Exhibit 10.34
NETWORK ENGINES, INC.
2009 INCENTIVE
PLAN
1.
Purpose
The purpose of this 2009 Incentive
Plan (the “ Plan ”) of Network
Engines, Inc., a Delaware corporation (the “
Company ”), is to advance the interests of the
Company’s stockholders by enhancing the Company’s
ability to attract, retain and motivate persons who are expected to
make important contributions to the Company and by providing such
persons with equity ownership opportunities and performance-based
incentives that are intended to better align the interests of such
persons with those of the Company’s stockholders.
Except where the context otherwise requires, the term “
Company ” shall include any of the
Company’s present or future parent or subsidiary corporations
as defined in Sections 424(e) or (f) of the Internal
Revenue Code of 1986, as amended, and any regulations thereunder
(the “ Code ”) and any other business
venture (including, without limitation, joint venture or limited
liability company) in which the Company has a controlling interest,
as determined by the Board of Directors of the Company (the “
Board ”).
2.
Eligibility
All of the Company’s
employees, officers, and directors are eligible to be granted
options, stock appreciation rights (“ SARs
”), restricted stock, restricted stock units (“
RSUs ”) and other stock- and cash-based awards
(each, an “ Award ”) under the
Plan. Consultants and advisors to the Company (as such terms
are defined and interpreted for purposes of Form S-8 (or any
successor form)) are also eligible to be granted Awards. Each
person who is granted an Award under the Plan is deemed a “
Participant .”
3.
Administration and Delegation
(a)
Administration by Board of Directors . The Plan will
be administered by the Board. The Board shall have authority
to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall
deem advisable. The Board may construe and interpret the
terms of the Plan and any Award agreements entered into under the
Plan. The Board may correct any defect, supply any omission
or reconcile any inconsistency in the Plan or any Award in the
manner and to the extent it shall deem expedient to carry the Plan
into effect and it shall be the sole and final judge of such
expediency. All decisions by the Board shall be made in the
Board’s sole discretion and shall be final and binding on all
persons having or claiming any interest in the Plan or in any
Award.
(b)
Appointment of Committees . To the extent permitted by
applicable law, the Board may delegate any or all of its powers
under the Plan to one or more committees or subcommittees of the
Board (a “ Committee ”). All
references in the Plan to the “ Board ” shall mean the Board
or a Committee of the Board or the officers referred to in
Section 3(c) to the extent that the Board’s powers
or authority under the Plan have been delegated to such Committee
or officers.
(c)
Delegation to Officers . To the extent permitted by
applicable law, the Board may delegate to one or more officers of
the Company the power to grant Options and other Awards that
constitute rights under Delaware law (subject to any limitations
under the Plan) to employees or officers of the Company or any of
its present or future subsidiary corporations and to exercise such
other powers under the Plan as the Board may determine, provided
that the Board shall fix the terms of the Awards to be granted by
such officers (including the exercise price of the Awards, which
may include a formula by which the exercise price will be
determined) and the maximum number of shares subject to such Awards
that the officers may grant; provided further, however, that no
officer shall be authorized to grant Awards to any “executive
officer” of the Company (as defined by Rule 3b-7 under
the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”)) or to
any “officer” of the Company (as defined by
Rule 16a-1 under the Exchange Act). The Board may not
delegate authority under this Section 3(c) to grant
restricted stock, unless Delaware law then permits such
delegation.
(d)
Awards to Non-Employee Directors . Discretionary
Awards to non-employee directors will only be granted and
administered by a Committee, all of the members of which are
independent as defined by Section 4200(a)(15) of the Nasdaq
Marketplace Rules.
4.
Stock Available for Awards
(a)
Number of Shares; Share Counting .
(1)
Authorized Number of Shares . Subject to adjustment
under Section 10, Awards may be made under the Plan for up to
750,000 shares of common stock, $.01 par value per share, of the
Company (the “ Common Stock ”), any or all of
which Awards may be in the form of Incentive Stock Options.
Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(2)
Share Counting . For purposes of counting the number
of shares available for the grant of Awards under the Plan and
under the sublimits contained in Sections 4(b)(2) and 4(b)(3),
(i) all shares of Common Stock covered by independent SARs
shall be counted against the number of shares available for the
grant of Awards; provided, however, that independent SARs that may
be settled only in cash shall not be so counted; (ii) if any
Award (A) expires or is terminated, surrendered or canceled
without having been fully exercised or is forfeited in whole or in
part (including as the result of shares of Common Stock subject to
such Award being repurchased by the Company at the original
issuance price pursuant to a contractual repurchase right) or
(B) results in any Common Stock not being issued (including as
a result of an independent SAR that was settleable either in cash
or in stock actually being settled in cash), the unused Common
Stock covered by such Award shall again be available for the grant
of Awards; provided, however , in the case of Incentive
Stock Options (as hereinafter defined), the foregoing shall be
subject to any limitations under the Code; and provided further, in
the case of independent SARs, that the full number of shares
subject to any stock-settled SAR shall be counted against the
shares available under the Plan and against the sublimits listed in
the first clause of this Section in proportion to the portion
of the SAR actually exercised regardless of the number of shares
actually used to settle such SAR upon exercise; (iii) shares
of Common Stock delivered (either by actual delivery, attestation,
or net exercise) to the Company by a Participant to
(A) purchase shares of Common Stock upon the exercise of an
Award or (B) satisfy tax
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withholding obligations (including shares
retained from the Award creating the tax obligation) shall not be
added back to the number of shares available for the future grant
of Awards; and (iv) shares of Common Stock repurchased by the
Company on the open market using the proceeds from the exercise of
an Award shall not increase the number of shares available for
future grant of Awards.
(b)
Sub-limits . Subject to adjustment under
Section 10, the following sub-limits on the number of shares
subject to Awards shall apply:
(1)
Section 162(m) Per-Participant Limit . The
maximum number of shares of Common Stock with respect to which
Awards may be granted to any Participant under the Plan shall be
750,000 per fiscal year. For purposes of the foregoing limit,
the combination of an Option in tandem with a SAR (as each is
hereafter defined) shall be treated as a single Award. The
per Participant limit described in this
Section 4(b)(1) shall be construed and applied
consistently with Section 162(m) of the Code or any
successor provision thereto, and the regulations thereunder
(“ Section 162(m) ”).
(2)
Limit on Awards other than Options and SARS . The
maximum number of shares with respect to which Awards other than
Options and SARs may be granted shall be 75% of the maximum number
of authorized shares set forth in Section 4(a)(1).
(3)
Limit on Awards to Directors . The maximum number of
shares with respect to which Awards may be granted to directors who
are not employees of the Company at the time of grant shall be 20%
of the maximum number of authorized shares set forth in
Section 4(a)(1).
(c)
Substitute Awards . In connection with a merger or
consolidation of an entity with the Company or the acquisition by
the Company of property or stock of an entity, the Board may grant
Awards in substitution for any options or other stock or
stock-based awards granted by such entity or an affiliate
thereof. Substitute Awards may be granted on such terms as
the Board deems appropriate in the circumstances, notwithstanding
any limitations on Awards contained in the Plan. Substitute
Awards shall not count against the overall share limit set forth in
Section 4(a)(1) or any sublimits contained in the Plan,
except as may be required by reason of Section 422 and related
provisions of the Code.
5.
Stock Options
(a)
General . The Board may grant options to purchase
Common Stock (each, an “ Option ”) and determine the
number of shares of Common Stock to be covered by each Option, the
exercise price of each Option and the conditions and limitations
applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it
considers necessary or advisable. An Option that is not
intended to be an Incentive Stock Option (as hereinafter defined)
shall be designated a “ Nonstatutory Stock Option
.”
(b)
Incentive Stock Options . An Option that the Board
intends to be an “incentive stock option” as defined in
Section 422 of the Code (an “ Incentive Stock Option ”) shall only be
granted to employees of Network Engines, Inc., any of Network
Engines, Inc.’s present or future parent or subsidiary
corporations as defined in Sections 424(e) or (f) of the
Code, and any other
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entities the employees of which are eligible to
receive Incentive Stock Options under the Code, and shall be
subject to and shall be construed consistently with the
requirements of Section 422 of the Code. The Company
shall have no liability to a Participant, or any other party, if an
Option (or any part thereof) that is intended to be an Incentive
Stock Option is not an Incentive Stock Option or if the Company
converts an Incentive Stock Option to a Nonstatutory Stock
Option.
(c)
Exercise Price . The Board shall establish the
exercise price of each Option and specify the exercise price in the
applicable option agreement. The exercise price shall be not
less than 100% of the Fair Market Value (as defined below) on the
date the Option is granted; provided that if the Board approves the
grant of an Option with an exercise price to be determined on a
future date, the exercise price shall be not less than 100% of the
Fair Market Value on such future date.
(d)
Duration of Options . Each Option shall be exercisable
at such times and subject to such terms and conditions as the Board
may specify in the applicable option agreement; provided,
however , that no Option will be granted with a term in excess
of 10 years.
(e)
Exercise of Option . Options may be exercised by
delivery to the Company of a written notice of exercise signed by
the proper person or by any other form of notice (including
electronic notice) approved by the Company, together with payment
in full as specified in Section 5(f) for the number of
shares for which the Option is exercised. Shares of Common
Stock subject to the Option will be delivered by the Company as
soon as practicable following exercise.
(f)
Payment Upon Exercise . Common Stock purchased upon
the exercise of an Option granted under the Plan shall be paid for
as follows:
(1)
in cash or by check, payable to the order of the
Company;
(2)
except as may otherwise be provided in the applicable option
agreement, by (i) delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price and any required
tax withholding or (ii) delivery by the Participant to the
Company of a copy of irrevocable and unconditional instructions to
a creditworthy broker to deliver promptly to the Company cash or a
check sufficient to pay the exercise price and any required tax
withholding;
(3)
to the extent provided for in the applicable option agreement or
approved by the Board, in its sole discretion, by delivery (either
by actual delivery or attestation) of shares of Common Stock owned
by the Participant valued at their fair market value, determined as
provided below (“ Fair Market Value ”), provided
(i) such method of payment is then permitted under applicable
law, (ii) such Common Stock, if acquired directly from the
Company, was owned by the Participant for such minimum period of
time, if any, as may be established by the Board in its discretion
and (iii) such Common Stock is not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar
requirements;
(4)
to the extent provided for in the applicable Nonstatutory Stock
Option agreement or approved by the Board in its sole discretion,
by delivery of a notice of “net
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exercise” to the Company, as a result of
which the Participant would receive the number of shares of Common
Stock underlying the Option so exercised reduced by the number of
shares of Common Stock equal to the aggregate exercise price of the
Option divided by the Fair Market Value on the date of
exercise;
(5)
to the extent permitted by applicable law and provided for in the
applicable Option agreement or approved by the Board, in its sole
discretion, by payment of such other lawful consideration as the
Board may determine; or
(6)
by any combination of the above permitted forms of
payment.
“ Fair Market Value
” of a share of Common Stock
for purposes of the Plan will be determined as follows:
(A) if the Common Stock
trades on a national securities exchange, the closing sale price
(for the primary trading session) on the date of grant;
or
(B) if the Common Stock does
not trade on any such exchange, the average of the closing bid and
asked prices as reported by an authorized OTCBB market data vendor
as listed on the OTCBB website (otcbb.com) on the date of grant;
or
(C) if the Common Stock is
not publicly traded, the Board will determine the Fair Market Value
for purposes of the Plan using any measure of value it determines
to be appropriate (including, as it considers appropriate, relying
on appraisals) in a manner consistent with the valuation principles
under Code Section 409A, except as the Board or Committee may
expressly determine otherwise.
For any date that is not a trading day, the
Fair Market Value of a share of Common Stock for such date will be
determined by using the closing sale price or average of the bid
and asked prices, as appropriate, for the immediately preceding
trading day and with the timing in the formulas above adjusted
accordingly. The Board can substitute a particular time of
day or other measure of “closing sale price” or
“bid and asked prices” if appropriate because of
exchange or market procedures or can, in its sole discretion, use
weighted averages either on a daily basis or such longer period as
complies with Code Section 409A.
The Board has sole
discretion to determine the Fair Market Value for purposes of this
Plan, and all Awards are conditioned on the participants’
agreement that the Board’s determination is conclusive and
binding even though others might make a different
determination.
(g)
Limitation on Repricing . Unless such action is
approved by the Company’s stockholders: (1) no
outstanding Option granted under the Plan may be amended to provide
an exercise price per share that is lower than the then-current
exercise price per share of such outstanding Option (other than
adjustments pursuant to Section 10) and (2) the Board may
not cancel any outstanding Option (whether or not granted under the
Plan) and grant in substitution therefor new Awards under the Plan
covering the same or a different number of shares of Common Stock
and having an exercise price per share lower than the then-current
exercise price per share of the cancelled option.
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6.
Director Options
(a)
Initial Grant . Upon the commencement of service on
the Board by any individual who is not then an employee of the
Company or any subsidiary of the Company, the Company shall grant
to such person a Nonstatutory Stock Option to purchase 50,000
shares of Common Stock (subject to adjustment under
Section 10).
(b)
Annual Grant . On the date of each annual meeting of
stockholders of the Company, the Company shall grant to each member
of the Board of Directors of the Company who is both serving as a
director of the Company immediately prior to and immediately
following such annual meeting and who is not then an employee of
the Company or any of its subsidiaries, a Nonstatutory Stock Option
to purchase 15,000 shares of Common Stock (subject to adjustment
under Section 10); provided, however , that a director
shall not be eligible to receive an option grant under this
Section 6(b) until such director has served on the Board
for at least nine months.
(c)
Terms of Director Options . Options granted under this
Section 6 shall (i) have an exercise price equal to the
closing sale price (for the primary trading session) of the Common
Stock on the national securities exchange on which the Common Stock
is then traded on the day of grant (or if the date of grant is not
a trading day on such exchange, the trading day immediately prior
to the date of grant) or if the Common Stock is not then traded on
a national securities exchange, the Fair Market Value of the Common
Stock on such date as determined by the Board,
(ii) (A) in the case of options granted under
Section 6(a) shall vest in equal 25% increments on each
anniversary of the date of grant and (B) in the case of
options granted under Section 6(b) shall vest in full on
the first anniversary of the date of grant, provided that in either
such case the individual is serving on the Board on such date (or
in the case of an option granted under Section 6(b), if
earlier, on the date which is one business day prior to date of the
Company’s next annual meeting), provided that in either such
case no additional vesting shall take place after the Participant
ceases to serve as a director and further provided that in either
such case the Board may provide for accelerated vesting in the case
of death, disability, change in control, attainment of mandatory
retirement age or retirement following at least 10 years of
service, (iii) expire on the earlier of 10 years from the date
of grant or three months following cessation of service on the
Board and (iv) contain such other terms and conditions as the
Board shall determine.
7.
Stock Appreciation Rights
(a)
General . The Board may grant Awards consisting of
SARs entitling the holder, upon exercise, to receive an amount of
Common Stock or cash or a combination thereof (such form to be
determined by the Board) determined by reference to appreciation,
from and after the date of grant, in the Fair Market Value of a
share of Common Stock over the measurement price established
pursuant to Section 7(c). The date as of which such
appreciation is determined shall be the exercise date.
(b)
Grants . SARs may be granted in tandem with, or
independently of, Options granted under the Plan.
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(1)
Tandem Awards . When SARs are expressly granted in
tandem with Options, (i) the SAR will be exercisable only at
such time or times, and to the extent, that the related Option is
exercisable (except to the extent designated by the Board in
connection with a Reorganization Event) and will be exercisable in
accordance with the procedure required for exercise of the related
Option; (ii) the SAR will terminate and no longer be
exercisable upon the termination or exercise of the related Option,
except to the extent designated by the Board in connection with a
Reorganization Event and except that a SAR granted with respect to
less than the full number of shares covered by an Option will not
be reduced until the number of shares as to which the related
Option has been exercised or has terminated exceeds the number of
shares not covered by the SAR; (iii) the Option will terminate
and no longer be exercisable upon the exercise of the related SAR;
and (iv) the SAR will be transferable only with the related
Option.
(2)
Independent SARs . A SAR not expressly granted in
tandem with an Option will become exercisable at such time or
times, and on such conditions, as the Board may specify in the SAR
Award.
(c)
Measurement Price . The Board shall establish the
measurement price of each SAR and specify it in the applicable SAR
agreement. The measurement price shall not be less than 100%
of the Fair Market Value on the date the SAR is granted; provided
that if the Board approves the grant of a SAR with a measurement
price to be determined on a future date, the measurement price
shall be not le
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