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Sample Business Contracts

1998 Stock Option Plan - Caldera Systems Inc.

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                              CALDERA SYSTEMS, INC.

                             1998 STOCK OPTION PLAN

                                    ARTICLE I

                               GENERAL PROVISIONS

      I.    PURPOSE OF THE PLAN

      This 1998 Stock Option Plan is intended to promote the interests of
CALDERA SYSTEMS, INC., a Utah corporation, by providing eligible persons with
the opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in
the service of the Corporation.

      Capitalized terms herein shall have the meanings assigned to such terms in
the attached Appendix.

      II.   ADMINISTRATION OF THE PLAN

            A.    The Plan shall be administered by the Board. However, any or
all administrative functions otherwise exercisable by the Board may be delegated
to the Committee. Members of the Committee shall serve for such period of time
as the Board may determine and shall be subject to removal by the Board at any
time. The Board may also at any time terminate the functions of the Committee
and reassume all powers and authority previously delegated to the Committee.

            B.    The Plan Administrator shall have full power and authority
(subject to the provisions of the Plan) to establish such rules and regulations
as it may deem appropriate for proper administration of the Plan and to make
such determinations under, and issue such interpretations of, the Plan and any
outstanding options thereunder as it may deem necessary or advisable. Decisions
of the Plan Administrator shall be final and binding on all parties who have an
interest in the Plan or any option thereunder.

      III.  ELIGIBILITY

            A.    The persons eligible to participate in the Plan are as
follows:

                  (i)   Employees,

                  (ii)  non-employee members of the Board or the non-employee
      members of the board of directors of any Parent or Subsidiary, and

                  (iii) consultants who provide services to the Corporation (or
      any Parent or Subsidiary).

            B.    The Plan Administrator shall have full authority to determine
which eligible persons are to receive option grants, the time or times when such
option grants are to be made, the number of shares to be covered by each such
grant the exercise price of option, the time or times at which each option is to
become exercisable, the vesting schedule applicable to the option shares and the
maximum term for which the option is to remain.

      IV.   STOCK SUBJECT TO THE PLAN

            A.    The stock issuable under the Plan shall be shares of
authorized but unissued or re-acquired Common Stock. The maximum number of
shares of Common Stock which may be issued over the term of the Plan shall not
exceed 1,000,000 shares.

            B.    Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the


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options are canceled in accordance with the cancellation-regrant provisions of
Article 2. All shares issued under the Plan, whether or not those shares are
subsequently repurchased by the Corporation pursuant to its repurchase rights
under the Plan, shall reduce on a share-for-share basis the number of shares of
Common Stock available for subsequent issuance under the Plan.

            C.    Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan and (ii) the number and/or class of securities and the exercise
price per share in effect under each outstanding option in order to prevent the
dilution or enlargement of benefits thereunder. The adjustments determined by
the Plan Administrator shall be final, binding and conclusive.

                                    ARTICLE 2

                                  OPTION GRANTS

      I.    OPTION TERMS

            Each option shall be a Non-Statutory Option and shall be evidenced
by one or more documents in the form approved by the Plan Administrator;
provided, however, that each such document shall comply with the terms specified
below

            A.    Exercise Price.

                  (i)   The exercise price per share shall be fixed by the Plan
      Administrator which may be less than the Fair Market Value per share of
      Common Stock on the option grant date.

                  (ii)  The exercise price shall become immediately due upon
      exercise of the option and shall, subject to the documents evidencing the
      option, be payable in cash or check made payable to the Corporation.

            B.    Exercise and Term of Options. Each option shall be exercisable
at such time or times, during such period and for such number of shares as shall
be determined by the Plan Administrator and set forth in the documents
evidencing the option. However, no option shall have a term in excess of ten
(10) years measured from the option grant date.

            C.    Effect of Termination of Service. The following provisions
shall govern the exercise of any options held by the Optionee at the time of
cessation of Service or death:

                  (i)   Should the Optionee cease to remain in Service for any
      reason other than Cause, Disability or death, then the Optionee shall have
      a period of three (3) months following the later of (i) the date of such
      cessation of Service, or (ii) the date the Options first become
      exercisable, during which to exercise each outstanding option held by such
      Optionee.

                  (ii)  Should the Optionee cease to remain in Service for
      Cause, then all outstanding Options shall terminate on the date of such
      cessation of Service.

                  (iii) Should such Service terminate by reason of Disability,
      then the Optionee shall have a period of twelve (12) months following the
      later of (i) the date of such cessation of Service, or (ii) the date the
      Options first become exercisable, during which to exercise each
      outstanding option held by such Optionee.

                  (iv)  Should the Optionee die while holding one or more
      outstanding options, then the personal representative of the Optionee's
      estate or the person or persons to whom the option is transferred pursuant
      to the Optionee's will or in accordance with the laws of descent and
      distribution shall have a period of twelve (12) months following the later
      of (i) date of the Optionee's death, or (ii) the date the Options first
      become exercisable, during which to exercise each outstanding option held
      by such Optionee.

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                  (v)   Under no circumstances, however, shall any such option
      be exercisable after the specified expiration of the option term or
      earlier termination of the option.

                  (vi)  During the applicable post-Service exercise period, the
      option may not be exercised in the aggregate for more than the number of
      vested shares for which the option is exercisable an the date of the
      Optionee's cessation of Service. The option shall terminate and cease to
      be outstanding for any vested shares for which the option has not been
      exercised upon the earlier of the following: (i) expiration of the
      applicable post-Service exercise period, (ii) upon the termination of the
      option as a result of a Corporate Transaction, or (iii) upon the
      expiration of the option term. The option shall, immediately upon the
      Optionee's cessation of Service, terminate and cease to be outstanding to
      the extent the option has not vested on the date of such cessation of
      Service.

            D.    Shareholder Rights. The holder of an option shall have no
shareholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.

            E.    Unvested Shares. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, all or (at the discretion of the Corporation and with the consent of the
Optionee) any of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right. The Plan Administrator may impose a vesting schedule upon any
option grant or any shares of Common Stock subject to the option.

            F.    First Refusal Rights. Until such time as the Common Stock is
FIRST registered under Section 12(g) of the 1934 Act, the Corporation shall have
the right of first refusal with respect to any proposed disposition by the
Optionee (or any successor in interest) of any shares of Common Stock issued
under the Plan. Such right of first refusal shall be exercisable in accordance
with the terms established by the Plan Administrator and set forth in the
document evidencing such right.

            G.    Limited Transferability of Option. During the lifetime of the
Optionee, the option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will, by the laws of descent and
distribution following the Optionee's death, or be assigned in accordance with
the terms of a Qualified Domestic Relations Order. The assigned option may only
be exercised by the person or persons who acquire a proprietary interest in the
option pursuant to such Qualified Domestic Relations Order. The terms applicable
to the assigned option (or portion thereof) shall be the same as those in effect
for the option immediately prior to such assignment and shall be set forth in
such documents issued to the assignee as the Plan Administrator may deem
appropriate.

      II.   CORPORATE TRANSACTION

            A.    In the event of any Corporate Transaction, each outstanding
option shall terminate and cease to be outstanding, except to the extent such
option is assumed by the successor corporation (or parent thereof) in connection
with such Corporate Transaction. In addition, all outstanding repurchase rights
shall terminate automatically in the event of any Corporate Transaction, except
to the extent the repurchase rights are assigned to the successor corporation
(or parent thereof) in connection with such Corporate Transaction.

            B.    Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in the consummation of such Corporate Transaction,
had the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same.

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            C.    The grant of options under the Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.

      III.  CANCELLATION AND REGRANT OF OPTIONS

      The Plan Administrator shall have the authority to effect, at any time and
from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options covering the same or different number of
shares of Common Stock but with an exercise price per share based on the Fair
Market Value per share of Common Stock on the new option grant date.

      IV.   ADDITIONAL AUTHORITY

      The Plan Administrator shall have the discretion, exercisable either at
the time an option is granted or at any time while the option remains
outstanding, to:

                  (i)   extend the period of time for which the option is to
      remain exercisable following the Optionee's cessation of Service or death
      from the limited period otherwise in effect for that option to such
      greater period of time as the Plan Administrator shall deem appropriate,
      but in no event beyond the expiration of the option term;

                  (ii)  permit the option to be exercised, during the applicable
      post-Service exercise period, not only with respect to the number of
      vested shares of Common Stock for which such option is exercisable at the
      time of the Optionee's cessation of Service or death but also with respect
      to one or more additional installments in which the Optionee would have
      vested under the option had the Optionee continued in Service; and/or

                  (iii) accelerate or waive the Vesting Schedule and/or the date
      the option first becomes exercisable.

                                    ARTICLE 3

                                  MISCELLANEOUS

      I.    EFFECTIVE DATE AND TERM OF THE PLAN

            A.    The Plan shall become effective when adopted by the Board. The
Plan Administrator may grant options and issue shares under the Plan at any time
after the effective date of the Plan and before the date fixed herein for
termination of  the Plan.

            B.    The Plan shall terminate upon the earliest of (i) the
expiration of the ten (10)-year period measured from the date the Plan is
adopted by the Board, (ii) the date on which all shares available for issuance
under the Plan shall have been issued pursuant to the exercise of options or the
issuance of shares (whether vested or unvested) under the Plan or (iii) the
termination of all outstanding options in connection with a Corporate
Transaction. Upon such Plan termination, all options and unvested stock
issuances outstanding under the Plan shall continue to have full force and
effect in accordance with the provisions of the documents evidencing such
options or issuances.

      II.   AMENDMENT OF THE PLAN

      The Board shall have complete and exclusive power and authority to amend
or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
options or unvested stock issuances at the time outstanding under the Plan,
unless the Optionee consents to such amendment or modification.

      III.  USE OF PROCEEDS

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      Any cash proceeds received by the Corporation from the sale of shares of
Common Stock under the Plan shall be used for general corporate purposes.

      IV.   WITHHOLDING

      The Corporation's obligation to deliver shares of Common Stock upon the
exercise of any options or upon the issuance or vesting of any shares issued
under the Plan shall be subject to the satisfaction of all applicable Federal,
state and local income and employment tax withholding requirements.

      V.    REGULATORY APPROVALS

      The implementation of the Plan, the granting of any options under the Plan
and the issuance of any shares of Common Stock upon the exercise of any option
shall be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
options granted under it and the shares of Common Stock issued pursuant to it.

      VI.   NO EMPLOYMENT OR SERVICE RIGHTS

      Nothing in the Plan shall confer upon the Optionee any right to continue
in Service for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any Parent or Subsidiary
employing or retaining such person) or of the Optionee, which rights are hereby
expressly reserved by each, to terminate such person's Service at any time for
any reason, with or without cause.










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                                    APPENDIX

      The following definitions shall be in effect under the Plan

      A.    Board shall mean the Corporation's Board of Directors.

      B.    Cause shall mean any of the following: (i) Optionee's material
breach of any employee, confidentiality, or other employment related agreement
with the Corporation, (ii) Optionee's violation of the Corporation's policies or
procedures set forth in the Corporation's Policies and Procedure Manual, as
amended from time to time, or (iii) Optionee's conviction of or entrance of a
plea of nolo contenders to a felony or to any other crime punishable by
incarceration.

      C.    Code shall mean the Internal Revenue Code of 1986, as amended.

      D.    Committee shall mean a committee of two (2) or more Board members
appointed by the Board to exercise one or more administrative functions under
the Plan.

      E.    Common Stock shall mean the Corporation's common stock.

      F.    Corporate Transaction shall mean either of the following
shareholder-approved transactions to which the Corporation is a party:

            (i)   a merger or consolidation in which securities possessing more
      than fifty percent (50%) of the total combined voting power of the
      Corporation's outstanding securities are transferred to a person or
      persons different from the persons holding those securities immediately
      prior to such transaction, or

            (ii)  the sale, transfer or other disposition of all or
      substantially all of the Corporation's assets, or the complete liquidation
      or dissolution of the Corporation.

      G.    Corporation shall mean Caldera Systems, Inc., a Utah corporation.

      H.    Disability shall mean the inability of the Optionee to engage in the
performance of his duties as an Employee for a period exceeding three (3) months
by reason of any medically determinable physical or mental impairment and shall
be determined by the Plan Administrator on the basis of such medical evidence as
the Plan Administrator deems warranted under the circumstances.

      I.    Domestic Relations Order shall mean any judgment, decree or order
(including approval of a property settlement agreement) which provides or
otherwise conveys, pursuant to applicable State domestic relations laws
(including community property laws), marital property rights to any spouse or
former spouse of the Optionee.

      J.    Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

      K.    Exercise Date shall mean the date on which the Corporation shall
have received written notice of the Date option exercise.

      L.    Fair Market Value per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:


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            (i)   If the Common Stock is at the time traded on the Nasdaq
      National Market, then the Fair Market Value shall be the closing selling
      price per share of Common Stock on the date in question, as such price is
      reported by the National Association of Securities Dealers on the Nasdaq
      National Market or any successor system. If there is no closing selling
      price for the Common Stock on the date in question, then the Fair Market
      Value shall be the closing selling price on the last preceding date for
      which such quotation exists.

            (ii)  If the Common Stock is at the time listed on any Stock
      Exchange, then the Fair Market Value shall be the closing selling price
      per share of Common Stock on the date in question on the Stock Exchange
      determined by the Plan Administrator to be the primary market for the
      Common Stock, as such price is officially quoted in the composite tape of
      transactions on such exchange. If there is no closing selling price for
      the Common Stock on the date in question, then the Fair Market Value shall
      be the closing selling price on the last preceding date for which such
      quotation exists.

            (iii) If the Common Stock is at the time neither listed on any Stock
      Exchange nor traded on the Nasdaq National Market, then the Fair Market
      Value shall be conclusively determined by the Plan Administrator after
      taking into account such factors as the Plan Administrator shall deem
      appropriate.

      M.    1934 Act shall mean the Securities Exchange Act of 1934, as amended.

      N.    Non-Statutory Option shall mean an option not intended to satisfy
the requirements of Code Section 422.

      O.    Optionee shall mean any person to whom an option is granted under
the Plan.

      P.    Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing 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.

      Q.    Plan shall mean the Corporation's 1998 Stock Option Plan, as set
forth in this document.

      R.    Plan Administrator shall mean either the Board or the Committee, to
the extent the Committee is at the time responsible for the administration of
the Plan.

      S.    Qualified Domestic Relations Order shall mean a Domestic Relations
Order which substantially complies with the requirements of Code Section 414(p).
The Plan Administrator shall have the sole discretion to determine whether a
Domestic Relations Order is a Qualified Domestic Relations Order.

      T.    Service shall mean the provision of services to the Corporation (or
any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant except to the
extent otherwise specifically provided in the documents evidencing the option or
stock issuance.

      U.    Stock Exchange shall mean either the American Stock Exchange or the
New York Stock Exchange.

      V.    Subsidiary shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing 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.


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