclusive and final. No member of the Committee shall
be liable for any action or determination made in good faith with respect to the
Plan or any Award.
5. Eligibility.
Awards may be granted to any full-time employee (including any
officer), part-time employee, independent contractor or director employed or
retained by the Company or any of its Subsidiaries. In selecting the individuals
to whom Awards may be granted, as well as in determining the number of shares of
Stock subject to, and the other terms and conditions applicable to, each Award,
the Committee shall take into consideration such factors as it deems relevant in
promoting the purposes of the Plan.
6. Conditions to Grants.
(a) General Conditions.
(i) The Grant Date of an Award shall be the date on which the
Committee grants the Award or such later date as specified in advance
by the Committee.
(ii) A Grantee may, if otherwise eligible, be granted
additional Awards.
(iii) To the extent not set forth in the Plan, the terms and
conditions of each Award shall be set forth in an Award Agreement.
(b) Grant of Options and Option Price.
(i) No later than the Grant Date of any option, the Committee
shall determine the Option Price of such option: provided, however,
that the Option Price for incentive stock options issued pursuant to
Section 6(c) shall not be less than 100% of the Fair Market Value of
the Stock on the Grant Date.
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(ii) The Committee may, in its discretion, permit a person
eligible to receive Awards under Section 5 of the Plan to elect, prior
to earning compensation, to be granted an option or options under the
Plan in lieu of receiving such compensation. Subject to the express
terms of the Plan, such options shall have such terms and conditions as
the Committee in its discretion specifies; provided, however, that, in
the judgment of the Committee, the value of such options on the Grant
Date equals the amount of compensation foregone by such person; and
provided, further, that except to the extent such condition may be
waived by the securities law counsel to the Company, a Section 16
Person must irrevocably elect to forego such compensation and acquire
such option at least six months prior to the Grant Date of such option.
(c) Grant of Incentive Stock Options. At the time of the grant of any
option, the Committee may designate that such option shall be made subject to
additional restrictions to permit it to qualify as an "incentive stock option"
under the requirements of Section 422 of the Code. Any option designated as an
incentive stock option:
(i) shall, if granted to a 10% Owner, provide for an Option
Price of not less than 110% of the Fair Market Value of the Stock on
the Grant Date;
(ii) shall not have an aggregate Fair Market Value (determined
for each incentive stock option at its Grant Date) of Stock with
respect to which incentive stock options are exercisable for the first
time by such Grantee during any calendar year (under the Plan and any
other employee stock option plan of the Company or any parent or
Subsidiary thereof ("Other Plans"), determined in accordance with the
provisions of Section 422 of the Code) which exceeds $100,000 (the
"$100,000 Limit");
(iii) shall, if the aggregate Fair Market Value of Stock
(determined on the Grant Date) with respect to the portion of such
grant which is exercisable for the first time during any calendar year
("Current Grant") and all incentive stock options previously granted
under the Plan and any Other Plans which are exercisable for the first
time during a calendar year ("Prior Grants") would exceed the $100,000
Limit, be exercisable as follows:
(A) the portion of the Current Grant which would,
when added to any Prior Grants, be exercisable with respect to
Stock which would have an aggregate Fair Market Value
(determined as of the respective Grant Date for such options)
in excess of the $100,000 Limit shall, notwithstanding the
terms of the Current Grant, be exercisable for the first time
by the Grantee in the first subsequent calendar year or years
in which it could be exercisable for the first time by the
Grantee when added to all Prior Grants without exceeding the
$100,000 Limit; and
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(B) if, viewed as of the date of the Current Grant,
any portion of a Current Grant could not be exercised under
the preceding provisions of this Section 6(c)(iii) during any
calendar year commencing with the calendar year in which it is
first exercisable through and including the last calendar year
in which it may by its terms be exercised, such portion of the
Current Grant shall not be an incentive stock option, but
shall be exercisable as a separate option at such date or
dates as are provided in the Current Grant;
(iv) shall be granted within 10 years from the earlier of the
date the Plan is adopted or the date the Plan is approved by the
stockholders of the Company;
(v) shall require the Grantee to notify the Committee of any
disposition of any Stock issued pursuant to the exercise of the
incentive stock option under the circumstances described in Section
421(b) of the Code (relating to certain disqualifying dispositions)
within 10 days of such disposition; and
(vi) shall not be granted to any director or independent
contractor of the Company or any of its Subsidiaries.
(d) Grant of Stock Appreciation Rights. When granted, stock
appreciation rights shall be identified with shares of Stock subject to a
specific option in a number equal to or different from the number of stock
appreciation rights so granted. Unless otherwise provided in the applicable
Award Agreement, the Grantee's stock appreciation rights shall terminate upon
(i) the expiration, termination, forfeiture or cancellation of the option with
which it is associated, or (ii) the exercise of such option.
7. No Employment Rights.
Neither the establishment of the Plan nor the granting of any Award
shall be construed to (a) give any Grantee the right (i) to remain employed or
retained by the Company or any of its Subsidiaries or (ii) to any benefits not
specifically provided by the Plan or (b) in any manner modify the right of the
Company or any of its Subsidiaries to modify, amend, or terminate any of its
employee benefit plans.
8. Non-transferability.
Except as may be set forth in an Award Agreement, each Award granted
hereunder shall not be assignable or transferable other than by will or the laws
of descent and distribution or pursuant to a "qualified domestic relations
order" (as that term is defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder) and may be exercised, during the Grantee's
lifetime, only by the Grantee; provided, however, that a Grantee may in a manner
specified by the Committee and to the extent provided in the Plan (a) designate
in writing a beneficiary to exercise his Award after the Grantee's death and (b)
transfer an option (other than an incentive stock option) or stock appreciation
right to a revocable, inter vivos trust as to which the Grantee is both the
settlor and trustee, but in no event shall any transfer to such a trust by or on
behalf of a Section 16 Person be effective unless the Company shall have
received an opinion of counsel, or the staff of the SEC shall have issued an
interpretive or "no action" letter, in either case to the effect that such a
transfer is not inconsistent with the requirements of Rule 16b-3 under the 1934
Act.
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9. Exercise.
(a) Exercise of Options. Each option shall be exercised by delivery to
the Company of written notice of intent to purchase a specific number of shares
of Stock subject to the option. The Option Price of any shares of Stock as to
which an option is exercised shall be paid in full at the time of the exercise.
Payment may, at the election of the Grantee, be made in any one or any
combination of the following:
(i) cash;
(ii) shares of Stock held by the Grantee for at least 6 months
prior to exercise of the option, valued at its Fair Market Value on the
date of exercise;
(iii) with the approval of the Committee, shares of restricted
Stock held by the Grantee for at least 6 months prior to exercise of
the option, valued at its Fair Market Value on the date of exercise; or
(iv) through simultaneous sale through a broker of shares
acquired upon exercise, as permitted under Regulation T of the Federal
Reserve Board.
If restricted Stock ("Tendered Restricted Stock") is to be used to pay
the Option Price for Stock, the Committee may, but need not, specify that (i)
all the shares of Stock acquired upon the exercise of the option shall be
subject to the same restrictions as the Tendered Restricted Stock, determined as
of the date of exercise of the option, or (ii) a number of shares of Stock
acquired upon the exercise of the option which is equal to the number of shares
of Tendered Restricted Stock shall be subject to the same restrictions as the
Tendered Restricted Stock, determined as of the date of exercise of the option.
(b) Exercise of Stock Appreciation Rights. Subject to such terms and
conditions as the Committee may impose, each stock appreciation right shall be
deemed to have been exercised upon the exercise of the option with which it is
affiliated.
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The benefit for each share of Stock in respect of which a
stock appreciation right is exercised shall be equal to:
(i) the Fair Market Value of a share of Stock on the date of
such exercise, reduced by
(ii) an amount equal to the Option Price of such option,
unless the Committee in the grant of the stock appreciation right
specified a higher amount;
provided, however, that the Committee may provide that the benefit for any stock
appreciation right shall not exceed such amount or such percentage of the Fair
Market Value of a share of Stock on such Grant Date as the Committee shall
specify. The benefit upon the exercise of a stock appreciation right shall be
payable in cash. Notwithstanding the foregoing, if the Committee in its
discretion determines that the exercise of stock appreciation rights would
preclude the use of pooling of interests accounting following a sale of the
Company which is reasonably likely to occur and that such preclusion of pooling
would have a material adverse effect on the sale of the Company, the Committee,
in its discretion may either unilaterally preclude stock appreciation rights
from being exercised upon the occurrence of a Change of Control by canceling the
stock appreciation rights prior to the Change of Control or, subject to Section
3(a), cause the Company to pay the stock appreciation rights benefit in Stock if
it determines that such payment would not cause the transaction to be ineligible
for pooling.
(c) Special Rules for Section 16 Persons. No option or stock
appreciation right shall be exercisable by a Section 16 Person during the first
six months after its Grant Date, except as exempted from Section 16 of the 1934
Act under Rule 16a-2(d) under the 1934 Act or as may from time to time be
permitted by the Committee.
(d) Full Vesting upon Change of Control. In the event of a Change of
Control, all unvested Awards held by Grantees who have been employed by the
Company for at least three (3) years on the occurrence of such Change of Control
shall become immediately vested and exercisable; provided, however, that in such
event the Board or Committee, as the case may be, may exercise its authority
under Section 4 (c)(vii) to accelerate vesting in respect of Grantees who are
not employees or have been employed by the Company for less than three (3)
years.
10. Termination.
Except as provided by the Committee in the Award Agreement or otherwise
and except as otherwise required to maintain the status of an incentive stock
option as such:
(a) For Cause. If a Grantee has a Termination for Cause, any
unexercised Award shall thereupon terminate.
(b) On Account of Death or Disability. If a Grantee has a Termination
on account of the Grantee's death or Disability, then any unexercised option and
stock appreciation right, whether or not exercisable on the date of such
Termination on account of death or Disability may be exercised, in whole or in
part, at any time within 360 days after such Termination by the Grantee, or
after the Grantee's death, by (A) his personal representative or by the person
to whom the option is transferred by will or the applicable laws of descent and
distribution, (B) the Grantee's beneficiary designated in accordance with
Section 8, or (C) the then-acting trustee of the trust described in Section 8.
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(c) On Account of Retirement. If a Grantee has a Termination on account
of Retirement, any unexercised Award may be exercised, in whole or in part, at
any time within 360 days after such Retirement (90 days in the case of an award
of an incentive stock option).
(d) Any Other Reason. If a Grantee has a Termination for a reason other
than for Cause, death, Disability, or Retirement, any unexercised Award, to the
extent exercisable on the date of the Grantee's Termination, may be exercised in
whole or in part, not later than the 10th day following the Grantee's
Termination (90th day in the case of an award of an incentive stock option);
provided, however, that if the Grantee has entered into an agreement with the
Company not to sell any shares of Stock (or the capital stock of a successor to
the Company) for a specified period following the consummation of a business
combination between the Company and another corporation or entity (the
"Specified Period"), such Award may be exercised in whole or in part until the
later of such 90th day or 10 business days following the expiration of the
Specified Period.
(e) Extension of Term. In the event of Termination other than for
Cause, the term of any Award (whether or not exercisable on the date of the
Grantee's Termination) which by its terms would otherwise expire after the
Grantee's Termination but prior to the end of the period following the Grantee's
Termination described in Sections 10(b), (c) and (d) above for exercise of
Awards may, in the discretion of the Committee and except as to incentive stock
options, be extended so as to permit any unexercised portion thereof to be
exercised at any time within such period. Except as to incentive stock options,
the Committee may further extend the period of exercisability to permit any
unexercised portion thereof to be exercised within a specified period provided
by the Committee. However, in no event may the term of any Award expire more
than 10 years after the Grant Date of such Award.
11. Securities Law Matters.
(a) If the Committee deems necessary to comply with the Securities Act
of 1933, the Committee may require written investment intent representations by
the Grantee and may require that a restrictive legend be affixed to certificates
for shares of Stock.
(b) If, based upon the opinion of counsel for the Company, the
Committee determines that the exercise or nonforfeitability of, or delivery of
benefits pursuant to, any Award would violate any applicable provision of (i)
federal or state securities laws or (ii) the listing requirements of any
national securities exchange or national market system on which are listed any
of the Company's equity securities, then the Committee may postpone any such
exercise, nonforfeitability or delivery, as the case may be, but the Company
shall use its best efforts to cause such exercise, nonforfeitability or delivery
to comply with all such provisions at the earliest practicable date.
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12. Funding.
Benefits payable under the Plan to any person shall be paid directly by
the Company. The Company shall not be required to fund, or otherwise segregate
assets to be used for payment of, benefits under the Plan.
13. Rights as a Stockholder.
A Grantee shall not, by reason of any Award have any right as a
stockholder of the Company with respect to the shares of Stock which may be
deliverable upon exercise of an option until such shares have been delivered to
him.
14. Nature of Payments.
Any and all grants, payments of cash, or deliveries of shares of Stock
hereunder shall constitute special incentive payments to the Grantee and shall
not be taken into account in computing the amount of salary or compensation of
the Grantee for the purposes of determining any pension, retirement, death or
other benefits under (a) any pension, retirement, profit-sharing, bonus, life
insurance or other employee benefit plan of the Company or any of its
Subsidiaries or (b) any agreement between the Company or any Subsidiary, on the
one hand, and the Grantee, on the other hand, except as such plan or agreement
shall otherwise expressly provide.
15. Adjustments.
The Committee shall make equitable adjustment of:
(a) the number of shares of Stock available under Section 3(a);
(b) the number of shares of Stock covered by an Award;
(c) the Option Price of all outstanding options; and
(d) the Fair Market Value of Stock to be used to determine the
amount of the benefit payable in respect of stock appreciation rights;
in each case to reflect a stock dividend, stock split, reverse stock split,
share combination, recapitalization, merger, consolidation, acquisition of
property or shares, asset spin-off, split-off, reorganization, stock rights
offering, liquidation or similar event, of or by the Company.
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16. Amendment of the Plan.
The Board may from time to time in its discretion amend or modify the
Plan without the approval of the stockholders of the Company, except as such
stockholder approval may be required (a) to permit the grant of Awards under,
and the issuance of Stock pursuant to, the Plan to be exempt from potential
liability under Section 16(b) of the 1934 Act or (b) under the listing
requirements of any national securities exchange or national market system on
which are listed any of the Company's equity securities.
17. Termination of the Plan.
The Plan shall terminate on the tenth (10th) anniversary of the
Effective Date or at such other time as the Board may determine. Any
termination, whether in whole or in part, shall not affect any Award then
outstanding under the Plan.
18. No Illegal Transactions.
The Plan and all Awards granted pursuant to it are subject to all laws
and regulations of any governmental authority which may be applicable thereto;
and notwithstanding any provision of the Plan or any Award, Grantees shall not
be entitled to exercise Awards or receive the benefits thereof, and the Company
shall not be obligated to deliver any Stock or pay any benefits to a Grantee, if
such exercise, delivery, receipt or payment would constitute a violation by the
Grantee or the Company of any such law or regulation.
19. Controlling Law.
The law of Delaware, except its law with respect to choice of law,
shall be controlling in all matters relating to the Plan.
20. Severability.
If all or any part of the Plan is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any portion of the Plan not declared to be unlawful or
invalid. Any Section or part of a Section so declared to be unlawful or invalid
shall, if possible, be construed in a manner which will give effect to the terms
of such Section or part of a Section to the fullest extent possible while
remaining lawful and valid.
21. Effective Date.
Subject to the approval of the Plan by majority vote of the Company's
stockholders, the Plan shall become effective as of the date (the "Effective
Date") hereof.
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Executed as of January 25, 1996.
FREEMARKETS ONLINE, INC.
By: /s/ Glen T. Meakem
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Name: Glen T. Meakem
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Title: President
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