1999 Executive Equity Incentive Plan - Handspring Inc.
HANDSPRING, INC.
1999 EXECUTIVE EQUITY INCENTIVE PLAN
AS ADOPTED ON AUGUST 4, 1999 AND
AMENDED ON JANUARY 3, 2000 AND MARCH 28, 2000
1. PURPOSE. The purpose of this Executive Plan is to provide incentives
to attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options and Restricted Stock. Capitalized
terms not defined in the text are defined in Section 22 hereof.
2. SHARES SUBJECT TO THE EXECUTIVE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and 17
hereof, the total number of Shares reserved and available for grant and issuance
pursuant to this Executive Plan will be 10,350,000(1) Shares or such lesser
number of Shares as permitted under Section 260.140.45 of Title 10 of the
California Code of Regulations. Subject to Sections 2.2 and 17 hereof, Shares
previously granted will again be available for grant and issuance in connection
with future Awards under this Executive Plan that: (i) are subject to issuance
upon exercise of an Option but cease to be subject to such Option for any reason
other than exercise of such Option or (ii) are subject to a Restricted Stock
Award that otherwise terminates without Shares being issued. At all times the
Company will reserve and keep available a sufficient number of Shares as will be
required to satisfy the requirements of all Awards granted and outstanding under
this Executive Plan.
2.2 Adjustment of Shares. In the event that the number of
outstanding shares of the Company's Common Stock is changed by a stock dividend,
recapitalization, stock split, reverse stock split, subdivision, combination,
reclassification or similar change in the capital structure of the Company
without consideration, then (i) the number of Shares reserved for issuance under
this Executive Plan, (ii) the Exercise Prices of and number of Shares subject to
outstanding Options and (iii) the Purchase Prices of and number of Shares
subject to other outstanding Awards will be proportionately adjusted, subject to
any required action by the Board or the shareholders of the Company and
compliance with applicable securities laws; provided, however, that fractions of
a Share will not be issued but will either be paid in cash at the Fair Market
Value of such fraction of a Share or will be rounded down to the nearest whole
Share, as determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 hereof) may be granted
only to employees (including officers and directors who are also employees and
certain other employees who may be selected for grants in the discretion of the
Committee or the Board) of the Company or of a Parent or Subsidiary of the
Company. NQSOs (as defined in Section 5 hereof) and Restricted Stock Awards may
be granted to officers, directors and, in the discretion of the Committee or the
Board, selected employees and selected consultants of the Company or any Parent
or Subsidiary of the Company; provided such consultants render bona fide
services not in connection with the offer and sale of securities in a
capital-raising transaction. A person may be granted more than one Award under
this Executive Plan.
(1) This 10,350,000 figure reflects the 3-for-1 stock split which became
effective on March 23, 2000, the 900,000 (post-split) share increase to the
total pool effective on March 28, 2000 and the 3-for-2 stock split which
became effective in May 2000.
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4. ADMINISTRATION.
4.1 Committee Authority. This Executive Plan will be
administered by the Committee or the Board if no Committee is created by the
Board. Subject to the general purposes, terms and conditions of this Executive
Plan, and to the direction of the Board, the Committee will have full power to
implement and carry out this Executive Plan. Without limitation, the Committee
will have the authority to:
(a) construe and interpret this Executive Plan, any Award
Agreement and any other agreement or document
executed pursuant to this Executive Plan;
(b) prescribe, amend and rescind rules and regulations
relating to this Executive Plan;
(c) approve persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration
subject to Awards;
(f) determine whether Awards will be granted singly, in
combination with, in tandem with, in replacement of,
or as alternatives to, other Awards under this
Executive Plan or awards under any other incentive or
compensation plan of the Company or any Parent or
Subsidiary of the Company;
(g) grant waivers of any conditions of this Executive
Plan or any Award;
(h) determine the terms of vesting, exercisability and
payment of Awards;
(i) correct any defect, supply any omission, or reconcile
any inconsistency in this Executive Plan, any Award,
any Award Agreement, any Exercise Agreement or any
Restricted Stock Purchase Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable
for the administration of this Executive Plan.
4.2 Committee Discretion. Unless in contravention of any
express terms of this Executive Plan or Award, any determination made by the
Committee with respect to any Award will be made in its sole discretion either
(i) at the time of grant of the Award, or (ii) subject to Section 5.9 hereof, at
any later time. Any such determination will be final and binding on the Company
and on all persons having an interest in any Award under this Executive Plan.
The Committee may delegate to one or more officers of the Company the authority
to grant an Award under this Executive Plan, provided such officer or officers
are members of the Board.
5. OPTIONS. The Committee may grant Options to eligible persons
described in Section 3 hereof and will determine whether such Options will be
Incentive Stock Options within the meaning of the Code ("ISOS") or Nonqualified
Stock Options ("NQSOS"), the number of Shares subject to the Option, the
Exercise Price of the Option, the period during which the Option may be
exercised, and all other terms and conditions of the Option, subject to the
following:
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5.1 Form of Option Grant. Each Option granted under this
Executive Plan will be evidenced by an Award Agreement which will expressly
identify the Option as an ISO or an NQSO ("STOCK OPTION AGREEMENT"), and will be
in such form and contain such provisions (which need not be the same for each
Participant) as the Committee may from time to time approve, and which will
comply with and be subject to the terms and conditions of this Executive Plan.
5.2 Date of Grant. The date of grant of an Option will be the
date on which the Committee makes the determination to grant such Option, unless
a later date is otherwise specified by the Committee. The Stock Option Agreement
and a copy of this Executive Plan will be delivered to the Participant within a
reasonable time after the granting of the Option.
5.3 Exercise Period. Options may be exercisable immediately
but subject to repurchase pursuant to Section 11 hereof or may be exercisable
within the times or upon the events determined by the Committee as set forth in
the Stock Option Agreement governing such Option; provided, however, that no
Option will be exercisable after the expiration of ten (10) years from the date
the Option is granted; and provided further that no ISO granted to a person who
directly or by attribution owns more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any Parent or
Subsidiary of the Company ("TEN PERCENT SHAREHOLDER") will be exercisable after
the expiration of five (5) years from the date the ISO is granted. The Committee
also may provide for Options to become exercisable at one time or from time to
time, periodically or otherwise, in such number of Shares or percentage of
Shares as the Committee determines. Subject to earlier termination of the Option
as provided herein, each Participant who is not an officer, director or
consultant of the Company or of a Parent or Subsidiary of the Company shall have
the right to exercise an Option granted hereunder at the rate of no less than
twenty percent (20%) per year over five (5) years from the date such Option is
granted.
5.4 Exercise Price. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may not be less than
eighty-five percent (85%) of the Fair Market Value of the Shares on the date of
grant; provided that (i) the Exercise Price of an ISO will not be less than one
hundred percent (100%) of the Fair Market Value of the Shares on the date of
grant and (ii) the Exercise Price of any Option granted to a Ten Percent
Shareholder will not be less than one hundred ten percent (110%) of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased must be made in accordance with Section 7 hereof.
5.5 Method of Exercise. Options may be exercised only by
delivery to the Company of a written stock option exercise agreement (the
"EXERCISE AGREEMENT") in a form approved by the Committee (which need not be the
same for each Participant). The Exercise Agreement will state (i) the number of
Shares being purchased, (ii) the restrictions imposed on the Shares purchased
under such Exercise Agreement, if any, and (iii) such representations and
agreements regarding Participant's investment intent and access to information
and other matters, if any, as may be required or desirable by the Company to
comply with applicable securities laws. Participant shall execute and deliver to
the Company the Exercise Agreement together with payment in full of the Exercise
Price, and any applicable taxes, for the number of Shares being purchased.
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5.6 Termination. Subject to earlier termination pursuant to
Sections 17 and 18 hereof and notwithstanding the exercise periods set forth in
the Stock Option Agreement, exercise of an Option will always be subject to the
following:
(a) If the Participant is Terminated for any reason other
than death, Disability or for Cause, then the
Participant may exercise such Participant's Options
only to the extent that such Options are exercisable
upon the Termination Date. Such Options must be
exercised by the Participant, if at all, as to all or
some of the Vested Shares calculated as of the
Termination Date, within three (3) months after the
Termination Date (or within such shorter time period,
not less than thirty (30) days, or within such longer
time period, not exceeding five (5) years, after the
Termination Date as may be determined by the
Committee, with any exercise beyond three (3) months
after the Termination Date deemed to be an NQSO) but
in any event, no later than the expiration date of
the Options.
(b) If the Participant is Terminated because of
Participant's death or Disability (or the Participant
dies within three (3) months after a Termination
other than for Cause), then Participant's Options may
be exercised only to the extent that such Options are
exercisable by Participant on the Termination Date.
Such options must be exercised by Participant (or
Participant's legal representative or authorized
assignee), if at all, as to all or some of the Vested
Shares calculated as of the Termination Date, within
twelve (12) months after the Termination Date (or
within such shorter time period, not less than six
(6) months, or within such longer time period, not
exceeding five (5) years, after the Termination Date
as may be determined by the Committee, with any
exercise beyond (i) three (3) months after the
Termination Date when the Termination is for any
reason other than the Participant's death or
disability, within the meaning of Section 22(e)(3) of
the Code, or (ii) twelve (12) months after the
Termination Date when the Termination is for
Participant's disability, within the meaning of
Section 22(e)(3) of the Code, deemed to be an NQSO)
but in any event no later than the expiration date of
the Options.
(c) If the Participant is terminated for Cause, then
Participant's Options shall expire on such
Participant's Termination Date, or at such later time
and on such conditions as are determined by the
Committee.
5.7 Limitations on Exercise. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISOs. The aggregate Fair Market Value (determined as
of the date of grant) of Shares with respect to which ISOs are exercisable for
the first time by a Participant during any calendar year (under this Executive
Plan or under any other incentive stock option plan of the Company or any Parent
or Subsidiary of the Company) will not exceed One Hundred Thousand Dollars
($100,000). If the Fair Market Value of Shares on the date of grant with respect
to which ISOs are exercisable for the first time by a Participant during any
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calendar year exceeds One Hundred Thousand Dollars ($100,000), then the Options
for the first One Hundred Thousand Dollars ($100,000) worth of Shares to become
exercisable in such calendar year will be ISOs and the Options for the amount in
excess of One Hundred Thousand Dollars ($100,000) that become exercisable in
that calendar year will be NQSOs. In the event that the Code or the regulations
promulgated thereunder are amended after the Effective Date (as defined in
Section 18 hereof) to provide for a different limit on the Fair Market Value of
Shares permitted to be subject to ISOs, then such different limit will be
automatically incorporated herein and will apply to any Options granted after
the effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with
Section 424(h) of the Code. Subject to Section 5.10 hereof, the Committee may
reduce the Exercise Price of outstanding Options without the consent of
Participants by a written notice to them; provided, however, that the Exercise
Price may not be reduced below the minimum Exercise Price that would be
permitted under Section 5.4 hereof for Options granted on the date the action is
taken to reduce the Exercise Price.
5.10 No Disqualification. Notwithstanding any other provision
in this Executive Plan, no term of this Executive Plan relating to ISOs will be
interpreted, amended or altered, nor will any discretion or authority granted
under this Executive Plan be exercised, so as to disqualify this Executive Plan
under Section 422 of the Code or, without the consent of the Participant, to
disqualify any Participant's ISO under Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the
Company to sell to an eligible person Shares that are subject to certain
specified restrictions. The Committee will determine to whom an offer will be
made, the number of Shares the person may purchase, the Purchase Price, the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a
Restricted Stock Award made pursuant to this Executive Plan will be evidenced by
an Award Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such
form (which need not be the same for each Participant) as the Committee will
from time to time approve, and will comply with and be subject to the terms and
conditions of this Executive Plan. The Restricted Stock Award will be accepted
by the Participant's execution and delivery of the Restricted Stock Purchase
Agreement and full payment for the Shares to the Company within thirty (30) days
from the date the Restricted Stock Purchase Agreement is delivered to the
person. If such person does not execute and deliver the Restricted Stock
Purchase Agreement along with full payment for the Shares to the Company within
such thirty (30) days, then the offer will terminate, unless otherwise
determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award will be determined by the Committee and will be at least
eighty-five percent (85%) of the Fair Market Value of the Shares on the date the
Restricted Stock Award is granted or at the time the purchase is consummated,
except in the case of a sale to a Ten Percent Shareholder, in which case the
Purchase Price will be one hundred percent (100%) of the Fair Market Value on
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the date the Restricted Stock Award is granted or at the time the purchase is
consummated. Payment of the Purchase Price must be made in accordance with
Section 7 hereof.
6.3 Restrictions. Restricted Stock Awards may be subject to
the restrictions set forth in Section 11 hereof or such other restrictions not
inconsistent with Section 25102(f) of the California Corporations Code.
7. PAYMENT FOR SHARE PURCHASES.
7.1 Payment. Payment for Shares purchased pursuant to this
Executive Plan may be made in cash (by check) or, where expressly approved for
the Participant by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company owed
to the Participant;
(b) by surrender of shares that: (i) either (A) have been
owned by Participant for more than six (6) months and
have been paid for within the meaning of SEC Rule 144
(and, if such shares were purchased from the Company
by use of a promissory note, such note has been fully
paid with respect to such shares) or (B) were
obtained by Participant in the public market and (ii)
are clear of all liens, claims, encumbrances or
security interests;
(c) by tender of a full recourse promissory note having
such terms as may be approved by the Committee and
bearing interest at a rate sufficient to avoid
imputation of income under Sections 483 and 1274 of
the Code; provided, however, that Participants who
are not employees or directors of the Company will
not be entitled to purchase Shares with a promissory
note unless the note is adequately secured by
collateral other than the Shares;
(d) by waiver of compensation due or accrued to the
Participant from the Company for services rendered;
(e) with respect only to purchases upon exercise of an
Option, and provided that a public market for the
Company's stock exists:
(i) through a "same day sale" commitment from
the Participant and a broker-dealer that is
a member of the National Association of
Securities Dealers (an "NASD DEALER")
whereby the Participant irrevocably elects
to exercise the Option and to sell a portion
of the Shares so purchased sufficient to pay
the total Exercise Price, and whereby the
NASD Dealer irrevocably commits upon receipt
of such Shares to forward the total Exercise
Price directly to the Company; or
(ii) through a "margin" commitment from the
Participant and an NASD Dealer whereby the
Participant irrevocably elects to exercise
the Option and to pledge the Shares so
purchased to the NASD Dealer in a margin
account as security for a loan from the NASD
Dealer in the amount of the total Exercise
Price, and
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whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the
total Exercise Price directly to the
Company; or
(f) by any combination of the foregoing.
7.2 Loan Guarantees. The Committee may, in its sole
discretion, elect to assist the Participant in paying for Shares purchased under
this Executive Plan by authorizing a guarantee by the Company of a third-party
loan to the Participant.
8. WITHHOLDING TAXES.
8.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Executive Plan, the Company may
require the Participant to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements prior to the delivery of
any certificate or certificates for such Shares. Whenever, under this Executive
Plan, payments in satisfaction of Awards are to be made in cash by the Company,
such payment will be net of an amount sufficient to satisfy federal, state, and
local withholding tax requirements.
8.2 Stock Withholding. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee for such elections and be in writing in a form
acceptable to the Committee.
9. PRIVILEGES OF STOCK OWNERSHIP.
9.1 Voting and Dividends. No Participant will have any of the
rights of a shareholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a shareholder and have all the rights of a shareholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock. The Participant will have no right to retain such stock
dividends or stock distributions with respect to Unvested Shares that are
repurchased pursuant to Section 11 hereof. The Company will comply with Section
260.140.1 of Title 10 of the California Code of Regulations with respect to the
voting rights of Common Stock.
9.2 Financial Statements. The Company will provide financial
statements to each Participant annually during the period such Participant has
Awards outstanding, or as otherwise required under Section 260.140.46 of Title
10 of the California Code of Regulations. Notwithstanding the foregoing, the
Company will not be required to provide such financial
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statements to Participants when issuance is limited to key employees whose
services in connection with the Company assure them access to equivalent
information.
10. TRANSFERABILITY. Awards granted under this Executive Plan, and any
interest therein, will not be transferable or assignable by Participant, other
than by will or by the laws of descent and distribution, and may not be made
subject to execution, attachment or similar process. During the lifetime of the
Participant an Award will be exercisable only by the Participant or
Participant's legal representative and any elections with respect to an Award
may be made only by the Participant or Participant's legal representative.
11. RESTRICTIONS ON SHARES.
11.1 Right of First Refusal. At the discretion of the
Committee, the Company may reserve to itself and/or its assignee(s) in the Award
Agreement a right of first refusal to purchase all Shares that a Participant (or
a subsequent transferee) may propose to transfer to a third party, unless
otherwise not permitted by Section 25102(f) of the California Corporations Code,
provided that such right of first refusal terminates upon the Company's initial
public offering of Common Stock pursuant to an effective registration statement
filed under the Securities Act.
11.2 Right of Repurchase. At the discretion of the Committee,
the Company may reserve to itself and/or its assignee(s) in the Award Agreement
a right to repurchase Unvested Shares held by a Participant for cash and/or
cancellation of purchase money indebtedness owed to the Company by the
Participant following such Participant's Termination at any time within the
later of ninety (90) days after the Participant's Termination Date and the date
the Participant purchases Shares under the Executive Plan at the Participant's
Exercise Price or Purchase Price, as the case may be, provided that, unless the
Participant is an officer, director or consultant of the Company or of a Parent
or Subsidiary of the Company, such right of repurchase lapses at the rate of no
less than twenty percent (20%) per year over five (5) years from: (a) the date
of grant of the Option or (b) in the case of Restricted Stock, the date the
Participant purchases the Shares.
12. CERTIFICATES. All certificates for Shares or other securities
delivered under this Executive Plan will be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem necessary or
advisable, including restrictions under any applicable federal, state or foreign
securities law, or any rules, regulations and other requirements of the SEC or
any stock exchange or automated quotation system upon which the Shares may be
listed or quoted.
13. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares set forth in Section 11 hereof, the Committee may require
the Participant to deposit all certificates representing Shares, together with
stock powers or other instruments of transfer approved by the Committee,
appropriately endorsed in blank, with the Company or an agent designated by the
Company to hold in escrow until such restrictions have lapsed or terminated. The
Committee may cause a legend or legends referencing such restrictions to be
placed on the certificates. Any Participant who is permitted to execute a
promissory note as partial or full consideration for the purchase of Shares
under this Executive Plan will be required to pledge and deposit with the
Company all or part of the Shares so purchased as collateral to secure the
payment of Participant's obligation to the Company under the promissory note;
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provided, however, that the Committee may require or accept other or additional
forms of collateral to secure the payment of such obligation and, in any event,
the Company will have full recourse against the Participant under the promissory
note notwithstanding any pledge of the Participant's Shares or other collateral.
In connection with any pledge of the Shares, Participant will be required to
execute and deliver a written pledge agreement in such form as the Committee
will from time to time approve.
14. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, shares of Common
Stock of the Company (including Restricted Stock) or other consideration, based
on such terms and conditions as the Committee and the Participant may agree.
15. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not
be effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Executive Plan, the Company will have no obligation
to issue or deliver certificates for Shares under this Executive Plan prior to
(i) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable, and/or (ii) compliance with any
exemption, completion of any registration or other qualification of such Shares
under any state or federal law or ruling of any governmental body that the
Company determines to be necessary or advisable. The Company will be under no
obligation to register the Shares with the SEC or to effect compliance with the
exemption, registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
will have no liability for any inability or failure to do so.
16. NO OBLIGATION TO EMPLOY. Nothing in this Executive Plan or any
Award granted under this Executive Plan will confer or be deemed to confer on
any Participant any right to continue in the employ of, or to continue any other
relationship with, the Company or any Parent or Subsidiary of the Company or
limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant's employment or other relationship at any time,
with or without Cause.
17. CORPORATE TRANSACTIONS.
17.1 Assumption or Replacement of Awards by Successor or
Acquiring Corporation. In the event of (i) a dissolution or liquidation of the
Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the shareholders of
the Company or their relative stock holdings and the Awards granted under this
Executive Plan are assumed, converted or replaced by the successor or acquiring
corporation, which assumption, conversion or replacement will be binding on all
Participants), (iii) a merger in which the Company is the surviving corporation
but after which the shareholders of the Company
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immediately prior to such merger (other than any shareholder which merges with
the Company in such merger, or which owns or controls another corporation which
merges with the Company in such merger) cease to own their shares or other
equity interests in the Company, or (iv) the sale of all or substantially all of
the assets of the Company, any or all outstanding Awards may be assumed,
converted or replaced by the successor or acquiring corporation (if any), which
assumption, conversion or replacement will be binding on all Participants. In
the alternative, the successor or acquiring corporation may substitute
equivalent Awards or provide substantially similar consideration to Participants
as was provided to shareholders (after taking into account the existing
provisions of the Awards). The successor or acquiring corporation may also
issue, in place of outstanding Shares of the Company held by the Participant,
substantially similar shares or other property subject to repurchase
restrictions and other provisions no less favorable to the Participant than
those which applied to such outstanding Shares immediately prior to such
transaction described in this Section 17.1. In the event such successor or
acquiring corporation (if any) does not assume or substitute Awards, as provided
above, pursuant to a transaction described in this Section 17.1, then
notwithstanding any other provision in this Executive Plan to the contrary, the
vesting of such Awards will accelerate and the Options will become exercisable
in full prior to the consummation of such event at such times and on such
conditions as the Committee determines, and if such Options are not exercised
prior to the consummation of the corporate transaction, they shall terminate in
accordance with the provisions of this Executive Plan.
17.2 Other Treatment of Awards. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 17, in
the event of the occurrence of any transaction described in Section 17.1 hereof,
any outstanding Awards will be treated as provided in the applicable agreement
or plan of merger, consolidation, dissolution, liquidation or sale of assets.
17.3 Assumption of Awards by the Company. The Company, from
time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either (i) granting an Award under this Executive Plan in
substitution of such other company's award or (ii) assuming such award as if it
had been granted under this Executive Plan if the terms of such assumed award
could be applied to an Award granted under this Executive Plan. Such
substitution or assumption will be permissible if the holder of the substituted
or assumed award would have been eligible to be granted an Award under this
Executive Plan if the other company had applied the rules of this Executive Plan
to such grant. In the event the Company assumes an award granted by another
company, the terms and conditions of such award will remain unchanged (except
that the exercise price and the number and nature of shares issuable upon
exercise of any such option will be adjusted appropriately pursuant to Section
424(a) of the Code). In the event the Company elects to grant a new Option
rather than assuming an existing option, such new Option may be granted with a
similarly adjusted Exercise Price.
18. ADOPTION AND SHAREHOLDER APPROVAL. This Executive Plan will become
effective on the date that it is adopted by the Board (the "EFFECTIVE DATE").
This Executive Plan will be approved by the shareholders of the Company
(excluding Shares issued pursuant to this Executive Plan), consistent with
applicable laws, within twelve (12) months before or after the Effective Date.
Upon the Effective Date, the Board may grant Awards pursuant to this Executive
Plan; provided, however, that: (i) no Option may be exercised prior to
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initial shareholder approval of this Executive Plan; (ii) no Option granted
pursuant to an increase in the number of Shares approved by the Board shall be
exercised prior to the time such increase has been approved by the shareholders
of the Company; (iii) in the event that initial shareholder approval is not
obtained within the time period provided herein, all Awards granted hereunder
shall be canceled, any Shares issued pursuant to any Award shall be canceled and
any purchase of Shares issued hereunder shall be rescinded; and (iv) Awards
granted pursuant to an increase in the number of Shares approved by the Board
which increase is not timely approved by shareholders shall be canceled, any
Shares issued pursuant to any such Awards shall be canceled, and any purchase of
Shares subject to any such Award shall be rescinded.
19. TERM OF EXECUTIVE PLAN/GOVERNING LAW. Unless earlier terminated as
provided herein, this Executive Plan will terminate ten (10) years from the
Effective Date or, if earlier, the date of shareholder approval. This Executive
Plan and all agreements hereunder shall be governed by and construed in
accordance with the laws of the State of California.
20. AMENDMENT OR TERMINATION OF EXECUTIVE PLAN. Subject to Section 5.9
hereof, the Board may at any time terminate or amend this Executive Plan in any
respect, including without limitation amendment of any form of Award Agreement
or instrument to be executed pursuant to this Executive Plan; provided, however,
that the Board will not, without the approval of the shareholders of the
Company, amend this Executive Plan in any manner that requires such shareholder
approval pursuant to the California Corporations Code or the Code or the
regulations promulgated thereunder as such provisions apply to ISO plans.
21. NONEXCLUSIVITY OF THE EXECUTIVE PLAN. Neither the adoption of this
Executive Plan by the Board, the submission of this Executive Plan to the
shareholders of the Company for approval, nor any provision of this Executive
Plan will be construed as creating any limitations on the power of the Board to
adopt such additional compensation arrangements as it may deem desirable,
including, without limitation, the granting of stock options and other equity
awards otherwise than under this Executive Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.
22. DEFINITIONS. As used in this Executive Plan, the following terms
will have the following meanings:
"AWARD" means any award under this Executive Plan, including
any Option or Restricted Stock Award.
"AWARD AGREEMENT" means, with respect to each Award, the
signed written agreement between the Company and the Participant setting forth
the terms and conditions of the Award, including the Stock Option Agreement and
Restricted Stock Agreement.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means Termination because of (i) any willful, material
violation by the Participant of any law or regulation applicable to the business
of the Company or a Parent or Subsidiary of the Company, the Participant's
conviction for, or guilty plea to, a felony or a crime involving moral
turpitude, or any willful perpetration by the Participant of a common law fraud,
(ii) the Participant's commission of an act of personal dishonesty which
involves personal profit in connection with the Company or any other entity
having a business relationship with the
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Company, (iii) any material breach by the Participant of any provision of any
agreement or understanding between the Company or any Parent or Subsidiary of
the Company and the Participant regarding the terms of the Participant's service
as an employee, officer, director or consultant to the Company or a Parent or
Subsidiary of the Company, including without limitation, the willful and
continued failure or refusal of the Participant to perform the material duties
required of such Participant as an employee, officer, director or consultant of
the Company or a Parent or Subsidiary of the Company, other than as a result of
having a Disability, or a breach of any applicable invention assignment and
confidentiality agreement or similar agreement between the Company or a Parent
or Subsidiary of the Company and the Participant, (iv) Participant's disregard
of the policies of the Company or any Parent or Subsidiary of the Company so as
to cause loss, damage or injury to the property, reputation or employees of the
Company or a Parent or Subsidiary of the Company, or (v) any other misconduct by
the Participant which is materially injurious to the financial condition or
business reputation of, or is otherwise materially injurious to, the Company or
a Parent or Subsidiary of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee created and appointed by the
Board to administer this Executive Plan, or if no committee is created and
appointed, the Board.
"COMPANY" means Handspring, Inc. or any successor corporation.
"DISABILITY" means a disability, whether temporary or
permanent, partial or total, as determined by the Committee.
"EXECUTIVE PLAN" means this Handspring, Inc. 1999 Executive
Equity Incentive Plan, as amended from time to time.
"EXERCISE PRICE" means the price at which a holder of an
Option may purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a
share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq
National Market, its closing price on the Nasdaq
National Market on the date of determination as
reported in The Wall Street Journal;
(b) if such Common Stock is publicly traded and is then
listed on a national securities exchange, its closing
price on the date of determination on the principal
national securities exchange on which the Common
Stock is listed or admitted to trading as reported in
The Wall Street Journal;
(c) if such Common Stock is publicly traded but is not
quoted on the Nasdaq National Market nor listed or
admitted to trading on a national securities
exchange, the average of the closing bid and asked
prices on the date of determination as reported by
The Wall Street Journal (or, if not so reported, as
otherwise reported by any newspaper or other source
as the Board may determine); or
(d) if none of the foregoing is applicable, by the
Committee in good faith.
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"OPTION" means an award of an option to purchase Shares
pursuant to Section 5 hereof.
"PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock representing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
"PARTICIPANT" means a person who receives an Award under this
Executive Plan.
"PURCHASE PRICE" means the price at which a Participant may
purchase Restricted Stock.
"RESTRICTED STOCK" means Shares purchased pursuant to a
Restricted Stock Award.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant to
Section 6 hereof.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's Common Stock reserved
for issuance under this Executive Plan, as adjusted pursuant to Sections 2 and
17 hereof, and any successor security.
"SUBSIDIARY" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
representing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
"TERMINATION" or "TERMINATED" means, for purposes of this
Executive Plan with respect to a Participant, that the Participant has for any
reason ceased to provide services as an employee, officer, director or
consultant to the Company or a Parent or Subsidiary of the Company. A
Participant will not be deemed to have ceased to provide services in the case of
(i) sick leave, (ii) military leave, or (iii) any other leave of absence
approved by the Committee, provided that such leave is for a period of not more
than ninety (90) days (a) unless reinstatement (or, in the case of an employee
with an ISO, reemployment) upon the expiration of such leave is guaranteed by
contract or statute, or (b) unless provided otherwise pursuant to formal policy
adopted from time to time by the Company's Board and issued and promulgated in
writing. In the case of any Participant on (i) sick leave, (ii) military leave
or (iii) an approved leave of absence, the Committee may make such provisions
respecting suspension of vesting of the Award while on leave from the Company or
a Parent or Subsidiary of the Company as it may deem appropriate, except that in
no event may an Option be exercised after the expiration of the term set forth
in the Stock Option Agreement. The Committee will have sole discretion to
determine whether a Participant has ceased to provide services and the effective
date on which the Participant ceased to provide services (the "TERMINATION
DATE").
"UNVESTED SHARES" means "Unvested Shares" as defined in the
Award Agreement.
"VESTED SHARES" means "Vested Shares" as defined in the Award
Agreement.
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