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Exhibit 4
LEFTHAND NETWORKS, INC.
SECOND AMENDED AND RESTATED 2000 EQUITY
INCENTIVE PLAN
ARTICLE I
INTRODUCTION
1.1
Amendment of Plan. This Second Amended and Restated
2000 Equity Incentive Plan amends and restates the 2000 Equity
Incentive Plan originally adopted on October 20, 2000, and
subsequently amended and restated on February 20, 2003, by LeftHand
Networks, Inc., a Delaware based corporation.
1.2
Establishment. The Company hereby establishes this
Plan for certain key employees of the Company and certain directors
and consultants to the Company. The Plan permits the grant of
incentive stock options within the meaning of Code
§ 422, non-qualified stock options, restricted stock
awards, stock appreciation rights, stock bonuses, stock units and
other stock grants to certain key employees of the Company and to
certain directors and consultants to the Company.
1.3
Purposes . The purposes of the Plan are to provide
those who are selected for participation in the Plan with added
incentives to continue in the long-term service of the Company and
to create in such persons a more direct interest in the future
success of the operations of the Company by relating incentive
compensation to increases in shareholder value, so that the income
of those participating in the Plan is more closely aligned with the
income of the Company’s shareholders. The Plan is also
designed to provide a financial incentive that will help the
Company attract, retain and motivate the most qualified employees,
directors, and consultants.
ARTICLE II
DEFINITIONS
2.1
“Affiliated Corporation” means
any corporation or other entity that is affiliated with the Plan
Sponsor through stock ownership or otherwise and is designated as
an “Affiliated Corporation” by the Board,
provided, however, that for purposes of Incentive Options granted
pursuant to the Plan, an “Affiliated
Corporation” means any parent or subsidiary of the Plan
Sponsor as defined in Code § 424.
2.2
“Award” means an Option, a
Restricted Stock Award, a Stock Appreciation Right, a Stock Unit,
or Stock Bonus issued under the Plan.
2.3
“Board” means the Board of
Directors of the Plan Sponsor.
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2.4
“Code” means the Internal
Revenue Code of 1986, as it may be amended from time to
time.
2.5
“Company” means the Plan
Sponsor and the Affiliated Corporations.
2.6
“Disabled” or
“Disability” shall have the
meaning given to such terms in Code § 22(e)(3).
2.7
“Effective Date” means the
effective date of the Plan which is October 20, 2000; however, the
adoption of those provisions of the Plan by the Board of Directors
which relate to the grant of Incentive Options are subject to
approval and ratification by the shareholders of the Plan Sponsor
within 12 months of the effective date. Incentive Options granted
under the Plan prior to the approval of the Plan by the
shareholders of the Plan Sponsor shall be subject to approval of
the Plan by the shareholders of the Plan Sponsor.
2.8
“Eligible Employees” means those
key employees (including, without limitation, officers and
directors who are also employees) of the Company, upon whose
judgment, initiative and efforts the Company is, or will become,
largely dependent for the successful conduct of its business. For
purposes of the Plan, an employee is an individual whose wages are
subject to the withholding of federal income tax under Code
§ 3401.
2.9
“Eligible Individuals” means
those consultants to the Company and directors of the Company who
are determined by the Plan Administrator to be individuals whose
services are important to the Company.
2.10
“Fair Market Value” means the
average of the mean between the bid and the asked prices of the
Stock or the closing price, as applicable, on the NASDAQ National
Market System, the principal stock exchange or other market on
which the Stock is traded, over the five consecutive trading days
ending on a particular date or by such other method as the Plan
Administrator may specify at the time an Award is granted. If the
price of the Stock is not reported on any securities exchange or
national market system, the Fair Market Value of the Stock on a
particular date shall be as determined by the Plan Administrator in
good faith by applying any reasonable valuation method. If, upon
exercise of an Option, the exercise price is paid by a
broker’s transaction, Fair Market Value, for purposes of
the exercise, shall be the price at which the Stock is sold by the
broker.
2.11
“Incentive Option” means an
Option designated as an incentive stock option and granted in
accordance with Code § 422.
2.12
“Initial Public Offering” means
the consummation of an underwritten public offering of shares of
common stock of the Plan Sponsor pursuant to the Securities Act of
1933, as amended.
2.13
“Non-Qualified Option” means
any Option other than an Incentive Option.
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2.14
“Option” means a right to
purchase Stock at a stated or formula price for a specified period
of time. Options granted under the Plan shall be either Incentive
Options or Non-Qualified Options.
2.15
“Option Agreement” shall have
the meaning given to it in Section 4.3.
2.16
“Option Holder” means a
Participant who has been granted one or more Options under the
Plan.
2.17
“Option Price” means the price at
which each share of Stock subject to an Option may be purchased,
determined in accordance with Subsection 4.3(b).
2.18
“Participant” means an Eligible
Employee or Eligible Individual designated by the Plan
Administrator during the term of the Plan to receive one or more
Options under the Plan.
2.19
“Plan” means the Amended and
Restated 2000 Equity Incentive Plan.
2.20
“ Plan Administrator ” means the
Board or a committee established under Article X of the Plan
that is empowered to take actions with respect to the
administration of the Plan.
2.21
“Plan Sponsor” means LeftHand
Networks, Inc. and any successor thereto.
2.22
“Restricted Stock Award” means an
award of Stock granted to a Participant that is subject to certain
restrictions.
2.23
“Section” or
“Subsection” means a reference to a
section or subsection of the Plan, unless another reference
specifically applies.
2.24
“Share” means a share of
Stock.
2.25
“Stock” means the common stock
of the Plan Sponsor.
2.26
“Stock Appreciation Right” means
the right, granted by the Plan Administrator pursuant to the Plan,
to receive a payment equal to the increase in the Fair Market Value
of a Share of Stock subsequent to the grant of such Award.
2.27
“Stock Bonus” means either an
outright grant of Stock or a grant of Stock subject to and
conditioned upon certain employment or performance related
goals.
2.28
“Stock Unit” means a measurement
component equal to the Fair Market Value of one share of Stock on
the date for which a determination is made pursuant to the
provisions of this Plan.
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2.29
“Termination Event” means (i)
any transaction or series of related transactions (including,
without limitation, any reorganization, merger, or consolidation)
that will result in the holders of the outstanding voting equity
securities of the Plan Sponsor immediately prior to such
transaction holding less than a majority of the voting equity
securities of the surviving entity immediately following such a
transaction, (ii) the sale or transfer of all or substantially
all of the assets of the Plan Sponsor, or (iii) the dissolution or
liquidation of the Plan Sponsor.
ARTICLE III
PARTICIPATION
Participants in
the Plan shall be those Eligible Employees who, in the judgment of
the Plan Administrator, are performing, or during the term of their
incentive arrangement will perform, vital services in the
management, operation and development of the Company, and
significantly contribute, or are expected to significantly
contribute, to the achievement of long-term corporate economic
objectives. Eligible Individuals shall be selected from those
non-employee consultants to the Company and directors of the
Company who are performing services important to the operation and
growth of the Company. Participants may be granted from time to
time one or more Awards.
ARTICLE IV
OPTIONS
4.1
Grant of Options . A Participant may be granted one
or more Options. Options shall be granted as of the date specified
in the Option Agreement. The Plan Administrator in its sole
discretion shall designate whether an Option is an Incentive Option
or a Non-Qualified Option. Only Non-Qualified Options may be
granted to Eligible Individuals. The Plan Administrator may grant
both an Incentive Option and a Non-Qualified Option to an Eligible
Employee at the same time or at different times. Incentive Options
and Non-Qualified Options, whether granted at the same time or at
different times, shall be deemed to have been awarded in separate
grants and shall be clearly identified. In no event shall the
exercise of one Option affect the right to exercise any other
Option or affect the number of shares for which any other Option
may be exercised. The grant of each Option shall be separately
approved by the Plan Administrator, and the receipt of one Option
shall not result in automatic receipt of any other Option. Upon
determination by the Plan Administrator to grant an Option to a
Participant, the Plan Administrator shall enter into a Option
Agreement with the Participant.
4.2
Restrictions on Incentive Options
.
(a) Initial
Exercise. The aggregate Fair Market Value of the Shares
with respect to which Incentive Options are exercisable for the
first time by an Option Holder in any calendar year, under the Plan
or otherwise, shall not exceed $100,000. For this purpose, the Fair
Market Value of the Shares shall be determined as of the date of
grant of the Option.
(b) Ten Percent
Stockholders. Incentive Options granted to an Option Holder
who is the holder of record of 10% or more of the outstanding Stock
of the Plan Sponsor shall have an Option Price equal to 110% of the
Fair Market Value of the Shares on the date of grant of the Option
and the Option Period for any such Option shall not exceed five
years.
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4.3
Stock Option Agreements . Each Option granted under
the Plan shall be evidenced by a written stock option certificate
or agreement (an “Option Agreement”). An Option
Agreement shall be issued by the Plan Sponsor in the name of the
Participant to whom the Option is granted (the “Option
Holder”) and in such form as may be approved by the Plan
Administrator. The Option Agreement shall incorporate and conform
to the conditions in the Plan as well as any other terms and
conditions that are not inconsistent as the Plan Administrator may
consider appropriate. In the event of any inconsistency between the
provisions of the Plan and any Option Agreement, the provisions of
the Plan shall govern.
(a)
Number of Shares. Each Option Agreement shall state
that it covers a specified number of shares of Stock, as determined
by the Plan Administrator.
(b) Price.
The price at which each share of Stock covered by an Option may be
purchased shall be determined in each case by the Plan
Administrator and set forth in the Option Agreement. The price of
an Incentive Option shall not be less than 100% of the Fair Market
Value of the Stock on the date the Incentive Option is granted.
(c) Duration of
Options. Each Option Agreement shall state the period of
time, determined by the Plan Administrator, within which the Option
may be exercised by the Option Holder (the “Option
Period”). The Option Period must end not more than ten
years from the date the Option is granted.
(d)
Restrictions on Exercise. The Option Agreement shall
also set forth any restrictions on Option exercise during the
Option Period, if any, as may be determined by the Plan
Administrator. Each Option shall become exercisable (vest) over
such period of time, if any, or upon such events, as determined by
the Plan Administrator.
(e) Termination of
Services, Death, or Disability. The Plan Administrator may
specify the period, if any, after which an Option may be exercised
following termination of the Option Holder’s services in
the Option Agreement. If the Option Agreement does not specify the
period of time following termination of service during which
Options may be exercised, the time periods in this Subsection shall
apply.
(i)
Termination for Cause . If the services of the Option
Holder are terminated within the Option Period for
“cause”, as determined by the Company, the
Option shall thereafter be void for all purposes.
“Cause” shall have the meaning assigned to it
by the Option Holder’s employment agreement, if the
Company has entered into an employment agreement with the Option
Holder; otherwise “cause” shall mean:
(A)
Fraud, theft, misappropriation or embezzlement of the
Company’s funds;
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(B)
Any conduct by the Option Holder that constitutes moral turpitude,
or that would tend to bring public disrespect, contempt, or
ridicule upon the Company;
(C) A deliberate or
serious violation of any law which violation may reflect adversely
upon the Company;
(D) A deliberate or
serious violation by the Option Holder of his or her
duties or a refusal or unwillingness to perform such duties in good
faith and to the best of the Option Holder’s abilities
not remedied after thirty (30) days’ written notice
thereof from the Company;
(E)
The unauthorized use or disclosure of the confidential information
or trade secrets of the Company, which use or disclosure causes
material harm to the Company;
(F)
A violation by the Option Holder of any of the other
terms and conditions of a written employment agreement with the
Company not remedied after thirty (30) days’ written
notice thereof from the Company; and
(G)
Illegal possession or use of any controlled substance.
(ii)
Disability . If the Option Holder becomes Disabled,
the Option may be exercised by the Option Holder within six months
following the Option Holder’s termination of services on
account of Disability (provided that such exercise must occur
within the Option Period), but not thereafter. The Option may be
exercised only with respect to the shares which had become
exercisable on or before the date of the Option Holder’s
termination of services because of Disability.
(iii) Death
. If the Option Holder dies during the Option Period while
still performing services for the Company or within the six month
period referred to in (ii) above or the three-month period referred
to in (iv) below, the Option may be exercised by those entitled to
do so under the Option Holder’s will or by the laws of
descent and distribution within six months following the Option
Holder’s death, (provided that such exercise must occur
within the Option Period), but not thereafter. The Option may be
exercised only with respect to the shares as to which the Option
had become exercisable on or before the date of the Option
Holder’s death.
(iv) Termination
for Reasons Other than Cause, Disability or Death . If the
Option Holder is no longer employed by the Company or performing
services for the Company for any reason other than Cause,
Disability or the Option Holder’s death, the Option may
be exercised by the Option Holder within three months following the
date of termination (provided that the exercise must occur within
the Option Period), but not thereafter. The Option may be exercised
only as to the shares with respect o which the Option had become
exercisable on or before the date of termination of services.
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4.4
Transferability.
(a) General
Rule: No Lifetime Transfers. An Option shall not be
transferable by the Option Holder except by will or pursuant to the
laws of descent and distribution. An Option shall be exercisable
during the Option Holder’s lifetime only by him or her,
or in the event of Disability or incapacity, by his or her guardian
or legal representative. The Option Holder’s guardian or
legal representative shall have all of the rights of the Option
Holder under this Plan.
(b) InterVivos
Transfer to Certain Family Members. The Plan Administrator
may, however, provide at the time of grant or thereafter that the
Option Holder may transfer a Non-Qualified Option to a member of
the Option Holder’s immediate family, a trust of which
members of the Option Holder’s immediate family are the
only beneficiaries, or a partnership of which members of the Option
Holder’s immediate family or trusts for the sole benefit
of the Option Holder’s immediate family are the only
partners (the “InterVivos Transferee”).
Immediate family means the Option Holder’s spouse, issue
(by birth or adoption), parents, grandparents, siblings (including
half brothers and sisters and adopted siblings) and nieces and
nephews. No transfer shall be effective unless the Option Holder
shall have notified the Company of the transfer in writing and has
furnished a copy of the documents that effect the transfer to the
Company. The InterVivos Transferee shall be subject to all of the
terms of this Plan and the Option, including, but not limited to,
the vesting schedule, termination provisions, and the manner in
which the Option may be exercised. The Plan Administrator may
require the Option Holder and the InterVivos Transferee to enter
into an appropriate agreement with the Company providing for, among
other things, the satisfaction of required tax withholding with
respect to the exercise of the transferred Option and the
satisfaction of any Stock retention requirements applicable to the
Option Holder, together with such other terms and conditions as may
be specified by the Plan Administrator. Except to the extent
provided otherwise in such agreement, the InterVivos Transferee
shall have all of the rights and obligations of the Option Holder
under this Plan; provided that the InterVivos Transferee shall not
have any Stock withheld to pay withholding taxes pursuant to
Section 4.8 unless the agreement referred to in the preceding
sentence specifically provides otherwise.
(c)
No Transfer of Incentive Options . During the Option
Holder’s lifetime the Option Holder may not transfer an
Incentive Option under any circumstances.
(d) No
Assignment . Except as set forth above in subsection
4.4(b), no right or interest of any Option Holder in an Option
granted pursuant to the Plan shall be assignable or transferable
during the lifetime of the Option Holder, either voluntarily or
involuntarily, or be subjected to any lien, directly or indirectly,
by operation of law, or otherwise, including execution, levy,
garnishment, attachment, pledge or bankruptcy, except as set forth
above.
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4.5
Manner of Exercise . The method for exercising each
Option granted hereunder shall be by delivery to the Plan Sponsor
of (1) written notice specifying the number of Shares with
respect to which such Option is exercised (2) payment in full
of the exercise price and any liability the Company may have for
withholding of federal, state or local income or other taxes
incurred by reason of the exercise of the Option,
(3) representation meeting the requirements of Section 13.1 if
requested by the Plan Sponsor, and (4) a shareholders
agreement meeting the requirements of Section 13.4 if requested by
the Plan Sponsor. The purchase of such Shares shall take place at
the principal offices of the Plan Sponsor within thirty days
following delivery of such notice, at which time the Option Price
of the Shares shall be paid in full. If the Option Price is paid by
means of a broker’s loan transaction, in whole or in
part, the closing of the purchase of the Stock under the Option
shall take place (and the Option shall be treated as exercised) on
the date on which, and only if, the sale of Stock upon which the
broker’s loan was based has been closed and settled,
unless the Option Holder makes an irrevocable written election, at
the time of exercise of the Option, to have the exercise treated as
fully effective for all purposes upon receipt of the Option Price
by the Plan Sponsor regardless of whether or not the sale of the
Stock by the broker is closed and settled. A properly executed
certificate or certificates representing the Shares shall be
delivered to the Option Holder upon payment. If Options on less
than all shares evidenced by an Option Agreement are exercised, the
Plan Sponsor shall deliver a new Option Agreement evidencing the
Option on the remaining shares upon delivery of the Option
Agreement for the Option being exercised.
4.6
Payment of the Exercise Price . The exercise price
shall be paid by any of the following methods or any combination of
the following methods, or by any other method, approved by the Plan
Administrator in its discretion upon the request of the Option
Holder:
(a) in cash.
(b) by certified check,
cashier’s check or other check acceptable to the Plan
Sponsor, payable to the order of the Plan Sponsor.
(c) by delivery to the
Plan Sponsor of certificates representing the number of shares then
owned by the Option Holder, the Fair Market Value of which equals
the purchase price of the Stock purchased pursuant to the Option,
properly endorsed for transfer to the Plan Sponsor. No Option may
be exercised by delivery to the Plan Sponsor of certificates
representing Stock, unless such Stock has been held by the Option
Holder for more than six months. The Fair Market Value of any
shares of Stock delivered in payment of the purchase price upon
exercise of the Option under the Plan shall be the Fair Market
Value as of the exercise date. The exercise date shall be the day
of delivery of the certificates for the Stock used as payment of
the Option Price.
(d) by delivery to the
Plan Sponsor of a properly executed notice of exercise together
with irrevocable instructions to a broker to deliver to the Plan
Sponsor promptly the amount of the proceeds of the sale of all or a
portion of the Stock or of a loan from the broker to the Option
Holder required to pay the Option Price.
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4.7
Withholding Requirement . The Plan
Sponsor’s obligations to deliver shares of Stock upon the
exercise of any Option shall be subject to the
Participant’s satisfaction of all applicable federal,
state and local income and other tax withholding
requirements.
(a) Non-Qualified
Options . Upon exercise of an Option, the Option Holder
shall make appropriate arrangements with the Company to provide for
the amount of additional withholding required by Code
§§ 3102 and 3402 and applicable state income
tax laws, including payment of such taxes through delivery of
shares of Stock or by withholding Stock to be issued under the
Option.
(b) Incentive
Options . If an Option Holder makes a disposition (as
defined in Code § 424(c)) of any Stock acquired
pursuant to the exercise of an Incentive Option prior to the
expiration of two years from the date on which the Incentive Option
was granted or prior to the expiration of one year from the date on
which the Option was exercised, the Option Holder shall send
written notice to the Company at the Company’s principal
place of business of the date of such disposition, the number of
shares disposed of, the amount of proceeds received from such
disposition and any other information relating to such disposition
as the Company may reasonably request. The Option Holder shall, in
the event of such a disposition, make appropriate arrangements with
the Company to provide for the amount of additional withholding, if
any, required by Code §§ 3102 and 3402 and
applicable state income tax laws.
4.8
Withholding With Stock . The Plan Administrator may,
in its sole discretion, grant the Participant an election to pay
all such amounts of tax withholding, or any part thereof, by
electing to transfer to the Plan Sponsor, or to have the Plan
Sponsor withhold from shares otherwise issuable to the Participant,
shares of Stock having a value equal to the amount required to be
withheld or such lesser amount as may be elected by the
Participant. All elections shall be subject to the approval or
disapproval of the Plan Administrator. The value of shares of Stock
to be withheld shall be based on the Fair Market Value of the Stock
on the date that the amount of tax to be withheld is to be
determined (the “Tax Date”). Any such elections
by Participants to have shares of Stock withheld for this purpose
will be subject to the following restrictions:
(a) All elections must be
made prior to the Tax Date.
(b) All elections shall
be irrevocable.
(c) If the Participant is
an officer or director of the Plan Sponsor within the meaning of
Section 16 of the 1934 Act (“Section 16”), the
Participant must satisfy the requirements of such Section 16 and
any applicable Rules thereunder with respect to the use of Stock to
satisfy such tax withholding obligation.
4.9
Shareholder Privileges . No Option Holder shall have
any rights as a shareholder with respect to any shares of Stock
covered by an Option until the Option Holder becomes the holder of
record of such Stock, and no adjustments shall be made for
dividends or other distributions or other righ
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