2005
Equity Incentive Plan
Adopted December 31,
2004
Original Approval By Shareholders February 24, 2005
Amended By Board of Directors on January 8, 2007,
January 23, 2007, August 5, 2007 (to reflect
two-for-one forward stock split effective August 20, 2007),
and January 7, 2009
Termination Date: December 30, 2014
(a) Eligible Stock Award Recipients. The persons
eligible to receive Stock Awards are the Employees, Directors and
Consultants of the Company and its Affiliates.
(b) Available Stock Awards. The purpose of the Plan is
to provide a means by which eligible recipients of Stock Awards may
be given an opportunity to benefit from increases in value of the
Common Stock through the granting of the following Stock Awards:
(i) Options and (ii) Stock Units.
(c) General Purpose. The Company, by means of the Plan,
seeks to retain the services of the group of persons eligible to
receive Stock Awards, to secure and retain the services of new
members of this group and to provide incentives for such persons to
exert maximum efforts for the success of the Company and its
Affiliates.
(a)
“Affiliate” means any parent corporation
or subsidiary corporation of the Company, whether now or hereafter
existing, as those terms are defined in Sections 424(e) and (f),
respectively, of the Code.
(b) “
Applicable Laws ” means the legal requirements
relating to the administration of equity compensation plans,
including under applicable U.S. state corporate laws, U.S. federal
and applicable state securities laws, other U.S. federal and state
laws, the Code, any stock exchange rules or regulations and the
applicable laws, rules and regulations of any other country or
jurisdiction where Stock Awards are granted under the Plan, as such
laws, rules, regulations and requirements shall be in place from
time to time.
(c)
“Board” means the Board of Directors of
the Company.
(d)
“ Code” means the Internal Revenue Code
of 1986, as amended.
(e)
“Committee” means a committee appointed
by the Board in accordance with subsection 3(c).
(f)
“Common Stock” means the common stock of
the Company.
(g)
“Company” means F5 Networks, Inc., a
Washington corporation.
(h)
“Consultant” means any person, including
an advisor, (i) who is engaged by the Company or an Affiliate
to render services other than as an Employee or as a Director or
(ii) who is a member of the Board of Directors of an
Affiliate.
(i)
“Continuous Service” means that the
Participant’s service with the Company or an Affiliate,
whether as an Employee, Director or Consultant, is not interrupted
or terminated. The Participant’s Continuous Service shall not
be deemed to have terminated merely because of a change in the
capacity in which the Participant renders service to the Company or
an Affiliate as an Employee, Consultant or Director or a change in
the entity among the Company or an Affiliate for which the
Participant renders such
service,
provided that there is no interruption or termination of the
Participant’s Continuous Service. For example, a change in
status from an Employee of the Company to a Consultant of an
Affiliate or a Director of the Company will not constitute an
interruption of Continuous Service. Subject to
Section 6(e)(ii), the Board or the chief executive officer of
the Company, in that party’s sole discretion, may determine
whether Continuous Service shall be considered interrupted in the
case of any leave of absence approved by that party, including sick
leave, military leave or any other personal leave.
(j)
“Covered Employee” means the chief
executive officer and the four (4) other highest compensated
officers of the Company for whom total compensation is required to
be reported to shareholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.
(k)
“Director” means a member of the Board of
Directors of the Company.
(l)
“Disability” means the permanent and
total disability of a person within the meaning of
Section 22(e)(3) of the Code.
(m)
“Employee” means any person employed by
the Company or an Affiliate. Subject to the Applicable Laws, the
determination of whether an individual (including a leased and
temporary employees) is an Employee hereunder shall be made by the
Board (or its Committee), in its sole discretion. Mere service as a
Director or payment of a director’s fee by the Company or an
Affiliate shall not be sufficient to constitute
“employment” by the Company or an Affiliate.
(n)
“Exchange Act” means the Securities
Exchange Act of 1934, as amended.
(o)
“ Fair Market Value” means, as of any
date, the value of the Common Stock determined as
follows:
(i) If
the Common Stock is listed on any established stock exchange or
traded on the Nasdaq National Market, the Fair Market Value of a
Share shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange
or market (or such other exchange or market with the greatest
volume of trading in the Common Stock) on the day of determination
or, if the day of determination is not a market trading day, then
on the last market trading day prior to the day of determination,
as reported in such source or sources as the Board deems reliable,
or
(ii) In
the absence of such markets for the Common Stock, the Fair Market
Value shall be determined in good faith by the Board.
(p)
“Independent Director” means a Director
who qualifies as an “independent” director under
applicable Nasdaq rules (or the rules of any exchange on which the
Common Stock is then listed or approved for listing).
(q)
“Non-Employee Director” means a Director
of the Company who either (i) is not a current Employee or
Officer of the Company or its parent or a subsidiary, does not
receive compensation (directly or indirectly) from the Company or
its parent or a subsidiary for services rendered as a consultant or
in any capacity other than as a Director (except for an amount as
to which disclosure would not be required under Item 404(a) of
Regulation S-K promulgated pursuant to the Securities Act
(“Regulation S-K”)), does not possess an interest
in any other transaction as to which disclosure would be required
under Item 404(a) of Regulation S-K and is not engaged in a
business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise
considered a “non-employee director” for purposes of
Rule 16b-3.
(r)
“Officer” means a person who is an
officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated
thereunder.
(s)
“Option” means a nonstatutory stock
option (meaning, an option not intended to qualify as an incentive
stock option under Code Section 422) granted pursuant to the
Plan.
(t)
“Outside Director” means a Director of
the Company who either (i) is not a current Employee of the
Company or an “affiliated corporation” (within the
meaning of Treasury Regulations promulgated under Section 162(m) of
the Code), is not a former Employee of the Company or an
“affiliated corporation” receiving compensation for
prior services (other than benefits under a tax qualified pension
plan), was not an officer of the Company or an “affiliated
corporation” at any time and is not currently
receiving
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direct or
indirect remuneration from the Company or an “affiliated
corporation” for services in any capacity other than as a
Director or (ii) is otherwise considered an “outside
director” for purposes of Section 162(m) of the
Code.
(u)
“Participant” means a person to whom a
Stock Award is granted pursuant to the Plan or, if applicable, such
other person who holds an outstanding Stock Award.
(v)
“Plan” means this F5 Networks, Inc. 2005
Equity Incentive Plan.
(w)
“Rule 16b-3” means Rule 16b-3
promulgated under the Exchange Act or any successor to Rule 16b-3,
as in effect from time to time.
(x)
“Securities Act” means the Securities Act
of 1933, as amended.
(y)
“ Share ” means a share of the Common
Stock, as adjusted in accordance with Section 11
below.
(z)
“Stock Award” means any right involving
Shares granted under the Plan, including an Option or Stock
Unit.
(aa)
“Stock Award Agreement” means a written
agreement between the Company and a holder of a Stock Award
evidencing the terms and conditions of an individual Stock Award
grant. Each Stock Award Agreement shall be subject to the terms and
conditions of the Plan.
(bb)
“Stock Unit ” means an award giving the
right to receive Shares granted under Section 7
below.
(a) Administration by Board. The Board shall administer
the Plan unless and until the Board delegates administration to a
Committee or an administrator, as provided in subsection
3(c).
(b) Powers of Board. The Board shall have the power,
subject to, and within the limitations of, the express provisions
of the Plan:
(i) To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how
each Stock Award shall be granted; what type or combination of
types of Stock Awards shall be granted; the provisions, terms and
conditions of each Stock Award granted (which need not be identical
as among Participants or as among types of Stock Awards),
including, without limitation: the time or times when a person
shall be permitted to receive Shares pursuant to a Stock Award, the
number of Shares with respect to which a Stock Award shall be
granted to each such person, the exercise or purchase price (if
any) of a Stock Award, the time or times when Stock Awards may be
exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, any pro rata
adjustment to vesting as a result of a Participant’s
transitioning from full- to part-time service (or vice versa), and
any other restriction (including forfeiture restriction),
limitation or term of any Stock Award, based in each case on such
factors as the Board, in its sole discretion, shall determine;
provided, however, that such provisions, terms and conditions are
not inconsistent with the terms of the Plan.
(ii) In order to fulfill the purposes of the Plan and
without amending the Plan, to modify grants of Stock Awards to
Participants who are foreign nationals or employed outside of the
United States in order to recognize differences in local law, tax
policies or customs.
(iii) To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of
this power, may correct any defect, omission or inconsistency in
the Plan or in any Stock Award Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully
effective.
(iv) To amend the Plan or a Stock Award as provided in
Section 12.
(v) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best
interests of the Company which are not in conflict with the
provisions of the Plan.
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(c) Delegation to Committee. The Board may delegate
administration of the Plan to a Committee or Committees of one or
more members of the Board, and the term “Committee”
shall apply to any person or persons to whom such authority has
been delegated. In the discretion of the Board, the Committee may
consist solely of two or more Outside Directors, in accordance with
Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3, and/or
solely of two or more Independent Directors under applicable Nasdaq
(or other exchange) rules. The Board or the Committee may further
delegate its authority and responsibilities under the Plan to an
Officer. However, if administration is delegated to an Officer,
such Officer may grant Stock Awards only within guidelines
established by the Board or the Committee, and only the Board or
the Committee may make a Stock Award to an Officer or Director. If
administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to delegate
to a subcommittee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board
shall thereafter be to the Committee or subcommittee, or an Officer
to whom authority has been delegated), subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as
may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the
administration of the Plan, and unless otherwise specified by the
Board shall retain any authority granted to a committee or
individual hereunder unto itself.
4.
Shares Subject to the
Plan.
(a) Share
Reserve. Subject to the provisions of Section 11 relating
to adjustments upon changes in stock, the stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate Twelve
Million Four Hundred Thousand (12,400,000) 1 Shares of Common Stock.
(b) Section 162(m) Limitation on Share Numbers. No
Employee shall be eligible to be granted Stock Awards covering more
than Two Million (2,000,000) Shares during any fiscal year of the
Company.
(c) Reversion of Shares to the Share Reserve. If any
Stock Award shall for any reason expire or otherwise terminate, in
whole or in part, without having been exercised in full, the Shares
not acquired under such Stock Award shall revert to and again
become available for issuance under the Plan. Further, if any
previously-issued Shares are forfeited under the terms and
conditions of the Stock Award, then any Shares so forfeited shall
revert to and again become available for issuance under the Plan.
The provisions of this Section 4(c) are qualified by Section 4(a)
such that the total number of Shares issued and outstanding under
the Plan at any time may not exceed the number set forth in Section
4(a) (as adjusted under Section 11).
(d) Source of Shares. The stock subject to the Plan may
be unissued Shares or reacquired Shares, bought on the market or
otherwise.
Stock
Awards may be granted to Employees, Directors and
Consultants.
Each
Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of
separate Options need not be identical, but each Option shall
include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following
provisions:
(a) Term. No Option shall be exercisable after the
expiration of ten (10) years from the date it was
granted.
(b) Exercise Price of an Option. The exercise price of
each Option shall be at least equal to the Fair Market Value of the
stock subject to the Option on the date the Option is granted.
Notwithstanding the foregoing, an Option may be granted with an
exercise price lower than that set forth in the preceding sentence
if such Option is granted pursuant to an assumption or substitution
for another option in a manner satisfying the provisions of Section
424(a) of the Code.
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As adjusted to
reflect two-for-one forward stock split effective August 20,
2007
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(c) Consideration. The purchase price of stock acquired
pursuant to an Option shall be paid, to the extent permitted by
applicable statutes and regulations, either (i) in cash, check
or wire transfer at the time the Option is exercised or
(ii) at the discretion of the Board at the time of the grant
of the Option or subsequently by (1) by delivery to the
Company of other Shares that have a Fair Market Value on the date
of surrender equal to the aggregate exercise price of the Shares as
to which the Option is exercised, provided that in the case of
Shares acquired, directly or indirectly, from the Company, such
Shares must have been owned by the Participant for more than six
(6) months on the date of surrender (or such other period as
may be required to avoid the Company’s incurring an adverse
accounting charge), (2) if, as of the date of exercise of an
Option the Company then is permitting Employees to engage in a
“same-day sale” cashless brokered exercise program
involving one or more brokers, through such a program that complies
with the Applicable Laws (including without limitation the
requirements of Regulation T and other applicable regulations
promulgated by the Federal
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