2000 Stock Option Plan - Roxio Inc.
AMENDED AND RESTATED
ROXIO, INC.
2000 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan
are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees,
Directors and Consultants and to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant.
2. DEFINITIONS. As used herein, the following definitions shall
apply:
(a) "ADMINISTRATOR" means the Board or any of its
Committees as shall be administering the Plan in accordance with Section 4
hereof.
(b) "AFFILIATE" means any corporation or any other entity
(including, but not limited to, partnerships and joint ventures) that is
determined to be by the Administrator controlling, controlled by or under common
control with the Company.
(c) "APPLICABLE LAWS" means the requirements relating to
the administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any other country or jurisdiction where Options are granted under the Plan.
(d) "BOARD" means the Board of Directors of the Company.
(e) "CAUSE" shall have the meaning as set forth in
Section 12(f)(ii) of the Plan.
(f) "CHANGE OF CONTROL" shall have the meaning as set
forth in Section 12(f)(i) of the Plan.
(g) "CODE" means the Internal Revenue Code of 1986, as
amended.
(h) "COMMITTEE" means a committee of Directors appointed
by the Board in accordance with Section 4 hereof.
(i) "COMMON STOCK" means the Common Stock of the Company.
(j) "COMPANY" means Roxio, Inc., a Delaware corporation.
(k) "CONSULTANT" means any natural person who is engaged
by the Company or an Affiliate to render consulting or advisory services to such
entity and who satisfies the requirements of subsection (c)(1) of Rule 701 under
the Securities Act of 1933, as amended.
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(l) "DIRECTOR" means a member of the Board.
(m) "DISABILITY" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(n) "EMPLOYEE" means any person, including officers and
Directors, employed by the Company or any Parent, Subsidiary or Affiliate of the
Company. A Service Provider shall not cease to be an Employee in the case of (i)
any leave of absence approved by the Company or (ii) transfers between locations
of the Company or between the Company, its Parent, any Subsidiary, or any
successor. For purposes of Incentive Stock Options, no such leave may exceed
ninety (90) days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. If reemployment upon expiration of a leave of
absence approved by the Company is not so guaranteed, then three (3) months
following the 91st day of such leave, any Incentive Stock Option held by the
Optionee shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(o) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(p) "FAIR MARKET VALUE" means, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system on the day of determination, as reported in THE WALL STREET
JOURNAL or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for the
Common Stock on the day of determination; or
(iii) In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Administrator.
(q) "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(r) "NONSTATUTORY STOCK OPTION" means an Option not
intended to qualify as an Incentive Stock Option.
(s) "OPTION" means a stock option granted pursuant to the
Plan.
(t) "OPTION AGREEMENT" means a written or electronic
agreement between the Company and an Optionee evidencing the terms and
conditions of an individual Option grant. The Option Agreement is subject to the
terms and conditions of the Plan.
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(u) "OPTIONED STOCK" means the Common Stock subject to an
Option.
(v) "OPTIONEE" means the holder of an outstanding Option
granted under the Plan.
(w) "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(x) "PLAN" means this 2000 Stock Option Plan.
(y) "SERVICE PROVIDER" means an Employee, Director or
Consultant.
(z) "SHARE" means a share of the Common Stock, as
adjusted in accordance with Section 12 below.
(aa) "SUBSIDIARY" means a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 12 of the Plan, the maximum aggregate number of Shares that may be
subject to option and sold under the Plan is 3,600,000 Shares. The Shares may be
authorized but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having
been exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). However, Shares that have actually been issued under the Plan, upon
exercise of an Option, shall not be returned to the Plan and shall not become
available for future distribution under the Plan, except that if Shares of
restricted stock issued pursuant to an Option are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) ADMINISTRATOR. The Plan shall be administered by the
Board or a Committee appointed by the Board, which Committee shall be
constituted to comply with Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the
provisions of the Plan and, in the case of a Committee, the specific duties
delegated by the Board to such Committee, and subject to the approval of any
relevant authorities, the Administrator shall have the authority in its
discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom
Options may from time to time be granted hereunder;
(iii) to determine the number of Shares to be
covered by each such Option granted hereunder;
(iv) to approve forms of agreement for use under
the Plan;
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(v) to determine the terms and conditions of any
Option granted hereunder. Such terms and conditions include, but are not limited
to, the exercise price, the time or times when Options may be exercised (which
may be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or the Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vi) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of satisfying applicable foreign laws;
(vii) to allow Optionees to satisfy withholding
tax obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option that number of Shares having a Fair Market
Value equal to the minimum amount required to be withheld. The Fair Market Value
of the Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined. All elections by Optionees to have
Shares withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable; and
(viii) to construe and interpret the terms of the
Plan and Options granted pursuant to the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees.
5. ELIGIBILITY. Nonstatutory Stock Options may be granted to
Service Providers. Incentive Stock Options may be granted only to persons who
are employees of the Company or a Subsidiary on the Grant Date.
6. LIMITATIONS.
(a) INCENTIVE STOCK OPTION LIMIT. Each Option shall be
designated in the Option Agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, notwithstanding such designation, to the
extent that the aggregate Fair Market Value of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by the Optionee
during any calendar year (under all plans of the Company and any Parent or
Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory
Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall
be taken into account in the order in which they were granted. The Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
(b) AT-WILL EMPLOYMENT. Neither the Plan nor any Option
shall confer upon any Optionee any right with respect to continuing the
Optionee's relationship as a Service Provider with the Company, nor shall it
interfere in any way with his or her right or the Company's right to terminate
such relationship at any time, with or without cause, and with or without
notice.
7. TERM OF PLAN. Subject to shareholder approval in accordance
with Section 18, the Plan shall become effective upon its adoption by the Board.
Unless sooner terminated under Section
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14, it shall continue in effect for a term of ten (10) years from the later of
(i) the effective date of the Plan, or (ii) the date of the most recent Board
approval of an increase in the number of shares reserved for issuance under the
Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. In the case of an Incentive Stock
Option granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant or such shorter term as may be provided
in the Option Agreement.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per share exercise price for the
Shares to be issued upon exercise of an Option shall be such price as is
determined by the Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the
time of grant of such Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of grant.
(B) granted to any other Employee, the
per Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a Service Provider who,
at the time of grant of such Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.
(B) granted to any other Service
Provider, the per Share exercise price shall be no less than 85% of the Fair
Market Value per Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may
be granted with a per Share exercise price other than as required above pursuant
to a merger or other corporate transaction.
(b) FORMS OF CONSIDERATION. The consideration to be paid
for the Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Administrator (and, in the case of an
Incentive Stock Option, shall be determined at the time of grant). Such
consideration may consist of, without limitation, (1) cash, (2) check, (3)
promissory note, (4) other Shares, provided Shares acquired directly from the
Company (x) have been owned by the Optionee for more than six (6) months on the
date of surrender, and (y) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which such Option
shall be exercised, (5) consideration received by the Company under a cashless
exercise program
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implemented by the Company in connection with the Plan, or (6) any combination
of the foregoing methods of payment. In making its determination as to the type
of consideration to accept, the Administrator shall consider if acceptance of
such consideration may be reasonably expected to benefit the Company.
Notwithstanding the foregoing, the Administrator may permit an Optionee to
exercise his or her Option by delivery of a full-recourse promissory note
secured by the purchased Shares. The terms of such promissory note shall be
determined by the Administrator in its sole discretion.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
Option granted hereunder shall be exercisable according to the terms hereof at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Except in the case of Options granted to
officers, Directors and Consultants, Options shall become exercisable at a rate
of no less than 20% per year over five (5) years from the date the Options are
granted. Unless the Administrator provides otherwise, vesting of Options granted
hereunder to officers and Directors shall be suspended during any unpaid leave
of absence. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company
receives (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares thereafter available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If
an Optionee ceases to be a Service Provider, such Optionee may exercise his or
her Option within ninety (90) days of termination, or such longer period of time
as specified in the Option Agreement, to the extent that the Option is vested on
the date of termination (but in no event later than the expiration of the term
of the Option as set forth in the Option Agreement). If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
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(c) DISABILITY OF OPTIONEE. If an Optionee ceases to be a
Service Provider as a result of the Optionee's Disability, the Optionee may
exercise his or her Option within six (6) months of termination, or such longer
period of time as specified in the Option Agreement, to the extent the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). If, on the date
of termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. If an Optionee dies while a
Service Provider, the Option may be exercised within six (6) months following
Optionee's death, or such longer period of time as specified in the Option
Agreement, to the extent that the Option is vested on the date of death (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement) by the Optionee's designated beneficiary, provided such
beneficiary has been designated prior to Optionee's death in a form acceptable
to the Administrator. If no such beneficiary has been designated by the
Optionee, then such Option may be exercised by the personal representative of
the Optionee's estate or by the person(s) to whom the Option is transferred
pursuant to the Optionee's will or in accordance with the laws of descent and
distribution. If an Optionee dies while a Service Provider, then any of
Optionee's Options that are not yet exercisable and vested on the date of death
of the Optionee shall immediately become one hundred percent (100%) vested and
exercisable. If the Option is not so exercised within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.
11. LIMITED TRANSFERABILITY OF OPTIONS. Unless determined
otherwise by the Administrator, Options may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or
the laws of descent and distribution, and may be exercised during the lifetime
of the Optionee, only by the Optionee. If the Administrator in its sole
discretion makes an Option transferable, such Option may only be transferred by
(i) will, (ii) the laws of descent and distribution, (iii) instrument to an
inter vivos or testamentary trust in which the Option is to be passed to
beneficiaries upon the death of the Optionee, or (iv) gift to a member of
Optionee's immediate family (as such term is defined in Rule 16a-1(e) of the
Exchange Act). In addition, any transferable Option shall contain additional
terms and conditions as the Administrator deems appropriate.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR CHANGE
IN CONTROL.
(a) CHANGES IN CAPITALIZATION. Subject to any required
action by the shareholders of the Company, the number and type of Shares
which have been authorized for issuance under the Plan but as to which no
Options have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, and the number and type of Shares
covered by each outstanding Option, as well as the price per Share covered by
each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number or type of issued Shares resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
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consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number, type or
price of Shares subject to an Option. Notwithstanding anything herein to the
contrary, the number of Shares reserved for issuance under Section 3 already
gives effect to a 33,000 for one stock split to be effected by the Company in
November 2000 (the "November 2000 Stock Split"), and accordingly no adjustment
to the number of Shares reserved for issuance under Section 3 shall be made on
account of the November 2000 Stock Split.
(b) DISSOLUTION OR LIQUIDATION. In the event of the
proposed dissolution or liquidation of the Company, the Administrator shall
notify each Optionee as soon as practicable prior to the effective date of such
proposed transaction. The Administrator in its discretion may provide for an
Optionee to have the right to exercise his or her Option until ten (10) days
prior to such transaction as to all of the Optioned Stock covered thereby,
including Shares as to which the Option would not otherwise be exercisable. In
addition, the Administrator may provide that any Company repurchase option
applicable to any Shares purchased upon exercise of an Option shall lapse as to
all such Shares, provided the proposed dissolution or liquidation takes place at
the time and in the manner contemplated. To the extent it has not been
previously exercised, an Option will terminate immediately prior to the
consummation of such proposed action.
(c) MERGER OR CHANGE IN CONTROL. In the event of a merger
of the Company with or into another corporation, or the sale of substantially
all of the assets of the Company, each outstanding Option and Stock Purchase
Right shall be assumed or an equivalent option or right substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation. In
the event that the successor corporation refuses to assume or substitute for the
Option or Stock Purchase Right, the Optionee shall fully vest in and have the
right to exercise the Option or Stock Purchase Right as to all of the Optioned
Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option or Stock Purchase Right becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee in writing or
electronically that the Option or Stock Purchase Right shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option or Stock Purchase Right shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option or Stock Purchase Right
shall be considered assumed if, following the merger or sale of assets, the
option or right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option or Stock Purchase Right immediately prior
to the merger or sale of assets, the consideration (whether stock, cash, or
other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
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(d) CHANGE OF CONTROL. In the event of a "Change of
Control" of the Company then any Options outstanding upon the date of such
Change of Control that are not yet exercisable and vested on such date shall
have their vesting accelerated as to an additional twenty-five percent (25%) of
the unvested Shares subject to such Options as of the date of such Change of
Control, and such Stock Options shall continue to otherwise vest, (subject to
(i) Optionee remaining in Continuous Status as an Employee or Consultant, and
(ii) accelerated vesting as provided for in Sections 12(c) or 12(e) of this
Plan) at the same rate and as to the same number of Shares per vesting period as
immediately prior to the Change of Control. For example, if an Optionee holds an
Option that is fifty percent (50%) vested immediately prior to the date of a
Change of Control, which Option ordinarily vests so as to be one hundred percent
(100%) vested four years after the date of grant (subject to Optionee
maintaining his or her Continuous Status as an Employee or Consultant), the
Option would, upon the date of the Change of Control, become vested as to an
additional twelve and one-half percent (12.5%) of the total number of Shares
covered by the Option (that is, 25% of the 50% that remained unvested as of the
date of the Change of Control). The Option would resume vesting (subject to (i)
Optionee maintaining his or her Continuous Status as an Employee or Consultant,
and (ii) accelerated vesting as provided for in Sections 12(c) or 12(e) of this
Plan) so as to be one hundred percent (100%) vested three and one-half years
following the date of grant. On the twelve month anniversary date (the
"Anniversary Date") following the date of the Change of Control each Service
Provider who is an Optionee shall have 25% of the unvested Shares subject to
such Options as of the Anniversary Date accelerated, provided, however, that
such Optionee was a Service Provider on the date the Change of Control occurred
and is a Service Provider on the Anniversary Date. For purposes of this section
12(d), any acceleration applies only to options that have not expired.
(e) In the event an Optionee is involuntarily terminated
without Cause within twelve (12) months following a "Change of Control" of the
Company (as such terms are defined in Section 12(f) below), then any unexpired
Options outstanding upon the date of such Change of Control that are not yet
exercisable and vested on such date shall become one hundred percent (100%)
exercisable and vested. Notwithstanding the foregoing, (unless Optionee is party
to a duly authorized written agreement with the Company providing otherwise)
this Plan does not constitute a contract of employment or impose on the Company
any obligation to retain the Optionee, or to change the Company's policies
regarding termination of employment or other provision of services. The
employment of Optionees who are Employees is and shall continue to be at-will,
as defined under applicable law, and may be terminated at any time, with or
without cause.
(f) DEFINITIONS.
(i) CHANGE OF CONTROL. For purposes of this
Section, a "Change of Control" means the occurrence of any of the following:
(A) When any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act (other than
Adaptec, Inc., the Company, a Subsidiary or a Company employee benefit plan,
including any trustee of such plan acting as trustee) 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 fifty percent (50%) or
more of the combined voting power of the Company's then outstanding securities;
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(B) A change in the composition of the
Board (excluding a change caused by Adaptec, Inc.) occurring within a two-year
period, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" shall mean directors who either (I)
are directors of the Company as of the date hereof, or (II) are appointed,
elected, or nominated for election, to the Board with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such appointment,
election or nomination (but shall not include an individual whose election or
nomination is in connection with an actual or threatened proxy contest relating
to the election of directors to the Company);
(C) The consummation of a merger or
consolidation of the Company with any other corporation, other than 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 entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or
(D) The consummation of the sale or
disposition by the Company of all or substantially all the Company's assets.
(ii) CAUSE. For purposes of this Section 12,
"Cause" shall mean (A) any act of personal dishonesty taken by the Optionee in
connection with his responsibilities as a service provider to the Company and
intended to result in substantial personal enrichment of the Optionee, (B) the
Optionee's conviction of a felony, or (C) a willful act by the Optionee which
constitutes gross misconduct and which is injurious to the Company, or (D)
continued substantial violations by the Optionee of the Optionee's duties to the
Company which are demonstrably willful and deliberate on the Optionee's part
after there has been delivered to the Optionee a written demand for performance
from the Company which specifically sets forth the factual basis for the
Company's belief that the Optionee has committed continued substantial
violations of his or her duties.
(g) GOLDEN PARACHUTE EXCISE TAX VESTING ACCELERATION
LIMITATION. Notwithstanding any other provision of this Plan, in the event that
the vesting acceleration provided for in this Plan or amounts or benefits
otherwise payable to an Optionee (i) constitute "parachute payments" within the
meaning of Section 280G of the Code, and (ii) but for this Section, would be
subject to the excise tax imposed by Section 4999 of the Code (the "Excise
Tax"), then the Optionee's accelerated vesting hereunder shall be either
(i) made in full, or
(ii) made as to such lesser extent as would
result in no portion of such
acceleration, amounts or benefits being
subject to the Excise Tax,
whichever of the foregoing amounts, taking into account the
applicable federal, state and local income taxes and the Excise Tax, results
in the receipt by the Optionee on an after-tax basis, of the greatest amount
of severance benefits, notwithstanding that all or some portion of such
severance benefits may be taxable under Section 4999 of the Code. Unless the
Company and the Optionee otherwise agree in writing, any determination
required under this Section shall be made in writing in good faith by the
accounting firm serving as the Company's independent public
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accountants immediately prior to the Change of Control (the "Accountants"). In
the event of a reduction in benefits hereunder, the Optionee shall be given the
choice of which benefits to reduce. For purposes of making the calculations
required by this Section, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 4999 of
the Code. The Company and the Optionee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section.
13. TIME OF GRANTING OPTIONS. The date of grant of an Option
shall, for all purposes, be the date on which the Administrator makes the
determination granting such Option, or such later date as is determined by the
Administrator. Notice of the determination shall be given to each Service
Provider to whom an Option is so granted within a reasonable time after the date
of such grant.
14. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time
amend, alter, suspend or terminate the Plan.
(b) SHAREHOLDER APPROVAL. The Board shall obtain
shareholder approval of any Plan amendment to the extent necessary and desirable
to comply with Applicable Laws.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination.
15. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares shall comply with Applicable Laws and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the
exercise of an Option, the Administrator may require the person exercising such
Option to represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required.
16. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any
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liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
17. RESERVATION OF SHARES. The Company, during the term of this
Plan, shall at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
18. SHAREHOLDER APPROVAL. The Plan shall be subject to approval by
the shareholders of the Company within twelve (12) months after the date the
Plan is adopted. Such shareholder approval shall be obtained in the degree and
manner required under Applicable Laws.
19. INFORMATION TO OPTIONEES. The Company shall provide to each
Optionee and to each individual who acquires Shares pursuant to the Plan, not
less frequently than annually during the period such Optionee has one or more
Options outstanding, and, in the case of an individual who acquires Shares
pursuant to the Plan, during the period such individual owns such Shares, copies
of annual financial statements. The Company shall not be required to provide
such statements to key employees whose duties in connection with the Company
assure their access to equivalent information.
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