Exhibit
10.3
LOCUSPOCUS INC.
2000 STOCK OPTION PLAN
1.
ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
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1.1
Establishment. The LocusPocus Inc. 2000 Stock Option Plan
(the " Plan ") is hereby
established effective as of September 6, 2000.
1.2
Purpose. The purpose of the Plan is to advance
the interests of the Participating Company Group and its
shareholders by providing an incentive to attract, retain and
reward persons performing services for the Participating Company
Group and by motivating such persons to contribute to the growth
and profitability of the Participating Company Group.
1.3
Term of Plan. The Plan shall continue in effect until
the earlier of its termination by the Board or the date on which
all of the shares of Stock available for issuance under the Plan
have been issued and all restrictions on such shares under the
terms of the Plan and the agreements evidencing Options granted
under the Plan have lapsed. However, all Options shall be granted,
if at all, within ten (10) years from the earlier of the date
the Plan is adopted by the Board or the date the Plan is duly
approved by the shareholders of the Company.
2.
DEFINITIONS AND CONSTRUCTION.
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2.1
Definitions . Whenever used herein, the following
terms shall have their respective meanings set forth
below:
(a) "
Board " means
the Board of Directors of the Company. If one or more Committees
have been appointed by the Board to administer the Plan, "
Board " also
means such Committee(s).
(b) "
Code " means the
Internal Revenue Code of 1986, as amended, and any applicable
regulations promulgated thereunder.
(c) "
Committee "
means the Compensation Committee or other committee of the Board
duly appointed to administer the Plan and having such powers as
shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the
powers of the Board granted herein, including, without limitation,
the power to amend or terminate the Plan at any time, subject to
the terms of the Plan and any applicable limitations imposed by
law.
(d) "
Company " means
LocusPocus Inc., a Delaware corporation, or any successor
corporation thereto.
(e) "
Consultant "
means a person engaged to provide consulting or advisory services
(other than as an Employee or a Director) to a Participating
Company, provided that the identity of such person, the nature of
such services or the entity to which such services are provided
would not preclude the Company from offering or selling securities
to such person pursuant to the Plan in reliance on either the
exemption from registration provided by Rule 701 under the
Securities Act or, if the Company is required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act,
registration on a Form S-8 Registration Statement under the
Securities Act.
(f) "
Director " means
a member of the Board or of the board of directors of any other
Participating Company.
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(g) "
Disability "
means the inability of the Optionee, in the opinion of a qualified
physician acceptable to the Company, to perform the major duties of
the Optionee's position with the Participating Company Group
because of the sickness or injury of the Optionee.
(h) "
Employee " means
any person treated as an employee (including an Officer or a
Director who is also treated as an employee) in the records of a
Participating Company and, with respect to any Incentive Stock
Option granted to such person, who is an employee for purposes of
Section 422 of the Code; provided, however, that neither
service as a Director nor payment of a director's fee shall be
sufficient to constitute employment for purposes of the Plan. The
Company shall determine in good faith and in the exercise of its
discretion whether an individual has become or has ceased to be an
Employee and the effective date of such individual's employment or
termination of employment, as the case may be. For purposes of an
individual's rights, if any, under the Plan as of the time of the
Company's determination, all such determinations by the Company
shall be final, binding and conclusive, notwithstanding that the
Company or any court of law or governmental agency subsequently
makes a contrary determination.
(i) "
Exchange Act "
means the Securities Exchange Act of 1934, as amended.
(j) "
Fair Market Value " means, as of any date, the value of a share of Stock or other
property as determined by the Board, in its discretion, or by the
Company, in its discretion, if such determination is expressly
allocated to the Company herein, subject to the
following:
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(i) If,
on such date, the Stock is listed on a national or regional
securities exchange or market system, the Fair Market Value of a
share of Stock shall be the closing price of a share of Stock (or
the mean of the closing bid and asked prices of a share of Stock if
the Stock is so quoted instead) as quoted on the Nasdaq National
Market, The Nasdaq SmallCap Market or such other national or
regional securities exchange or market system constituting the
primary market for the Stock, as reported in The Wall Street Journal or such
other source as the Company deems reliable. If the relevant date
does not fall on a day on which the Stock has traded on such
securities exchange or market system, the date on which the Fair
Market Value shall be established shall be the last day on which
the Stock was so traded prior to the relevant date, or such other
appropriate day as shall be determined by the Board, in its
discretion.
(ii) If,
on such date, the Stock is not listed on a national or regional
securities exchange or market system, the Fair Market Value of a
share of Stock shall be as determined by the Board in good faith
without regard to any restriction other than a restriction which,
by its terms, will never lapse.
(k) "
Incentive Stock Option
" means an Option intended to be (as set forth in
the Option Agreement) and which qualifies as an incentive stock
option within the meaning of Section 422(b) of the
Code.
(1) "
Insider " means
an Officer, a Director of the Company or other person whose
transactions in Stock are subject to Section 16 of the
Exchange Act.
(m) "
Nonstatutory Stock Option
" means an Option not intended to be (as set forth
in the Option Agreement) or which does not qualify as an Incentive
Stock Option.
(n) "
Officer " means
any person designated by the Board as an officer of the
Company.
(o) "
Option " means a
right to purchase Stock pursuant to the terms and conditions of the
Plan. An Option may be either an Incentive Stock Option or a
Nonstatutory Stock Option.
(p) "
Option Agreement " means a written agreement between the Company and an Optionee
setting forth the terms, conditions and restrictions of the Option
granted to the Optionee and any
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shares acquired upon the exercise thereof. An
Option Agreement may consist of a form of "Notice of Grant of Stock
Option" and a form of "Stock Option Agreement" incorporated therein
by reference, or such other form or forms as the Board may approve
from time to time.
(q) "
Optionee " means
a person who has been granted one or more Options.
(r) "
Parent Corporation " means any present or future "parent corporation" of the
Company, as defined in Section 424(e) of the Code.
(s) "
Participating Company
" means the Company or any Parent Corporation or
Subsidiary Corporation.
(t) "
Participating Company Group
" means, at any point in time, all corporations
collectively which are then Participating Companies.
(u) "
Rule 16b-3 " means Rule 16b-3 under the Exchange Act, as amended from
time to time, or any successor rule or regulation.
(v) "
Securities Act "
means the Securities Act of 1933, as amended.
(w) "
Service " means
an Optionee's employment or service with the Participating Company
Group, whether in the capacity of an Employee, a Director or a
Consultant. An Optionee's Service shall not be deemed to have
terminated merely because of a change in the capacity in which the
Optionee renders Service to the Participating Company Group or a
change in the Participating Company for which the Optionee renders
such Service, provided that there is no interruption or termination
of the Optionee's Service. Furthermore, an Optionee's Service with
the Participating Company Group shall not be deemed to have
terminated if the Optionee takes any military leave, sick leave, or
other bona fide leave of absence approved by the Company; provided,
however, that if any such leave exceeds ninety (90) days, on
the ninety-first (91st) day of such leave the Optionee's Service
shall be deemed to have terminated unless the Optionee's right to
return to Service with the Participating Company Group is
guaranteed by statute or contract. Notwithstanding the foregoing,
unless otherwise designated by the Company or required by law, a
leave of absence shall not be treated as Service for purposes of
determining vesting under the Optionee's Option Agreement. The
Optionee's Service shall be deemed to have terminated either upon
an actual termination of Service or upon the corporation for which
the Optionee performs Service ceasing to be a Participating
Company. Subject to the foregoing, the Company, in its discretion,
shall determine whether the Optionee's Service has terminated and
the effective date of such termination.
(x) "
Stock " means
the common stock of the Company, as adjusted from time to time in
accordance with Section 4.2.
(y) "
Subsidiary Corporation
" means any present or future "subsidiary
corporation" of the Company, as defined in Section 424(f) of
the Code.
(z) "
Ten Percent Owner Optionee
" means an Optionee who, at the time an Option is
granted to the Optionee, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of
stock of a Participating Company within the meaning of
Section 422(b)(6) of the Code.
2.2
Construction. Captions and titles contained herein
are for convenience only and shall not affect the meaning or
interpretation of any provision of the Plan. Except when otherwise
indicated by the context, the singular shall include the plural and
the plural shall include the singular. Use of the term "or" is not
intended to be exclusive, unless the context clearly requires
otherwise.
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3.
ADMINISTRATION.
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3.1
Administration by the Board. The Plan shall be administered by the
Board. All questions of interpretation of the Plan or of any Option
shall be determined by the Board, and such determinations shall be
final and binding upon all persons having an interest in the Plan
or such Option.
3.2
Authority of Officers. Any Officer shall have the authority to
act on behalf of the Company with respect to any matter, right,
obligation, determination or election which is the responsibility
of or which is allocated to the Company herein, provided the
Officer has apparent authority with respect to such matter, right,
obligation, determination or election.
3.3
Powers of the Board. In addition to any other powers set
forth in the Plan and subject to the provisions of the Plan, the
Board shall have the full and final power and authority, in its
discretion:
(a) to
determine the persons to whom, and the time or times at which,
Options shall be granted and the number of shares of Stock to be
subject to each Option;
(b) to
designate Options as Incentive Stock Options or Nonstatutory Stock
Options;
(c) to
determine the Fair Market Value of shares of Stock or other
property;
(d) to
determine the terms, conditions and restrictions applicable to each
Option (which need not be identical) and any shares acquired upon
the exercise thereof, including, without limitation, (i) the
exercise price of the Option, (ii) the method of payment for
shares purchased upon the exercise of the Option, (iii) the
method for satisfaction of any tax withholding obligation arising
in connection with the Option or such shares, including by the
withholding or delivery of shares of stock, (iv) the timing,
terms and conditions of the exercisability of the Option or the
vesting of any shares acquired upon the exercise thereof,
(v) the time of the expiration of the Option, (vi) the
effect of the Optionee's termination of Service with the
Participating Company Group on any of the foregoing, and
(vii) all other terms, conditions and restrictions applicable
to the Option or such shares not inconsistent with the terms of the
Plan;
(e) to
approve one or more forms of Option Agreement;
(f) to
amend, modify, extend, cancel or renew any Option or to waive any
restrictions or conditions applicable to any Option or any shares
acquired upon the exercise thereof;
(g) to
accelerate, continue, extend or defer the exercisability of any
Option or the vesting of any shares acquired upon the exercise
thereof, including with respect to the period following an
Optionee's termination of Service with the Participating Company
Group;
(h) to
prescribe, amend or rescind rules, guidelines and policies relating
to the Plan, or to adopt supplements to, or alternative versions
of, the Plan, including, without limitation, as the Board deems
necessary or desirable to comply with the laws of, or to
accommodate the tax policy or custom of, foreign jurisdictions
whose citizens may be granted Options; and
(i) to
correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option Agreement and to make all
other determinations and take such other actions with respect to
the Plan or any Option as the Board may deem advisable to the
extent not inconsistent with the provisions of the Plan or
applicable law.
3.4
Administration with Respect to Insiders.
With respect to
participation by Insiders in the Plan, at any time that any class
of equity security of the Company is registered pursuant to
Section 12 of the Exchange Act, the Plan shall be administered
in compliance with the requirements, if any, of
Rule 16b-3.
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3.5
Indemnification. In addition to such other rights of
indemnification as they may have as members of the Board or
officers or employees of the Participating Company Group, members
of the Board and any officers or employees of the Participating
Company Group to whom authority to act for the Board or the Company
is delegated shall be indemnified by the Company against all
reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with the defense of any action,
suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or
any right granted hereunder, and against all amounts paid by them
in settlement thereof (provided such settlement is approved by
independent legal counsel selected by the Company) or paid by them
in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person is
liable for gross negligence, bad faith or intentional misconduct in
duties; provided, however, that within sixty (60) days after
the institution of such action, suit or proceeding, such person
shall offer to the Company, in writing, the opportunity at its own
expense to handle and defend the same.
4.
SHARES SUBJECT TO PLAN .
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4.1
Maximum Number of Shares Issuable. Subject to adjustment as provided in
Section 4.2, the maximum aggregate number of shares of Stock
that may be issued under the Plan shall be two million (2,000,000)
and shall consist of authorized but unissued or reacquired shares
of Stock or any combination thereof. If an outstanding Option for
any reason expires or is terminated or canceled or if shares of
Stock are acquired upon the exercise of an Option subject to a
Company repurchase option and are repurchased by the Company at the
Optionee's exercise price, the shares of Stock allocable to the
unexercised portion of such Option or such repurchased shares of
Stock shall again be available for issuance under the Plan.
However, except as adjusted pursuant to Section 4.2, in no
event shall more than two million (2,000,000) shares of Stock be
available for issuance pursuant to the exercise of Incentive Stock
Options (the " ISO Share Issuance
Limit "). Notwithstanding the
foregoing, at any such time as the offer and sale of securities
pursuant to the Plan is subject to compliance with
Section 260.140.45 of Title 10 of the California Code of
Regulations (" Section 260.140.45 "),
the total number of shares of Stock issuable upon the exercise of
all outstanding Options (together with options outstanding under
any other stock option plan of the Company) and the total number of
shares provided for under any stock bonus or similar plan of the
Company shall not exceed thirty percent (30%) (or such other higher
percentage limitation as may be approved by the shareholders of the
Company pursuant to Section 260.140.45) of the then
outstanding shares of the Company as calculated in accordance with
the conditions and exclusions of
Section 260.140.45.
4.2
Adjustments for Changes in Capital Structure
. In the event of any stock
dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital
structure of the Company, appropriate adjustments shall be made in
the number and class of shares subject to the Plan and to any
outstanding Options, in the ISO Share Issuance Limit set forth in
Section 4.1, and in the exercise price per share of any
outstanding Options. If a majority of the shares which are of the
same class as the shares that are subject to outstanding Options
are exchanged for, converted into, or otherwise become (whether or
not pursuant to an Ownership Change Event, as defined in
Section 8.1) shares of another corporation (the "
New Shares "),
the Board may unilaterally amend the outstanding Options to provide
that such Options are exercisable for New Shares. In the event of
any such amendment, the number of shares subject to, and the
exercise price per share of, the outstanding Options shall be
adjusted in a fair and equitable manner as determined by the Board,
in its discretion. Notwithstanding the foregoing, any fractional
share resulting from an adjustment pursuant to this
Section 4.2 shall be rounded down to the nearest whole number,
and in no event may the exercise price of any Option be
decreased
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to an amount less than the par value, if any, of
the stock subject to the Option. The adjustments determined by the
Board pursuant to this Section 4.2 shall be final, binding and
conclusive.
5.
ELIGIBILITY AND OPTION LIMITATIONS
.
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5.1
Persons Eligible for Options . Options may be granted only to
Employees, Consultants, and Directors. For purposes of the
foregoing sentence, "Employees," "Consultants" and "Directors"
shall include prospective Employees, prospective Consultants and
prospective Directors to whom Options are granted in connection
with written offers of an employment or other service relationship
with the Participating Company Group. Eligible persons may be
granted more than one (1) Option. However, eligibility in
accordance with this Section shall not entitle any person to be
granted an Option, or, having been granted an Option, to be granted
an additional Option.
5.2
Option Grant Restrictions . Any person who is not an Employee on
the effective date of the grant of an Option to such person may be
granted only a Nonstatutory Stock Option. An Incentive Stock Option
granted to a prospective Employee upon the condition that such
person become an Employee shall be deemed granted effective on the
date such person commences Service with a Participating Company,
with an exercise price determined as of such date in accordance
with Section 6.1.
5.3
Fair Market Value Limitation . To the extent that options designated
as Incentive Stock Options (granted under all stock option plans of
the Participating Company Group, including the Plan) become
exercisable by an Optionee for the first time during any calendar
year for stock having a Fair Market Value greater than One Hundred
Thousand Dollars ($100,000), the portions of such options which
exceed such amount shall be treated as Nonstatutory Stock Options.
For purposes of this Section 5.3, options designated as
Incentive Stock Options shall be taken into account in the order in
which they were granted, and the Fair Market Value of stock shall
be determined as of the time the option with respect to such stock
is granted. If the Code is amended to provide for a different
limitation from that set forth in this Section 5.3, such
different limitation shall be deemed incorporated herein effective
as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as
an Incentive Stock Option in part and as a Nonstatutory Stock
Option in part by reason of the limitation set forth in this
Section 5.3, the Optionee may designate which portion of such
Option the Optionee is exercising. In the absence of such
designation, the Optionee shall be deemed to have exercised the
Incentive Stock Option portion of the Option first. Separate
certificates representing each such portion shall be issued upon
the exercise of the Option.
6.
TERMS AND CONDITIONS OF OPTIONS
.
Options shall
be evidenced by Option Agreements specifying the number of shares
of Stock covered thereby, in such form as the Board shall from time
to time establish. No Option or purported Option shall be a valid
and binding obligation of the Company unless evidenced by a fully
executed Option Agreement. Option Agreements may incorporate all or
any of the terms of the Plan by reference and shall comply with and
be subject to the following terms and conditions:
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6.1
Exercise Price . The exercise price for each Option
shall be established in the discretion of the Board; provided,
however, that (a) the exercise price per share for an
Incentive Stock Option shall be not less than the Fair Market Value
of a share of Stock on the effective date of grant of the Option,
(b) the exercise price per share for a Nonstatutory Stock
Option shall be not less than eighty-five percent (85%) of the Fair
Market Value of a share of Stock on the effective date of grant of
the Option, and (c) no Option granted to a Ten Percent Owner
Optionee shall have an exercise price per share less than one
hundred ten percent (110%) of the Fair Market Value of a share of
Stock on the effective date of grant of the Option. Notwithstanding
the foregoing, an Option (whether an Incentive Stock Option or a
Nonstatutory Stock Option) may be
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granted with an exercise price lower than the
minimum exercise price set forth above if such Option is granted
pursuant to an assumption or substitution for another option in a
manner qualifying under the provisions of Section 424(a) of
the Code.
6.2
Exercisability and Term of Options . Options shall be exercisable at such
time or times, or upon such event or events, and subject to such
terms, conditions, performance criteria and restrictions as shall
be determined by the Board and set forth in the Option Agreement
evidencing such Option; provided, however, that (a) no Option
shall be exercisable after the expiration of ten (10) years
after the effective date of grant of such Option, (b) no
Incentive Stock Option granted to a Ten Percent Owner Optionee
shall be exercisable after the expiration of five (5) years
after the effective date of grant of such Option, (c) no
Option granted to a prospective Employee, prospective Consultant or
prospective Director may become exercisable prior to the date on
which such person commences Service with a Participating Company,
and (d) with the exception of an Option granted to an Officer,
a Director or a Consultant, no Option shall become exercisable at a
rate less than twenty percent (20%) per year over a period of five
(5) years from the effective date of grant of such Option,
subject to the Optionee's continued Service. Subject to the
foregoing, unless otherwise specified by the Board in the grant of
an Option, any Option granted hereunder shall terminate ten
(10) years after the effective date of grant of the Option,
unless earlier terminated in accordance with its
provisions.
6.3
Payment of Exercise Price .
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(a)
Forms of Consideration
Authorized . Except as otherwise provided below,
payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in
cash, by check or cash equivalent, (ii) by tender to the
Company, or attestation to the ownership, of shares of Stock owned
by the Optionee having a Fair Market Value not less than the
exercise price, (iii) by delivery of a properly executed
notice together with irrevocable instructions to a broker providing
for the assignment to the Company of the proceeds of a sale or loan
with respect to some or all of the shares being acquired upon the
exercise of the Option (including, without limitation, through an
exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the
Federal Reserve System) (a " Cashless
Exercise "), (iv) provided that
the Optionee is an Employee (unless otherwise not prohibited by
law, including, without limitation, any regulation promulgated by
the Board of Governors of the Federal Reserve System) and in the
Company's sole discretion at the time the Option is exercised, by
delivery of the Optionee's promissory note in a form approved by
the Company for the aggregate exercise price, provided that, if the
Company is incorporated in the State of Delaware, the Optionee
shall pay in cash that portion of the aggregate exercise price not
less than the par value of the shares being acquired, (v) by
such other consideration as may be approved by the Board from time
to time to the extent permitted by applicable law, or (vi) by
any combination thereof. The Board may at any time or from time to
time, by approval of or by amendment to the standard forms of
Option Agreement described in Section 7, or by other means,
grant Options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price or which
otherwise restrict one or more forms of consideration.
(b)
Limitations on Forms of
Consideration .
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(i)
Tender of Stock . Notwithstanding the foregoing, an
Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock to the extent such
tender or attestation would constitute a violation of the
provisions of any law, regulation or agreement restricting the
redemption of the Company's stock. Unless otherwise provided by the
Board, an Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock unless such shares
either have been owned by the Optionee for more than six
(6) months (and not used for another Option exercise by
attestation during such period) or were not acquired, directly or
indirectly, from the Company.
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(ii)
Cashless Exercise . The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or
procedures for the exercise of Options by means of a Cashless
Exercise.
(iii)
Payment by Promissory Note . No promissory note shall be permitted
if the exercise of an Option using a promissory note would be a
violation of any law. Any permitted promissory note shall be on
such terms as the Board shall determine. The Board shall have the
authority to permit or require the Optionee to secure any
promissory note used to exercise an Option with the shares of Stock
acquired upon the exercise of the Option or with other collateral
acceptable to the Company. Unless otherwise provided by the Board,
if the Company at any time is subject to the regulations
promulgated by the Board of Governors of the Federal Reserve System
or any other governmental entity affecting the extension of credit
in connection with the Company's securities, any promissory note
shall comply with such applicable regulations, and the Optionee
shall pay the unpaid principal and accrued interest, if any, to the
extent necessary to comply with such applicable
regulations.
6.4
Tax Withholding . The Company shall have the right, but
not the obligation, to deduct from the shares of Stock issuable
upon the exercise of an Option, or to accept from the Optionee the
tender of, a number of whole shares of Stock having a Fair Market
Value, as determined by the Company, equal to all or any part of
the federal, state, local and foreign taxes, if any, required by
law to be withheld by the Participating Company Group with respect
to such Option or the shares acquired upon the exercise thereof.
Alternatively or in addition, in its discretion, the Company shall
have the right to require the Optionee, through payroll
withholding, cash payment or otherwise, including by means of a
Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising
in connection with the Option or the shares acquired upon the
exercise thereof. The Fair Market Value of any shares of Stock
withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the
applicable minimum statutory withholding rates. The Company shall
have no obligation to deliver shares of Stock or to release shares
of Stock from an escrow established pursuant to the Option
Agreement until the Participating Company Group's tax withholding
obligations have been satisfied by the Optionee.
6.5
Repurchase Rights . Shares issued under the Plan may be
subject to a right of first refusal, one or more repurchase
options, or other conditions and restrictions as determined by the
Board in its discretion at the time the Option is granted. The
Company shall have the right to assign at any time any repurchase
right it may have, whether or not such right is then exercisable,
to one or more persons as may be selected by the Company. Upon
request by the Company, each Optionee shall execute any agreement
evidencing such transfer restrictions prior to the receipt of
shares of Stock hereunder and shall promptly present to the Company
any and all certificates representing shares of Stock acquired
hereunder for the placement on such certificates of appropriate
legends evidencing any such transfer restrictions.
6.6
Effect of Termination of Service .
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(a)
Option Exercisability
. Subject to earlier
termination of the Option as otherwise provided herein and unless
otherwise provided by the Board in the grant of an Option and set
forth in the Option Agreement, an Option shall be exercisable after
an Optionee's termination of Service only during the applicable
time period determined in accordance with this Section 6.6 and
thereafter shall terminate:
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(i)
Disability . If the Optionee's Service terminates
because of the Disability of the Optionee, the Option, to the
extent unexercised and exercisable on the date on which the
Optionee's Service terminated, may be exercised by the Optionee (or
the Optionee's
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guardian or legal representative) at any time
prior to the expiration of twelve (12) months (or such longer
period of time as determined by the Board, in its discretion) after
the date on which the Optionee's Service terminated, but in any
event no later than the date of expiration of the Option's term as
set forth in the Option Agreement evidencing such Option (the
" Option Expiration Date
").
(ii)
Death . If the Optionee's Service terminates
because of the death of the Optionee, the Option, to the extent
unexercised and exercisable on the date on which the Optionee's
Service terminated, may be exercised by the Optionee's legal
representative or other person who acquired the right to exercise
the Option by reason of the Optionee's death at any time prior to
the expiration of twelve (12) months (or such longer period of
time as determined by the Board, in its discretion) after the date
on which the Optionee's Service terminated, but in any event no
later than the Option Expiration Date. The Optionee's Service shall
be deemed to have terminated on account of death if the Optionee
dies within three (3) months (or such longer period of time as
determined by the Board, in its discretion) after the Optionee's
termination of Service.
(iii)
Termination After Change in Control
. The Board may, in its
discretion, provide in any Option Agreement that if the Optionee's
Service ceases as a result of "Termination After Change in Control"
(as defined in such Option Agreement), then (1) the Option, to
the extent unexercised and exercisable on the date on which the
Optionee's Service terminated, may be exercised by the Optionee (or
the Optionee's guardian or legal representative) at any time prior
to the expiration of six (6) months (or such longer period of
time as determined by the Board, in its discretion) after the date
on which the Optionee's Service terminated, but in any event no
later than the Option Expiration Date, and (2) the
exercisability and vesting of the Option and any shares acquired
upon the exercise thereof shall be accelerated effective as of the
date on which the Optionee's Service terminated to such extent, if
any, as shall have been determined by the Board, in its discretion,
and set forth in the Option Agreement. Notwithstanding the
foregoing, if the Company and the other party to the transaction
constituting a Change in Control agree to treat such transaction as
a "pooling-of-interests" for accounting purposes and it is
determined that the provisions or operation of this
Section 6.6(a)(iii) would preclude treatment of such
transaction as a "pooling-of-interests" and provided further that
in the absence of the preceding sentence such transaction would be
treated as a "pooling-of-interests," then this
Section 6.6(a)(iii) shall be without force or effect, and
the vesting and exercisability of the Option shall be determined
under any other applicable provision of the Plan or the Option
Agreement evidencing such Option.
(iv)
Other Termination of Service
. If the Optionee's Service
terminates for any reason, except Disability, death or Termination
After Change in Control, the Option, to the extent unexercised and
exercisable by the Optionee on the date on which the Optionee's
Service terminated, may be exercised by the Optionee at any time
prior to the expiration of three (3) months (or such longer
period of time as determined by the Board, in its discretion) after
the date on which the Optionee's Service terminated, but in any
event no later than the Option Expiration Date.
(b)
Extension if Exercise Prevented by
Law . Notwithstanding the foregoing, if the
exercise of an Option within the applicable time periods set forth
in Section 6.6(a) is prevented by the provisions of
Section 10 below, the Option shall remain exercisable until
three (3) months (or such longer period of time as determined
by the Board, in its discretion) after the date the Optionee is
notified by the Company that the Option is exercisable, but in any
event no later than the Option Expiration Date.
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(c)
Extension if Optionee Subject to
Section 16(b) . Notwithstanding the foregoing, if a
sale within the applicable time periods set forth in
Section 6.6(a) of shares acquired upon the exercise of the
Option would subject the Optionee to suit under Section 16(b)
of the Exchange Act, the Option shall remain exercisable until the
earliest to occur of (i) the tenth (10th) day following the
date on which a sale of such shares by the Optionee would no longer
be subject to such suit, (ii) the one hundred and ninetieth
(190th) day after the Optionee's termination of Service, or
(iii) the Option Expiration Date.
6.7
Transferability of Options . During the lifetime of the Optionee,
an Option shall be exercisable only by the Optionee or the
Optionee's guardian or legal representative. No Option shall be
assignable or transferable by the Optionee, except by will or by
the laws of descent and distribution. Notwithstanding the
foregoing, to the extent permitted by the Board, in its discretion,
and set forth in the Option Agreement evidencing such Option, a
Nonstatutory Stock Option shall be assignable or transferable
subject to the applicable limitations, if any, described in
Section 260.140.41 of Title 10 of the California Code of
Regulations, Rule 701 under the Securities Act, and the
General Instructions to Form S-8 Registration Statement under
the Securities Act.
7.
STANDARD FORMS OF OPTION AGREEMENT
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7.1
Option Agreement . Unless otherwise provided by the Board
at the time the Option is granted, an Option shall comply with and
be subject to the terms and conditions set forth in the form of
Option Agreement approved by the Board concurrently with its
adoption of the Plan and as amended from time to time.
7.2
Authority to Vary Terms . The Board shall have the authority
from time to time to vary the terms of any standard form of Option
Agreement described in this Section 7 either in connection
with the grant or amendment of an individual Option or in
connection with the authorization of a new standard form or forms;
provided, however, that the terms and conditions of any such new,
revised or amended standard form or forms of Option Agreement are
not inconsistent with the terms of the Plan.
8.
CHANGE IN CONTROL .
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8.1
Definitions .
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(a) An
" Ownership Change Event
" shall be deemed to have occurred if any of the
following occurs with respect to the Company: (i) the direct
or indirect sale or exchange in a single or series of related
transactions by the shareholders of the Company of more than fifty
percent (50%) of the voting stock of the Company; (ii) a
merger or consolidation in which the Company is a party;
(iii) the sale, exchange, or transfer of all or substantially
all of the assets of the Company; or (iv) a liquidation or
dissolution of the Company.
(b) A
" Change in Control
" shall mean an Ownership Change Event or a series
of related Ownership Change Events (collectively, a "
Transaction ")
wherein the shareholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in
substantially the same proportions as their ownership of shares of
the Company's voting stock immediately before the Transaction,
direct or indirect beneficial ownership of more than fifty percent
(50%) of the total combined voting power of the outstanding voting
securities of the Company or, in the case of a Transaction
described in Section 8.1(a)(iii), the corporation or other
business entity to which the assets of the Company were transferred
(the " Transferee
"), as the case may be. For purposes of the
preceding sentence, indirect beneficial ownership shall include,
without limitation, an interest resulting from ownership of the
voting securities of one or more corporations or other business
entities which own the Company or the Transferee, as the case may
be, either directly or through one or more subsidiary corporations
or other business entities. The Board shall have the right to
determine whether
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8.2
Effect of Change in Control on Options
. In the event of a Change in
Control, the surviving, continuing, successor, or purchasing
corporation or other business entity or parent thereof, as the case
may be (the " Acquiring
Corporation "), may, without the
consent of any Optionee, either assume the Company's rights and
obligations under outstanding Options or substitute for outstanding
Options substantially equivalent options for the Acquiring
Corporation's stock. In the event the Acquiring Corporation elects
not to assume or substitute for outstanding Options in connection
with a Change in Control, the exercisability and vesting of each
such outstanding Option and any shares acquired upon the exercise
thereof held by Optionees whose Service has not terminated prior to
such date shall be accelerated, effective as of the date ten
(10) days prior to the date of the Change in Control, to such
extent, if any, as shall have been determined by the Board, in its
discretion, and set forth in the Option Agreement evidencing such
Option. The exercise or vesting of any Option and any shares
acquired upon the exercise thereof that was permissible solely by
reason of this Section 8.2 and the provisions of such Option
Agreement shall be conditioned upon the consummation of the Change
in Control. Any Options which are neither assumed or substituted
for by the Acquiring Corporation in connection with the Change in
Control nor exercised as of the date of the Change in Control shall
terminate and cease to be outstanding effective as of the date of
the Change in Control. Notwithstanding the foregoing, shares
acquired upon exercise of an Option prior to the Change in Control
and any consideration received pursuant to the Change in Control
with respect to such shares shall continue to be subject to all
applicable provisions of the Option Agreement evidencing such
Option except as otherwise provided in such Option Agreement.
Furthermore, notwithstanding the foregoing, if the corporation the
stock of which is subject to the outstanding Options immediately
prior to an Ownership Change Event described in
Section 8.1(a)(i) constituting a Change in Control is the
surviving or continuing corporation and immediately after such
Ownership Change Event less than fifty percent (50%) of the total
combined voting power of its voting stock is held by another
corporation or by other corporations that are members of an
affiliated group within the meaning of Section 1504(a) of the
Code without regard to the provisions of Section 1504(b) of
the Code, the outstanding Options shall not terminate unless the
Board otherwise provides in its discretion.
9.
PROVISION OF INFORMATION .
At least
annually, copies of the Company's balance sheet and income
statement for the just completed fiscal year shall be made
available to each Optionee and purchaser of shares of Stock upon
the exercise of an Option. The Company shall not be required to
provide such information to key employees whose duties in
connection with the Company assure them access to equivalent
information. Furthermore, the Company shall deliver to each
Optionee such disclosures as are required in accordance with
Rule 701 under the Securities Act.
10.
COMPLIANCE WITH SECURITIES LAW .
The grant of
Options and the issuance of shares of Stock upon exercise of
Options shall be subject to compliance with all applicable
requirements of federal, state and foreign law with respect to such
securities. Options may not be exercised if the issuance of shares
of Stock upon exercise would constitute a violation of any
applicable federal, state or foreign securities laws or other law
or regulations or the requirements of any stock exchange or market
system upon which the Stock may then be listed. In addition, no
Option may be exercised unless (a) a registration statement
under the Securities Act shall at the time of exercise of the
Option be in effect with respect to the shares issuable upon
exercise of the Option or (b) in the opinion of legal counsel
to the Company, the shares issuable upon exercise of the Option may
be issued in accordance with the terms of an applicable exemption
from the registration requirements of the Securities Act. The
inability of the Company to obtain from
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any regulatory body having jurisdiction the
authority, if any, deemed by the Company's legal counsel to be
necessary to the lawful issuance and sale of any shares hereunder
shall relieve the Company of any liability in respect of the
failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the
exercise of any Option, the Company may require the Optionee to
satisfy any qualifications that may be necessary or appropriate, to
evidence compliance with any applicable law or regulation and to
make any representation or warranty with respect thereto as may be
requested by the Company.
11.
TERMINATION OR AMENDMENT OF PLAN
.
The Board may
terminate or amend the Plan at any time. However, subject to
changes in applicable law, regulations or rules that would permit
otherwise, without the approval of the Company's shareholders,
there shall be (a) no increase in the maximum aggregate number
of shares of Stock that may be issued under the Plan (except by
operation of the provisions of Section 4.2), (b) no
change in the class of persons eligible to receive Incentive Stock
Options, and (c) no other amendment of the Plan that would
require approval of the Company's shareholders under any applicable
law, regulation or rule. No termination or amendment of the Plan
shall affect any then outstanding Option unless expressly provided
by the Board. In any event, no termination or amendment of the Plan
may adversely affect any then outstanding Option without the
consent of the Optionee, unless such termination or amendment is
required to enable an Option designated as an Incentive Stock
Option to qualify as an Incentive Stock Option or is necessary to
comply with any applicable law, regulation or rule.
12.
SHAREHOLDER APPROVAL .
The Plan or any
increase in the maximum aggregate numbe
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