1999 Stock Option Plan for Employees - Netgateway Inc.
NETGATEWAY, INC.
1999 STOCK OPTION PLAN FOR EMPLOYEES
1. PURPOSE; TYPE OF AWARDS; CONSTRUCTION.
The purpose of the 1999 Stock Option Plan for Employees (the "Plan")
of NetGateway, Inc., a Nevada corporation (the "Company"), is to attract and
retain employees (including officers) of the Company, or any Subsidiary or
Affiliate which now exists or hereafter is organized or acquired, and to
furnish additional incentives to such persons by encouraging them to acquire
a proprietary interest in the Company. Pursuant to Section 6 of the Plan,
there may be granted Options, including "incentive stock options" and
"nonqualified stock options". The Plan is intended to satisfy the
requirements of Rule 16b-3 promulgated under Section 16 of the Exchange Act
and shall be interpreted in a manner consistent with the requirements thereof.
2. DEFINITIONS.
For purposes of the Plan, the following terms shall be defined as set
forth below:
(a) "Administrator" means the Board or, if and so long as a Committee
has been established and is in existence, the Committee.
(b) "Affiliate" means any entity if, at the time of granting of an
Option, (i) the Company, directly, owns at least 20% of the combined voting
power of all classes of stock of such entity or at least 20% of the ownership
interests in such entity or (ii) such entity, directly or indirectly, owns at
least 20% of the combined voting power of all classes of stock of the Company.
(c) "Beneficiary" means the person, persons, trust or trusts which have
been designated by an Optionee in his or her most recent written beneficiary
designation filed with the Company to receive the benefits specified under the
Plan upon his or her death, or, if there is no designated Beneficiary or
surviving designated Beneficiary, then the person, persons, trust or trusts
entitled by will or the applicable laws of descent and distribution to receive
such benefits.
(d) "Board" means the Board of Directors of the Company.
(e) "Change in Control" means a change in control of the Company which
will be deemed to have occurred if:
(i) any "person," as such term is used in Section 13(d)
and 14(d) of the Exchange Act (other than an Exempt Person),
is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding
voting securities;
(ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute
the Board, and any new director (other than a director
designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause
(i), (iii), or (iv) of this
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Section 2(e)) whose election by the Board or nomination for
election by the Company" stockholders was approved by a vote
of at least a majority of the directors then still in office
who either were directors at the beginning of the period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a
majority thereof;
(iii) the stockholders of the Company approve a merger
or consolidation of the Company with any other corporation,
other than (A) a merger or consolidation which would result
in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving or parent entity) 50% or more of
the combined voting power of the voting securities of the
Company or such surviving or parent entity outstanding
immediately after such merger or consolidation or (B) a
merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no "person" (as hereinbefore defined), other than an
Exempt Person, acquired 50% or more of the combined voting
power of the Company's then outstanding securities, or
(iv) the stockholders of the Company approve of a plan
of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets (or any
transaction having a similar effect).
(f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(g) "Committee" means the committee, consisting exclusively of two or
more Non-Employee Directors (as defined in Rule 16b-3), if and as the same may
be established by the Board to administer the Plan; provided, however, that to
the extent required for the Plan to comply with the applicable provisions of
Section 162(m) of the Code, "Committee" means either such committee or a
subcommittee of that committee, as the case may be, which shall be constituted
to comply with the applicable requirements of Section 162(m) of the Code and the
regulations promulgated thereunder.
(h) "Company" means NetGateway, Inc., a corporation organized under the
laws of the State of Nevada, or any successor corporation.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and as now or hereafter construed, interpreted and
applied by regulations, rulings and cases.
(j) "Exempt Person" means (1) the Company, (2) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, (3)
any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of Stock, or
(4) any person or group of persons who, immediately prior to the adoption of
this Plan, owned more than 50% of the combined voting power of the Company's
then outstanding voting securities.
(k) "Fair Market Value" means, with respect to Stock or other
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property, the fair market value of such Stock or other property determined by
such methods or procedures as shall be established from time to time by the
administrator. Notwithstanding the foregoing, the per share Fair Market Value
of Stock as of a particular date shall mean (I) if the shares of Stock are
then listed on a national securities exchange, the closing sales price per
share of Stock on the national securities exchange on which the Stock is
principally traded, for the last preceding date on which there was a sale of
such Stock on such exchange, or (ii) if the shares of Stock are then traded
on the National Market System of the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"), the reported per share closing
price of the Stock on the day prior to such date or, if there was no such
price reported for such date, on the next preceding date for which such a
price was reported, or (iii) if the shares of Stock are then traded in an
over-the-counter market other than on the NASDAQ National Market System, the
average of the closing bid and asked prices for the shares of Stock in such
over-the-counter market for the last preceding date on which there was a sale
of such Stock in such market, or (iv) if the shares of Stock are not then
listed on a national securities exchange or traded in an over-the-counter
market, such value as the Administrator, in its sole discretion, shall
determine in good faith.
(l) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
(m) "NQSO" means any Option not designated as an ISO.
(n) "Option" means a right, granted to an Optionee under Section
6(b) of the Plan, to purchase shares of Stock. An Option may be either an ISO
or an NQSO.
(o) "Optionee" means a person who, as an employee of the Company, a
Subsidiary or an Affiliate, has been granted an Option.
(p) "Plan" means this NetGateway, Inc. 1999 Stock Option Plan for
Employees as amended from time to time.
(q) "Rule 16b-3" means Rule 16b-3, as from time to time in effect,
promulgated by the Securities and Exchange Commission under Section 16 of the
Exchange Act, including any successor to such Rule.
(r) "Stock" means the common stock, par value $.001 per share, of
the Company.
(s) "Stock Option Agreement" means any written agreement, contract,
or other instrument or document evidencing an Option.
(t) "Subsidiary" means any corporation in which the Company,
directly or indirectly, owns stock possessing 50% or more of the total
combined voting power of all classes of stock of such corporation.
3. ADMINISTRATION
The Plan shall be administered by the Administrator. The Administrator
shall have the authority in its discretion, subject to and not inconsistent with
the express provisions of the Plan,
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to administer the Plan and to exercise all the powers and authorities either
specifically granted to it under the Plan or necessary or advisable in the
administration of the Plan, including, without limitation, the authority to
grant Options; to determine the persons to whom and the time or times at
which Options shall be granted; to determine the type and number of Options
to be granted, the number of shares of Stock to which Options may relate and
the terms, conditions, restrictions and performance criteria relating to any
Options; to determine whether, to what extent, and under what circumstances
Options may be settled, canceled, forfeited, exchanged, or surrendered; to
make adjustments in the terms and conditions of, and the criteria and
performance objectives included in, Options in recognition of unusual or
non-recurring events affecting the Company or any Subsidiary or Affiliate or
the financial statements of the company or any Subsidiary or Affiliate, or in
response to changes in applicable laws, regulations, or accounting
principles; to designate Affiliates; to construe and interpret the Plan and
any Options; to prescribe, amend and rescind rules and regulations relating
to the Plan; to determine the terms and provisions of the Stock Option
Agreements (which need not be identical for each Optionee); and to make all
other determinations deemed necessary or advisable for the administration of
the Plan.
The Administrator may appoint a chairperson and a secretary and may
make such rules and regulations for the conduct of its business as it shall
deem advisable, and shall keep minutes of its meetings. All determinations of
the Administrator shall be made by a majority of its members either present
in person or participating by conference telephone at a meeting or by written
consent. The Administrator may delegate to one or more of its members or to
one or more agents such administrative duties as it may deem advisable, and
the Administrator or any person to whom it has delegated duties as aforesaid
may employ one or more persons to render advice with respect to any
responsibility the Administrator or such person may have under the Plan. All
decisions, determinations and interpretations of the Administrator shall be
final and binding on all persons, including the Company, and any Subsidiary,
Affiliate or Optionee (or any person claiming any rights under the Plan from
or through any Optionee) and any stockholder.
No member of the Board or Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any
Option granted hereunder.
4. ELIGIBILITY.
Options may be granted to employees of the Company and its present
or future Subsidiaries and Affiliates, in the discretion of the
Administrator. In determining the person to whom Options shall be granted and
the type of Options granted (including the number of shares to be covered by
such Options), the Administrator shall take into account such factors as the
Administrator shall deem relevant in connection with accomplishing the
purposes of the Plan.
5. STOCK SUBJECT TO THE PLAN.
The maximum number of shares of Stock reserved for the grant of
Options under the Plan shall be [ ] shares of Stock, subject to adjustment as
provided herein. Such shares may, in whole or in part, be authorized but
unissued shares or shares that shall have been or may be reacquired by the
Company in the open market, in private transactions or otherwise. The number
of shares of Stock available for issuance under the Plan shall be reduced by
the number of shares of Stock subject to outstanding Options. If any shares
subject to an Option are forfeited, canceled, exchanged or surrendered or if
an Option otherwise terminates or expires without a distribution of shares to
the Optionee, the shares of Stock with respect to such Option shall, to the
extent of any such forfeiture, cancellation, exchange, surrender, termination
or expiration, again be available for Options under the Plan. In no event
shall any Optionee acquire, pursuant to any
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awards of Options under this Plan, more than [ ]% of the aggregate number of
shares of Stock reserved for awards under the Plan.
In the event that the Administrator shall determine that any dividend or
other distribution (whether in the form of cash, Stock, or other property),
recapitalization, stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of an Optionee under the Plan, then the Administrator shall make such
equitable changes or adjustments as it deems necessary or appropriate to any or
all of (I) the number and kind of shares of Stock which may thereafter be issued
in connection with Options, (ii) the number and kind of shares of Stock issued
or issuable in respect of outstanding Options, and (iii) the exercise price,
grant price, or purchase price relating to any Option; PROVIDED THAT, with
respect to ISOs, such adjustment shall be made in accordance with Section 424(h)
of the Code.
6. SPECIFIC TERMS OF OPTIONS.
(a) General. The term of each Option shall be for such period as may be
determined by the Administrator. The Administrator may make rules relating to
Options, and may impose on any Option or the exercise thereof, at the date of
grant or thereafter, such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Administrator shall determine.
(b) Options. The Administrator is authorized to grant Options to
Optionees on the following terms and conditions:
(i) TYPE OF OPTION. The Stock Option Agreement evidencing
the grant of an Option under the Plan shall designate the Option
as an ISO (in the event its terms, and the individual to whom it
is granted, satisfy the requirements for ISOs under the Code), or
an NQSO.
(ii) EXERCISE PRICE. The exercise price per share of Stock
purchasable under an Option shall be determined by the
Administrator; provided that in the case of an ISO, such exercise
price shall be not less than the Fair Market Value of a share of
Stock on the date of grant of such Option and, in the case of an
ISO granted to the holder of more than 10% of the Stock
outstanding at the date of grant of such Option, such exercise
price shall be not less than 110% of the Fair Market Value on
such date of grant. In no event shall the exercise price for the
purchase of shares of Stock be less than par value. The exercise
price for Stock subject to an Option may be paid in cash or by an
exchange of Stock previously owned by the Optionee, or a
combination of both, in an amount having a combined value equal
to such exercise price. Any shares of Stock exchanged upon the
exercise of any Option shall be valued at the Fair Market Value
on the date on which such shares are exchanged. An Optionee also
may elect to pay all or a portion of the aggregate exercise price
by having shares of Stock with a Fair Market Value on the date of
exercise equal to the aggregate exercise price withheld by the
Company or sold by a broker-dealer in accordance with applicable
law.
(iii) TERM AND EXERCISABILITY OF OPTIONS. The date on which
the Administrator adopts a resolution expressly granting an
Option shall be considered the day on which such Option is
granted. Options shall be exercisable over the exercise period
(which shall not exceed ten years from the date of grant or five
years from the date
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of grant in the case of an ISO granted to a holder of more than
10% of Stock outstanding as of such date), at such times and upon
such conditions as the Administrator may determine, as reflected
in the Stock Option Agreement. An Option may be exercised to the
extent of any or all full shares of Stock as to which the Option
has become exercisable, by giving written notice of such exercise
to the Company's Secretary and paying the exercise price as
described in Section 6(b)(ii).
(iv) TERMINATION OF EMPLOYMENT, ETC. An Option may not be
exercised unless the Optionee is then in the employ of the
Company or any Subsidiary or Affiliate (or a company or a parent
or subsidiary company of such company issuing or assuming the
Option in a transaction to which Section 424(a) of the Code
applies), and unless the Optionee has continuously maintained any
of such relationships, since the date of grant of the Option;
PROVIDED THAT, the Stock Option Agreement may contain provisions
extending the exercisability of Options, in the event of
specified terminations, to a date not later than the expiration
date of such Option. The Administrator may establish a period
during which the Beneficiaries of an Optionee who died while an
employee, director or independent contractor of the Company or
any Subsidiary or Affiliate or during any extended period
referred to in the immediately preceding proviso may exercise
those Options which were exercisable on the date of the
Optionee's death; PROVIDED THAT, no Option shall be exercisable
after its expiration date.
(v) NONTRANSFERABILITY. Options shall not be transferable by
an Optionee except by will or the laws of descent and
distribution and shall be exercisable during the lifetime of an
Optionee only by such Optionee or his guardian or legal
representative.
(vi) OTHER PROVISIONS. Options may be subject to such other
conditions as the Administrator may prescribe in its discretion.
7. CHANGE IN CONTROL PROVISIONS.
In the event of a Change in Control, any and all Options then
outstanding shall become fully exercisable and vested, whether or not
theretofore vested and exercisable.
8. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LEGAL AND EXCHANGE REQUIREMENTS. The Plan, the
granting and exercising of Options thereunder, and the other obligations of the
Company under the Plan and any Stock Option Agreement, shall be subject to all
applicable federal and state laws, rules and regulations, and to such approvals
by any regulatory or governmental agency as may be required. The Company, in its
discretion, may postpone the issuance or delivery of Stock under any Option
until completion of such stock exchange listing or registration or qualification
of such Stock or other required action under any state, federal or foreign law,
rule or regulation as the Company may consider appropriate, and may require any
Optionee to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of Stock in
compliance with applicable laws, rules and regulations.
(b) NO RIGHT TO CONTINUED EMPLOYMENT, ETC. Nothing in the Plan or in
any Option granted or Stock Option Agreement entered into pursuant to the Plan
shall confer upon any Optionee the right to continue in the employ of the
Company, any Subsidiary or any Affiliate, as the case may be, or to be entitled
to any remuneration or benefits not set forth in the Plan or
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such Stock Option Agreement or to interfere with or limit in any way the right
of the Company or any such Subsidiary or Affiliate to terminate such Optionee's
employment, directorship or independent contractor relationship.
(c) TAXES. The Company or any Subsidiary or Affiliate is authorized
to withhold from any Option granted, any payment relating to an Option under
the Plan (including from a distribution of Stock), or any other payment to an
Optionee, amounts of withholding and other taxes due in connection with any
transaction involving an Option, and to take such other action as the
Administrator may deem advisable to enable the Company and an Optionee to
satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Option. This authority shall include authority to
withhold or receive Stock or other property and to make cash payments in
respect thereof in satisfaction of an Optionee's tax obligations.
(d) AMENDMENT AND TERMINATION OF THE PLAN. The Board may at any time
and from time to time alter, amend, suspend, or terminate the Plan in whole or
in part; PROVIDED THAT, no amendment which requires stockholder approval in
order for the Plan to continue to comply with Rule 16b-3 or Sections 422 and 424
of the Code and the regulations promulgated thereunder shall be effective unless
the same shall be approved by the requisite vote of the stockholders of the
Company entitled to vote thereon. Notwithstanding the foregoing, no amendment
shall affect adversely any of the rights of any Optionee, without such
Optionee's consent, under any Option theretofore granted under the Plan.
(e) NO RIGHTS TO OPTIONS; NO STOCKHOLDER RIGHTS. No Optionee shall
have any claim to be granted any Option under the Plan, and there is no
obligation for uniformity of treatment of Optionees. Except as provided
specifically herein, an Optionee or a transferee of an Option shall have no
rights as a stockholder with respect to any shares covered by the Option
until the date of the issuance of a stock certificate to such Optionee for
such shares.
(f) UNFUNDED STATUS OF OPTIONS. The Plan is intended to constitute
an "unfunded" plan for incentive and deferred compensation. Nothing contained
in the Plan or any Option shall give any such Optionee any rights that are
greater than those of a general creditor of the Company.
(g) NO FRACTIONAL SHARES. No fractional shares of Stock shall be
issued or delivered pursuant to the Plan or any Option. The Administrator
shall determine whether cash, other Options, or other property shall be
issued or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.
(h) GOVERNING LAW. The Plan and all determinations made and actions
taken pursuant hereto shall be governed by the laws of the State of
California without giving effect to the conflict of laws principles thereof.
(i) EFFECTIVE DATE. The Plan shall take effect upon its adoption by
the Board.
(j) PLAN TERMINATION. The Board may terminate the Plan at any time
with respect to any shares of Stock that are not subject to Options. Unless
terminated earlier by the Board, the Plan shall terminate ten years after the
effective date and no Options shall be granted under the Plan after such
date. Termination of the Plan under this Section 8(j) will not affect the
rights and obligations of any Optionee with respect to Options granted prior
to termination.