EXHIBIT 99.1
Published on September 15, 2006
EXHIBIT 99.1
STEPUP COMMERCE, INC.
2004 STOCK INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this Plan are to attract and retain the best
available personnel, to provide additional incentives to Employees, Directors and Consultants and
to promote the success of the Companys business.
2. Definitions. The following definitions shall apply as used herein and in the
individual Award Agreements except as defined otherwise in an individual Award Agreement. In the
event a term is separately defined in an individual Award Agreement, such definition shall
supercede the definition contained in this Section 2.
(a) Administrator means the Board or any of the Committees appointed to administer
the Plan.
(b) Applicable Laws means the legal requirements relating to the Plan and the Awards
under applicable provisions of federal and state securities laws, the corporate laws of California
and, to the extent other than California, the corporate law of the state of the Companys
incorporation, the Code, the rules of any applicable stock exchange or national market system, and
the rules and laws of any non-U.S. jurisdiction applicable to Awards granted to residents therein.
(c) Assumed means that pursuant to a Corporate Transaction either (i) the Award is
expressly affirmed by the Company or (ii) the contractual obligations represented by the Award are
expressly assumed (and not simply by operation of law) by the successor entity or its Parent in
connection with the Corporate Transaction with appropriate adjustments to the number and type of
securities of the successor entity or its Parent subject to the Award and the exercise or purchase
price thereof which at least preserves the compensation element of the Award existing at the time
of the Corporate Transaction as determined in accordance with the instruments evidencing the
agreement to assume the Award.
(d) Award means the grant of an Option, Restricted Stock, or other right or benefit
under the Plan.
(e) Award Agreement means the written agreement evidencing the grant of an Award
executed by the Company and the Grantee, including any amendments thereto.
(f) Board means the Board of Directors of the Company.
(g) Cause means, with respect to the termination by the Company or a Related Entity
of the Grantees Continuous Service, that such termination is for Cause as such term is expressly
defined in a then-effective written agreement between the Grantee and the Company or such Related
Entity, or in the absence of such then-effective written agreement and definition, is based on, in
the determination of the Administrator, the Grantees: (i) performance of any act or failure to
perform any act in bad faith and to the detriment of the Company or a
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Related Entity; (ii) dishonesty, intentional misconduct or material breach of any agreement
with the Company or a
Related Entity; or (iii) commission of a crime involving dishonesty, breach
of trust, or physical or emotional harm to any person.
(h) Code means the Internal Revenue Code of 1986, as amended.
(i) Committee means any committee composed of members of the Board appointed by the
Board to administer the Plan.
(j) Common Stock means the voting common stock of the Company.
(k) Company means StepUp Commerce, Inc., a California corporation, or any successor
corporation that adopts the Plan in connection with a Corporate Transaction.
(l) Consultant means any person (other than an Employee or a Director, solely with
respect to rendering services in such persons capacity as a Director) who (i) is engaged by the
Company or any Related Entity to render consulting or advisory services to the Company or such
Related Entity, (ii) provides such services under a written contract with the Company or Related
Entity and (iii) spends or will spend a significant amount of time and attention on the affairs and
business of the Company or a Related Entity..
(m) Continuous Service means that the provision of services to the Company or a
Related Entity in any capacity of Employee, Director or Consultant is not interrupted or
terminated. In jurisdictions requiring notice in advance of an effective termination as an
Employee, Director or Consultant, Continuous Service shall be deemed to terminate on the date upon
which either the Grantee or the Company (or a Related Entity) provides notification to the other to
the effect that the Grantees Continuous Service with the Company will terminate for any reason,
notwithstanding any period of notice that may be owing in respect of the termination of the
Grantees Continuous Service, or the date of actual termination of Continuous Service, whichever is
earlier. A Grantees Continuous Service shall be deemed to have terminated either upon an actual
termination of Continuous Service or upon the entity for which the Grantee provides services
ceasing to be a Related Entity. Continuous Service shall not be considered interrupted in the case
of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entity, or any
successor, in any capacity of Employee, Director or Consultant, or (iii) any change in status as
long as the individual remains in the service of the Company or a Related Entity in any capacity of
Employee, Director or Consultant (except as otherwise provided in the Award Agreement). An
approved leave of absence shall include sick leave, military leave, or any other authorized
personal leave. For purposes of each Incentive Stock Option granted under the Plan, if such leave
exceeds ninety (90) days, and reemployment upon expiration of such leave is not guaranteed by
statute or contract, then the Incentive Stock Option shall be treated as a Non-Qualified Stock
Option on the day three (3) months and one (1) day following the expiration of such ninety (90) day
period.
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(n) Corporate Transaction means any of the following transactions, provided,
however, that the Administrator shall determine under parts (iv) and (v) whether multiple
transactions are related, and its determination shall be final, binding and conclusive:
(i) a merger or consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the Company is
incorporated;
(ii) the sale, transfer or other disposition of all or substantially all of the assets of the
Company;
(iii) the complete liquidation or dissolution of the Company;
(iv) any reverse merger or series of related transactions culminating in a reverse merger
(including, but not limited to, a tender offer followed by a reverse merger) in which the Company
is the surviving entity but (A) the shares of Common Stock outstanding immediately prior to such
merger are converted or exchanged by virtue of the merger into other property, whether in the form
of securities, cash or otherwise, or (B) in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Companys outstanding securities are transferred to
a person or persons different from those who held such securities immediately prior to such merger
or the initial transaction culminating in such merger, but excluding any such transaction or series
of related transactions that the Administrator determines shall not be a Corporate Transaction; or
(v) acquisition in a single or series of related transactions by any person or related group
of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial
ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Companys outstanding securities but
excluding any such transaction or series of related transactions that the Administrator determines
shall not be a Corporate Transaction.
(o) Covered Employee means an Employee who is a covered employee under Section
162(m)(3) of the Code.
(p) Director means a member of the Board or the board of directors of any Related
Entity.
(q) Disability means as defined under the long-term disability policy of the Company
or the Related Entity to which the Grantee provides services regardless of whether the Grantee is
covered by such policy. If the Company or the Related Entity to which the Grantee provides service
does not have a long-term disability plan in place, Disability means that a Grantee is unable to
carry out the responsibilities and functions of the position held by the Grantee by reason of any
medically determinable physical or mental impairment for a period of not less than ninety (90)
consecutive days. A Grantee will not be considered to have incurred a Disability unless he or she
furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.
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(r) Employee means any person, including an Officer or Director, who is in the
employ of the Company or any Related Entity, subject to the control and direction of the Company or
any Related Entity as to both the work to be performed and the manner and method of performance.
The payment of a directors fee by the Company or a Related Entity shall not be sufficient to
constitute employment by the Company.
(s) Exchange Act means the Securities Exchange Act of 1934, as amended.
(t) Fair Market Value means, as of any date, the value of Common Stock determined as
follows:
(i) If the Common Stock is listed on one or more established stock exchanges or national
market systems, including without limitation The Nasdaq National Market or The Nasdaq SmallCap
Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such
stock (or the closing bid, if no sales were reported) as quoted on the principal exchange or system
on which the Common Stock is listed (as determined by the Administrator) on the date of
determination (or, if no closing sales price or closing bid was reported on that date, as
applicable, on the last trading date such closing sales price or closing bid was reported), as
reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted on an automated quotation system (including the
OTC Bulletin Board) or by a recognized securities dealer, its Fair Market Value shall be the
closing sales price for such stock as quoted on such system or by such securities dealer on the
date of determination, but if selling prices are not reported, the Fair Market Value of a share of
Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on
the date of determination (or, if no such prices were reported on that date, on the last date such
prices were reported), as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; or
(iii) In the absence of an established market for the Common Stock of the type described in
(i) and (ii), above, the Fair Market Value thereof shall be determined by the Administrator in good
faith and in a manner consistent with Section 260.140.50 of Title 10 of the California Code of
Regulations which requires that consideration be given to (A) the price at which securities of
reasonably comparable corporations (if any) in the same industry are being traded, or (B) if there
are no securities of reasonably comparable corporations in the same industry being traded, the
earnings history, book value and prospects of the issuer in light of market conditions generally.
(u) Grantee means an Employee, Director or Consultant who receives an Award under
the Plan.
(v) Immediate Family means any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in
law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any
person sharing the Grantees household (other than a tenant or employee), a trust in which these
persons (or the Grantee) have more than fifty percent (50%) of the beneficial
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interest, a foundation in which these persons (or the Grantee) control the management of
assets, and any other entity in which these persons (or the Grantee) own more than fifty percent
(50%) of the voting interests.
(w) Incentive Stock Option means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.
(x) Non-Qualified Stock Option means an Option not intended to qualify as an
Incentive Stock Option.
(y) Officer means a person who is an officer of the Company or a Related Entity
within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.
(z) Option means an option to purchase Shares pursuant to an Award Agreement granted
under the Plan.
(aa) Parent means a parent corporation, whether now or hereafter existing, as
defined in Section 424(e) of the Code.
(bb) Performance-Based Compensation means compensation qualifying as
performance-based compensation under Section 162(m) of the Code.
(cc) Plan means this 2004 Stock Incentive Plan.
(dd) Post-Termination Exercise Period means the period specified in the Award
Agreement of not less than thirty (30) days commencing on the date of termination (other than
termination by the Company or any Related Entity for Cause) of the Grantees Continuous Service, or
such longer period as may be applicable upon death or Disability.
(ee) Registration Date means the first to occur of (i) the closing of the first sale
to the general public pursuant to a registration statement filed with and declared effective by the
Securities and Exchange Commission under the Securities Act of 1933, as amended, of (A) the Common
Stock or (B) the same class of securities of a successor corporation (or its Parent) issued
pursuant to a Corporate Transaction in exchange for or in substitution of the Common Stock; and
(ii) in the event of a Corporate Transaction, the date of the consummation of the Corporate
Transaction if the same class of securities of the successor corporation (or its Parent) issuable
in such Corporate Transaction shall have been sold to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended, on or prior to the date of consummation of such Corporate
Transaction.
(ff) Related Entity means any Parent or Subsidiary of the Company and any business,
corporation, partnership, limited liability company or other entity in which the Company or a
Parent or a Subsidiary of the Company holds a substantial ownership interest, directly or
indirectly.
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(gg) Replaced means that pursuant to a Corporate Transaction the Award is replaced
with a comparable stock award or a cash incentive program of the Company, the successor entity (if
applicable) or Parent of either of them which preserves the compensation element of such Award
existing at the time of the Corporate Transaction and provides for subsequent payout in accordance
with the same (or a more favorable) vesting schedule applicable to such Award. The determination
of Award comparability shall be made by the Administrator and its determination shall be final,
binding and conclusive.
(hh) Restricted Stock means Shares issued under the Plan to the Grantee for such
consideration, if any, and subject to such restrictions on transfer, rights of first refusal,
repurchase provisions, forfeiture provisions, and other terms and conditions as established by the
Administrator.
(ii) Rule 16b-3 means Rule 16b-3 promulgated under the Exchange Act or any successor
thereto.
(jj) Share means a share of the Common Stock.
(kk) Subsidiary means a subsidiary corporation, whether now or hereafter existing,
as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan.
(a) Subject to the provisions of Section 10 below, the maximum aggregate number of Shares
which may be issued pursuant to all Awards (including Incentive Stock Options) is 2,000,000 Shares.
The Shares may be authorized, but unissued, or reacquired Common Stock.
(b) Any Shares covered by an Award (or portion of an Award) which is forfeited, canceled or
expires (whether voluntarily or involuntarily) shall be deemed not to have been issued for purposes
of determining the maximum aggregate number of Shares which may be issued under the Plan. Shares
that actually have been issued under the Plan pursuant to an Award shall not be returned to the
Plan and shall not become available for future issuance under the Plan, except that if unvested
Shares are forfeited or repurchased by the Company, such Shares shall become available for future
grant under the Plan. To the extent not prohibited by Section 422(b)(1) of the Code (and the
corresponding regulations thereunder), the listing requirements of The Nasdaq National Market (or
other established stock exchange or national market system on which the Common Stock is traded) and
Applicable Law, any Shares covered by an Award which are surrendered (i) in payment of the Award
exercise or purchase price or (ii) in satisfaction of tax withholding obligations incident to the
exercise of an Award shall be deemed not to have been issued for purposes of determining the
maximum number of Shares which may be issued pursuant to all Awards under the Plan, unless
otherwise determined by the Administrator.
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4. Administration of the Plan.
(a) Plan Administrator.
(i) Administration with Respect to Directors and Officers. Prior to the Registration
Date, with respect to grants of Awards to Directors or Employees who are also Officers or Directors
of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by
the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws.
On or after the Registration Date, with respect to grants of Awards to Directors or Employees who
are also Officers or Directors of the Company, the Plan shall be administered by (A) the Board or
(B) a Committee designated by the Board, which Committee shall be constituted in such a manner as
to satisfy the Applicable Laws and to permit such grants and related transactions under the Plan to
be exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed,
such Committee shall continue to serve in its designated capacity until otherwise directed by the
Board.
(ii) Administration With Respect to Consultants and Other Employees. With respect to
grants of Awards to Employees or Consultants who are neither Directors nor Officers of the Company,
the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy the Applicable Laws. Once appointed,
such Committee shall continue to serve in its designated capacity until otherwise directed by the
Board.
(iii) Administration With Respect to Covered Employees. Notwithstanding the
foregoing, as of and after the date that the exemption for the Plan under Section 162(m) of the
Code expires, as set forth in Section 20 below, grants of Awards to any Covered Employee intended
to qualify as Performance-Based Compensation shall be made only by a Committee (or subcommittee of
a Committee) which is comprised solely of two or more Directors eligible to serve on a committee
making Awards qualifying as Performance-Based Compensation. In the case of such Awards granted to
Covered Employees, references to the Administrator or to a Committee shall be deemed to be
references to such Committee or subcommittee.
(b) Multiple Administrative Bodies. The Plan may be administered by different bodies
with respect to Directors, Officers, Consultants, and Employees who are neither Directors nor
Officers.
(c) Powers of the Administrator. Subject to Applicable Laws and the provisions of the
Plan (including any other powers given to the Administrator hereunder), and except as otherwise
provided by the Board, the Administrator shall have the authority, in its discretion:
(i) to select the Employees, Directors and Consultants to whom Awards may be granted from time
to time hereunder;
(ii) to determine whether and to what extent Awards are granted hereunder;
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(iii) to determine the number of Shares or the amount of other consideration to be covered by
each Award granted hereunder;
(iv) to approve forms of Award Agreements for use under the Plan;
(v) to determine the terms and conditions of any Award granted hereunder;
(vi) to establish additional terms, conditions, rules or procedures to accommodate the rules
or laws of applicable non-U.S. jurisdictions and to afford Grantees favorable treatment under such
rules or laws; provided, however, that no Award shall be granted under any such additional terms,
conditions, rules or procedures with terms or conditions which are inconsistent with the provisions
of the Plan;
(vii) to amend the terms of any outstanding Award granted under the Plan, provided that any
amendment that would adversely affect the Grantees rights under an outstanding Award shall not be
made without the Grantees written consent;
(viii) to construe and interpret the terms of the Plan and Awards, including without
limitation, any notice of award or Award Agreement, granted pursuant to the Plan; and
(ix) to take such other action, not inconsistent with the terms of the Plan, as the
Administrator deems appropriate.
(d) Indemnification. In addition to such other rights of indemnification as they may
have as members of the Board or as Officers or Employees of the Company or a Related Entity,
members of the Board and any Officers or Employees of the Company or a Related Entity to whom
authority to act for the Board, the Administrator or the Company is delegated shall be defended and
indemnified by the Company to the extent permitted by law on an after-tax basis against all
reasonable expenses, including attorneys fees, actually and necessarily incurred in connection
with the defense of any claim, investigation, 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 Award granted hereunder, and against
all amounts paid by them in settlement thereof (provided such settlement is approved by the
Company) or paid by them in satisfaction of a judgment in any such claim, investigation, action,
suit or proceeding, except in relation to matters as to which it shall be adjudged in such claim,
investigation, action, suit or proceeding that such person is liable for gross negligence, bad
faith or intentional misconduct; provided, however, that within thirty (30) days after the
institution of such claim, investigation, action, suit or proceeding, such person shall offer to
the Company, in writing, the opportunity at the Companys expense to defend the same.
5. Eligibility. Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants. Incentive Stock Options may be granted only to Employees of
the Company or a Parent or a Subsidiary of the Company. An Employee, Director or Consultant who
has been granted an Award may, if otherwise eligible, be granted additional Awards. Awards may be
granted to such Employees, Directors or Consultants who are residing
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in non-U.S. jurisdictions as the Administrator may determine from time to time, subject to
compliance with the Applicable Laws of such non-U.S. jurisdiction.
6. Terms and Conditions of Awards.
(a) Designation of Award. Each Award shall be designated in the Award Agreement. In
the case of an Option, the Option shall be designated as either an Incentive Stock Option or a
Non-Qualified Stock Option. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive Stock Options
which become exercisable for the first time by a Grantee during any calendar year (under all plans
of the Company or any Parent or Subsidiary of the Company) exceeds $100,000, such excess Options,
to the extent of the Shares covered thereby in excess of the foregoing limitation, shall be treated
as Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of the Shares shall be
determined as of the grant date of the relevant Option.
(b) Conditions of Award. Subject to the terms of the Plan, the Administrator shall
determine the provisions, terms, and conditions of each Award including, but not limited to, the
Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form
of payment (cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance criteria established
by the Administrator may be based on any one of, or combination of, increase in share price,
earnings per share, total shareholder return, return on equity, return on assets, return on
investment, net operating income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator. Partial achievement of
the specified criteria may result in a payment or vesting corresponding to the degree of
achievement as specified in the Award Agreement.
(c) Acquisitions and Other Transactions. The Administrator may issue Awards under the
Plan in settlement, assumption or substitution for, outstanding awards or obligations to grant
future awards in connection with the Company or a Related Entity acquiring another entity, an
interest in another entity or an additional interest in a Related Entity whether by merger, stock
purchase, asset purchase or other form of transaction.
(d) Deferral of Award Payment. The Administrator may establish one or more programs
under the Plan to permit selected Grantees the opportunity to elect to defer receipt of
consideration upon exercise of an Award, satisfaction of performance criteria, or other event that
absent the election would entitle the Grantee to payment or receipt of Shares or other
consideration under an Award. The Administrator may establish the election procedures, the timing
of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if
any, on amounts, Shares or other consideration so deferred, and such other terms, conditions, rules
and procedures that the Administrator deems advisable for the administration of any such deferral
program.
(e) Separate Programs. The Administrator may establish one or more separate programs
under the Plan for the purpose of issuing particular forms of Awards to one or
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more classes of Grantees on such terms and conditions as determined by the Administrator from
time to time.
(f) Individual Option Limit. Following the date that the exemption from application
of Section 162(m) of the Code described in Section 20 (or any exemption having similar effect)
ceases to apply to Awards, the maximum number of Shares with respect to which Options may be
granted to any Grantee in any fiscal year of the Company shall be 750,000 Shares. In connection
with a Grantees commencement of Continuous Service, a Grantee may be granted Options for up to an
additional 750,000 Shares which shall not count against the limit set forth in the previous
sentence. The foregoing limitations shall be adjusted proportionately in connection with any
change in the Companys capitalization pursuant to Section 10, below. To the extent required by
Section 162(m) of the Code or the regulations thereunder, in applying the foregoing limitations
with respect to a Grantee, if any Option is canceled, the canceled Option shall continue to count
against the maximum number of Shares with respect to which Options may be granted to the Grantee.
For this purpose, the repricing of an Option shall be treated as the cancellation of the existing
Option and the grant of a new Option.
(g) Early Exercise. The Award Agreement may, but need not, include a provision
whereby the Grantee may elect at any time while an Employee, Director or Consultant to exercise any
part or all of the Award prior to full vesting of the Award. Any unvested Shares received pursuant
to such exercise may be subject to a repurchase right in favor of the Company or a Related Entity
or to any other restriction the Administrator determines to be appropriate.
(h) Term of Award. The term of each Award shall be the term stated in the Award
Agreement, provided, however, that the term shall be no more than ten (10) years from the date of
grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee who, at the
time the Option is granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary of the Company, the term of the
Incentive Stock Option shall be five (5) years from the date of grant thereof or such shorter term
as may be provided in the Award Agreement. Notwithstanding the foregoing, the specified term of
any Award shall not include any period for which the Grantee has elected to defer the receipt of
the Shares or cash issuable pursuant to the Award.
(i) Transferability of Awards. Non-Qualified Stock Options shall be transferable (i)
by will or by the laws of descent and distribution, or (ii) to the extent and in the manner
authorized by the Administrator by gift or pursuant to a domestic relations order to members of the
Grantees Immediate Family. Incentive Stock Options and other Awards may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws
of descent or distribution and may be exercised, during the lifetime of the Grantee, only by the
Grantee. Notwithstanding the foregoing, the Grantee may designate one or more
beneficiaries of the Grantees Incentive Stock Option or Non-Qualified Stock Option in the event of
the Grantees death on a beneficiary designation form provided by the Administrator.
Notwithstanding the foregoing, transfers shall be subject to the terms of any Award Agreement that
may place restrictions on such rights and all Applicable Laws.
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(j) Time of Granting Awards. The date of grant of an Award shall for all purposes be
the date on which the Administrator makes the determination to grant such Award, or such other date
as is determined by the Administrator.
7. Award Exercise or Purchase Price, Consideration and Taxes.
(a) Exercise or Purchase Price. The exercise or purchase price, if any, for an Award
shall be as follows:
(i) In the case of an Incentive Stock Option:
(A) granted to an Employee who, at the time of the grant of such Incentive Stock Option owns
stock representing more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary of the Company, the per Share exercise price shall be not less
than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant; or
(B) granted to any Employee other than an Employee described in the preceding paragraph, the
per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant.
(ii) In the case of a Non-Qualified Stock Option:
(A) granted to a person who, at the time of the grant of such Option, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary of the Company, the per Share exercise price shall be not less than one
hundred ten percent (110%) of the Fair Market Value per Share on the date of grant; or
(B) granted to any person other than a person described in the preceding paragraph, the per
Share exercise price shall be not less than eighty-five percent (85%) of the Fair Market Value per
Share on the date of grant.
(iii) In the case of Awards intended to qualify as Performance-Based Compensation, the
exercise or purchase price, if any, shall be not less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.
(iv) In the case of the sale of Shares:
(A) granted to a person who, at the time of the grant of such Award, or at the time the
purchase is consummated, owns stock representing more than ten percent (10%) of the voting power of
all classes of stock of the Company or any Parent or Subsidiary of the Company, the per Share
purchase price shall be not less than one hundred percent (100%) of the Fair Market Value per Share
on the date of grant; or
(B) granted to any person other than a person described in the preceding paragraph, the per
Share purchase price shall be not less than eighty-five percent (85%) of the Fair Market Value per
Share on the date of grant.
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(v) In the case of other Awards, such price as is determined by the Administrator.
(vi) Notwithstanding the foregoing provisions of this Section 7(a), in the case of an Award
issued pursuant to Section 6(c), above, the exercise or purchase price for the Award shall be
determined in accordance with the provisions of the relevant instrument evidencing the agreement to
issue such Award.
(b) Consideration. Subject to Applicable Laws, the consideration to be paid for the
Shares to be issued upon exercise or purchase of an Award including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined
at the time of grant). In addition to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as consideration for Shares issued under the
Plan the following:
(i) cash;
(ii) check;
(iii) delivery of Grantees promissory note with such recourse, interest, security, and
redemption provisions as the Administrator determines as appropriate (but only to the extent that
the acceptance or terms of the promissory note would not violate an Applicable Law);
(iv) if the exercise or purchase occurs on or after the Registration Date, surrender of Shares
or delivery of a properly executed form of attestation of ownership of Shares as the Administrator
may require which have a Fair Market Value on the date of surrender or attestation equal to the
aggregate exercise price of the Shares as to which said Award shall be exercised, provided,
however, that Shares acquired under the Plan or any other equity compensation plan or agreement of
the Company must have been held by the Grantee for a period of more than six (6) months (and not
used for another Award exercise by attestation during such period);
(v) with respect to Options, if the exercise occurs on or after the Registration Date, payment
through a broker-dealer sale and remittance procedure pursuant to which the Grantee (A) shall
provide written instructions to a Company designated brokerage firm to effect the immediate sale of
some or all of the purchased Shares and remit to the Company sufficient funds to cover the
aggregate exercise price payable for the purchased Shares and (B) shall provide written directives
to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm
in order to complete the sale transaction; or
(vi) any combination of the foregoing methods of payment.
The Administrator may at any time or from time to time, by adoption of or by amendment to the
standard forms of Award Agreement described in Section 4(c)(iv), or by other means, grant Awards
which do not permit all of the foregoing forms of consideration to be used in payment for the
Shares or which otherwise restrict one or more forms of consideration.
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(c) Taxes. No Shares shall be delivered under the Plan to any Grantee or other person
until such Grantee or other person has made arrangements acceptable to the Administrator for the
satisfaction of any non-U.S., federal, state, or local income and employment tax withholding
obligations, including, without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon
exercise of an Award the Company shall withhold or collect from Grantee an amount sufficient to
satisfy such tax obligations.
8. Exercise of Award.
(a) Procedure for Exercise; Rights as a Shareholder.
(i) Any Award granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator under the terms of the Plan and specified in the Award Agreement
but in the case of an Option, in no case at a rate of less than twenty percent (20%) per year over
five (5) years from the date the Option is granted, subject to reasonable conditions such as
continued employment. Notwithstanding the foregoing, in the case of an Option granted to an
Officer, Director or Consultant, the Award Agreement may provide that the Option may become
exercisable, subject to reasonable conditions such as such Officers, Directors or Consultants
Continuous Service, at any time or during any period established in the Award Agreement.
(ii) An Award shall be deemed to be exercised when written notice of such exercise has been
given to the Company in accordance with the terms of the Award by the person entitled to exercise
the Award and full payment for the Shares with respect to which the Award is exercised has been
made, including, to the extent selected, use of the broker-dealer sale and remittance procedure to
pay the purchase price as provided in Section 7(b)(v).
(b) Exercise of Award Following Termination of Continuous Service. In the event of
termination of a Grantees Continuous Service for any reason other than Disability or death (but
not in the event of a Grantees change of status from Employee to Consultant or from Consultant to
Employee), such Grantee may, but only during the Post-Termination Exercise Period (but in no event
later than the expiration date of the term of such Award as set forth in the Award Agreement),
exercise the portion of the Grantees Award that was vested at the date of such termination or such
other portion of the Grantees Award as may be determined by the Administrator. The Grantees
Award Agreement may provide that upon the termination of the Grantees Continuous Service for
Cause, the Grantees right to exercise the Award shall terminate concurrently with the termination
of Grantees Continuous Service. In the event of a Grantees change of status from Employee to
Consultant, an Employees Incentive Stock Option shall convert automatically to a Non-Qualified
Stock Option on the day three (3) months and one day following such change of status. To the
extent that the Grantees Award was unvested at the date of termination of the Grantees Continuous
Service, or if the Grantee does not exercise the vested portion of the Grantees Award within the
Post-Termination Exercise Period, the Award shall terminate.
(c) Disability of Grantee. In the event of termination of a Grantees Continuous
Service as a result of his or her Disability, such Grantee may, but only within
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twelve (12) months from the date of such termination (or such longer period as specified in
the Award Agreement but in no event later than the expiration date of the term of such Award as set
forth in the Award Agreement), exercise the portion of the Grantees Award that was vested at the
date of such termination; provided, however, that if such Disability is not a disability as such
term is defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such
Incentive Stock Option shall automatically convert to a Non-Qualified Stock Option on the day three
(3) months and one day following such termination. To the extent that the Grantees Award was
unvested at the date of termination, or if Grantee does not exercise the vested portion of the
Grantees Award within the time specified herein, the Award shall terminate.
(d) Death of Grantee. In the event of a termination of the Grantees Continuous
Service as a result of his or her death, or in the event of the death of the Grantee during the
Post-Termination Exercise Period or during the twelve (12) month period following the Grantees
termination of Continuous Service as a result of his or her Disability, the Grantees estate or a
person who acquired the right to exercise the Award by bequest or inheritance may exercise the
portion of the Grantees Award that was vested as of the date of termination, within twelve (12)
months from the date of death (or such longer period as specified in the Award Agreement but in no
event later than the expiration of the term of such Award as set forth in the Award Agreement). To
the extent that, at the time of death, the Grantees Award was unvested, or if the Grantees estate
or a person who acquired the right to exercise the Award by bequest or inheritance does not
exercise the vested portion of the Grantees Award within the time specified herein, the Award
shall terminate.
(e) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the
exercise of an Award within the applicable time periods set forth in this Section 8 is prevented by
the provisions of Section 9 below, the Award shall remain exercisable until one (1) month after the
date the Grantee is notified by the Company that the Award is exercisable, but in any event no
later than the expiration of the term of such Award as set forth in the Award Agreement.
9. Conditions Upon Issuance of Shares.
(a) Shares shall not be issued pursuant to the exercise of an Award unless the exercise of
such Award and the issuance and delivery of such Shares pursuant thereto shall comply with all
Applicable Laws, and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
(b) As a condition to the exercise of an Award, the Company may require the person exercising
such Award to represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required by any Applicable
Laws.
10. Adjustments Upon Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of Shares covered by each outstanding Award, and the number
of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet
been granted or which have been returned to the Plan, the exercise or purchase
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price of each such outstanding Award, the maximum number of Shares with respect to which
Options may be granted to any Grantee in any fiscal year of the Company, as well as any other terms
that the Administrator determines require adjustment shall be proportionately adjusted for (i) any
increase or decrease in the number of issued Shares resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Shares, or similar transaction
affecting the Shares, (ii) any other increase or decrease in the number of issued Shares effected
without receipt of consideration by the Company, or (iii) as the Administrator may determine in its
discretion, any other transaction with respect to Common Stock including a corporate merger,
consolidation, acquisition of property or stock, separation (including a spin-off or other
distribution of stock or property), reorganization, liquidation (whether partial or complete) or
any similar transaction; provided, however that conversion of any convertible securities of the
Company shall not be deemed to have been effected without receipt of consideration. Such
adjustment shall be made by the Administrator and its determination shall be final, binding and
conclusive. Except as the Administrator determines, no issuance by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason hereof shall be made with respect to, the number or price of Shares subject to
an Award.
11. Corporate Transactions.
(a) Termination of Award to Extent Not Assumed in Corporate Transaction. Effective
upon the consummation of a Corporate Transaction, all outstanding Awards under the Plan shall
terminate. However, all such Awards shall not terminate to the extent they are Assumed in
connection with the Corporate Transaction.
(b) Acceleration of Award Upon Corporate Transaction. The Administrator shall have
the authority, exercisable either in advance of any actual or anticipated Corporate Transaction at
the time of an actual Corporate Transaction and exercisable at the time of the grant of an Award
under the Plan or any time while an Award remains outstanding, to provide for the full or partial
automatic vesting and exercisability of one or more outstanding unvested Awards under the Plan and
the release from restrictions on transfer and repurchase or forfeiture rights of such Awards in
connection with a Corporate Transaction, on such terms and conditions as the Administrator may
specify. The Administrator also shall have the authority to condition any such Award vesting and
exercisability or release from such limitations upon the subsequent termination of the Continuous
Service of the Grantee within a specified period following the effective date of the Corporate
Transaction.
(c) Effect of Acceleration on Incentive Stock Options. Any Incentive Stock Option
accelerated under this Section 11 in connection with a Corporate Transaction shall remain
exercisable as an Incentive Stock Option under the Code only to the extent the $100,000 dollar
limitation of Section 422(d) of the Code is not exceeded. To the extent such dollar limitation is
exceeded, the excess Options shall be treated as Non-Qualified Stock Options.
12. Repurchase Rights. If the provisions of an Award Agreement grant to the Company
the right to repurchase Shares upon termination of the Grantees Continuous Service, the Award
Agreement shall (or may, with respect to Awards granted or issued to Officers, Directors or
Consultants) provide that:
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(a) the right to repurchase must be exercised, if at all, within ninety (90) days of the
termination of the Grantees Continuous Service (or in the case of Shares issued upon exercise of
Awards after the date of termination of the Grantees Continuous Service, within ninety (90) days
after the date of the Award exercise);
(b) the consideration payable for the Shares upon exercise of such repurchase right shall be
made in cash or by cancellation of purchase money indebtedness within the ninety (90) day periods
specified in Section 11(a);
(c) the amount of such consideration shall (i) be equal to the original purchase price paid by
Grantee for each such Share; provided, that the right to repurchase such Shares at the original
purchase price shall lapse at the rate of at least twenty percent (20%) of the Shares subject to
the Award per year over five (5) years from the date the Award is granted (without respect to the
date the Award was exercised or became exercisable), and (ii) with respect to Shares, other than
Shares subject to repurchase at the original purchase price pursuant to clause (i) above, not less
than the Fair Market Value of the Shares to be repurchased on the date of termination of Grantees
Continuous Service; and
(d) the right to repurchase Shares, other than the right to repurchase Shares at the original
purchase price pursuant to clause (i) of Section 11(c), shall terminate on the Registration Date.
13. Effective Date and Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board or its approval by the shareholders of the Company. It shall
continue in effect for a term of ten (10) years unless sooner terminated. Subject to Section 18
below, and Applicable Laws, Awards may be granted under the Plan upon its becoming effective.
14. Amendment, Suspension or Termination of the Plan.
(a) The Board may at any time amend, suspend or terminate the Plan. To the extent necessary to
comply with Applicable Laws, the Company shall obtain shareholder approval of any Plan amendment in
such a manner and to such a degree as required.
(b) No Award may be granted during any suspension of the Plan or after termination of the
Plan.
(c) No suspension or termination of the Plan (including termination of the Plan under Section
13, above) shall adversely affect any rights under Awards already granted to a Grantee.
15. Reservation of Shares.
(a) The Company, during the term of the Plan, will at all times reserve and keep available
such number of Shares as shall be sufficient to satisfy the requirements of the Plan.
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(b) The inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Companys 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.
16. No Effect on Terms of Employment/Consulting Relationship. The Plan shall not
confer upon any Grantee any right with respect to the Grantees Continuous Service, nor shall it
interfere in any way with his or her right or the right of the Company or a Related Entity to
terminate the Grantees Continuous Service at any time, with or without Cause, and with or without
notice. The ability of the Company or any Related Entity to terminate the employment of a Grantee
who is employed at will is in no way affected by its determination that the Grantees Continuous
Service has been terminated for Cause for the purposes of this Plan.
17. No Effect on Retirement and Other Benefit Plans. Except as specifically provided
in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be
deemed compensation for purposes of computing benefits or contributions under any retirement plan
of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the availability or amount of
benefits is related to level of compensation. The Plan is not a Retirement Plan or Welfare
Plan under the Employee Retirement Income Security Act of 1974, as amended.
18. Shareholder Approval. Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date the Plan is adopted.
Such shareholder approval shall be obtained in the degree and manner required under Applicable
Laws. Any Award exercised before shareholder approval is obtained shall be rescinded if
shareholder approval is not obtained within the time prescribed, and Shares issued on the exercise
of any such Award shall not be counted in determining whether shareholder approval is obtained.
19. Information to Grantees. The Company shall provide to each Grantee, during the
period for which such Grantee has one or more Awards outstanding, copies of financial statements at
least annually. The Company shall not be required to provide such information to persons whose
duties in connection with the Company assure them access to equivalent information.
20. Effect of Section 162(m) of the Code. Section 162(m) of the Code does not apply
to the Plan prior to the Registration Date or such earlier time that the Company first becomes
subject to the reporting obligations of Section 12 of the Exchange Act. Following the Registration
Date or such earlier time that the Company first becomes subject to the reporting obligations of
Section 12 of the Exchange Act, the Plan, and all Awards (except Awards of Restricted Stock that
vest over time) issued thereunder, are intended to be exempt from the application of Section 162(m)
of the Code, which restricts under certain circumstances the Federal income tax deduction for
compensation paid by a public company to named executives in excess of $1 million per year. The
exemption is based on Treasury Regulation Section 1.162-27(f), in the form existing on the
effective date of the Plan, with the understanding that such regulation generally exempts from the
application of Section 162(m) of the Code compensation
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paid pursuant to a plan that existed before a company becomes publicly held. Under such
Treasury Regulation, this exemption is available to the Plan for the duration of the period that
lasts until the earliest of (i) the expiration of the Plan, (ii) the material modification of the
Plan, (iii) the exhaustion of the maximum number of shares of Common Stock available for Awards
under the Plan, as set forth in Section 3(a), (iv) the first meeting of shareholders at which
directors are to be elected that occurs after the close of the third calendar year following the
calendar year in which the Company first becomes subject to the reporting obligations of Section 12
of the Exchange Act, or (v) such other date required by Section 162(m) of the Code and the rules
and regulations promulgated thereunder. To the extent that the Administrator determines as of the
date of grant of an Award that (i) the Award is intended to qualify as Performance-Based
Compensation and (ii) the exemption described above is no longer available with respect to such
Award, such Award shall not be effective until any shareholder approval required under Section
162(m) of the Code has been obtained.
21. Unfunded Obligation. Grantees shall have the status of general unsecured
creditors of the Company. Any amounts payable to Grantees pursuant to the Plan shall be unfunded
and unsecured obligations for all purposes, including, without limitation, Title I of the Employee
Retirement Income Security Act of 1974, as amended. Neither the Company nor any Related Entity
shall be required to segregate any monies from its general funds, or to create any trusts, or
establish any special accounts with respect to such obligations. The Company shall retain at all
times beneficial ownership of any investments, including trust investments, which the Company may
make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance
of any trust or any Grantee account shall not create or constitute a trust or fiduciary
relationship between the Administrator, the Company or any Related Entity and a Grantee, or
otherwise create any vested or beneficial interest in any Grantee or the Grantees creditors in any
assets of the Company or a Related Entity. The Grantees shall have no claim against the Company or
any Related Entity for any changes in the value of any assets that may be invested or reinvested by
the Company with respect to the Plan.
22. 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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