EXHIBIT 4.1
HA-LO INDUSTRIES, INC.
STOCK OPTION PLAN FOR STARBELLY
EMPLOYEES, DIRECTORS AND CONSULTANTS
WHEREAS, HA-LO INDUSTRIES, INC., an Illinois corporation (the
"Company"), HA-LO INDUSTRIES, INC., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Merger Sub"), and XXXXXXXXX.XXX, INC., a Delaware
corporation ("Starbelly"), have entered into an Agreement and Plan of
Reorganization dated as of January 17, 2000 (the "Plan of Reorganization") which
contemplates, among other things, (i) the merger of Starbelly with and into
Merger Sub (the "Merger") and (ii) the assumption by the Company of all
outstanding options granted pursuant to the Xxxxxxxxx.xxx, Inc. 1999 Stock
Option Plan, as amended, which is attached hereto as Exhibit A and by reference
made a part hereof (the "Starbelly Plan");
WHEREAS, at a meeting held on May 3, 2000, the Company's
shareholders approved the Merger and certain related matters; and
WHEREAS, the Merger was consummated on May 3, 2000.
ACCORDINGLY, subject to the following terms and conditions, the
Company does hereby agree to the following:
1. The Company hereby assumes the Starbelly Plan and all
options outstanding thereunder immediately prior to the effective time (the
"Effective Time") of the Merger (the "Assumed Options"). The Assumed Options
are held of record by the persons and in the amounts set forth on Schedule 1
hereto.
2. From and after the Effective Time, each Assumed Option shall
be deemed to be an option to acquire (a) that number of shares of the
Company's Common Stock equal to the product of (i) the number of shares of
Starbelly Class A Common Stock for which such Assumed Option was exercisable
immediately prior to the Effective Time and (ii) 0.753359718 (the number of
shares of Company Common Stock into which each share of Starbelly Class B
Common Stock is convertible pursuant to the Plan of Reorganization), and (b)
that number of shares of the Company's Series A Convertible Preferred Stock
equal to the product of (i) the number of shares of Starbelly Class A Common
Stock for which such Assumed Option was exercisable immediately prior to the
Effective Time and (ii) 0.079030882 (the number of shares of Company Series A
Convertible Preferred Stock into which each share of Starbelly Class B Common
Stock is convertible pursuant to the Plan of Reorganization). The shares of
Company Common Stock and Company Series A Convertible Preferred Stock into
which a share of Starbelly Class A Common Stock for which an Assumed Option
was exercisable immediately prior to the effective time of the Merger are
referred to as the "Option Shares." The exercise price for the Option Shares
shall be equal to the exercise price of a share of Starbelly Class A Common
Stock in effect under each Assumed Option immediately prior to the Effective
Time.
3. Subject to the adjustments described in the immediately
preceding paragraph, each of the Assumed Options shall continue to be
evidenced by the option agreements previously entered into by Starbelly and
the persons to whom options are granted pursuant to the Starbelly Plan (the
"Option Agreements").
4. Subject to the terms hereof, the Company hereby assumes all
of Starbelly's rights and obligations under each of the Option Agreements.
5. The Company will administer the Assumed Options in
accordance with the terms of this HA-LO Industries, Inc. Stock Option Plan
for Starbelly Employees, Directors and Consultants (the "Plan for Starbelly
Employees"), which, with respect to each Assumed Option, shall be
substantially similar to the terms of the Starbelly Plan.
6. The Compensation Committee of the Board of Directors of the
Company is appointed, directed and authorized to administer and interpret the
terms of the Plan for Starbelly Employees.
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Exhibit A
XXXXXXXX.XXX, INC.
1999 STOCK OPTION PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENT. XxxXxxxx.xxx, Inc. 1999 Stock
Option Plan (the "PLAN") is hereby established effective as of _________, 1999.
1.2 PURPOSE. The purpose of the Plan is to advance the
interests of the Participating Company Group and its stockholders by
providing an incentive to attract, retain and reward 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 stockholders of the Company.
2. DEFINITIONS AND CONSTRUCTION.
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 XxxXxxxx.xxx, Inc., a
Delaware corporation, or any successor corporation thereto.
(e) "CONSULTANT" means any person, including
an advisor, engaged by a Participating Company to render services other than
as an Employee or a Director.
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(f) "DIRECTOR" means a member of the Board or
of the board of directors of any other Participating Company.
(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.
(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:
(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, there is no
public market for the Stock, 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.
(l) "INSIDER" means an officer or a Director
of the Company or any 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.
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(n) "OPTION" means a right to purchase Stock
(subject to adjustment as provided in Section 4.2) pursuant to the terms and
conditions of the Plan. An Option may be either an Incentive Stock Option or
a Nonstatutory Stock Option.
(o) "OPTION AGREEMENT" means a written
agreement, including any related form of stock option grant agreement,
between the Company and an Optionee setting forth the terms, conditions and
restrictions of the Option granted to the Optionee and any shares acquired
upon the exercise thereof.
(p) "OPTIONEE" means a person who has been
granted one or more Options.
(q) "PARENT CORPORATION" means any present or
future "parent corporation" of the Company, as defined in Section 424(e) of
the Code.
(r) "PARTICIPATING COMPANY" means the Company
or any Parent Corporation or Subsidiary Corporation.
(s) "PARTICIPATING COMPANY GROUP" means, at
any point in time, all corporations collectively which are then Participating
Companies.
(t) "RULE 16b-3" means Rule 16b-3 under the
Exchange Act, as amended from time to time, or any successor rule or
regulation.
(u) "SECURITIES ACT" means the Securities Act
of 1933, as amended.
(v) "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. The 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.
(w) "STOCK" means the common stock of the
Company, as adjusted from time to time in accordance with Section 4.2.
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(x) "SUBSIDIARY CORPORATION" means any
present or future "subsidiary corporation" of the Company, as defined in
Section 424(f) of the Code.
(y) "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.
3. ADMINISTRATION.
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 of a
Participating Company 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 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.
3.4 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
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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, renew,
reprice or otherwise adjust the exercise price of, or grant a new Option in
substitution for, 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
consistent with the Plan and applicable law.
4. SHARES SUBJECT TO PLAN.
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 one million two hundred
fifty thousand (1,250,000) 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. 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
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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 stockholders 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 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 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.
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 relationships with the Participating Company Group. Eligible
persons may be granted more than one (1) 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
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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 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:
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 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 EXERCISE PERIOD. 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, Director or 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 have a term of ten (10) years from the effective date of
grant of the Option.
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6.3 PAYMENT OF EXERCISE PRICE.
(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 (as determined by the Company without regard to any
restrictions on transferability applicable to such stock by reason of federal
or state securities laws or agreements with an underwriter for the Company)
not less than the exercise price, (iii) by the assignment 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) by the Optionee's promissory note in a form
approved by the Company, (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 adoption 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.
(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 or were not acquired, directly or indirectly, from the Company.
(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 at the time the
Option is granted. 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
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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 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.
(a) OPTION EXERCISABILITY. Subject to earlier
termination of the Option as otherwise provided herein, an Option shall be
exercisable after an Optionee's termination of Service as follows:
(i) DISABILITY. If the Optionee's
Service with the Participating Company Group is terminated 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 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 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
with the Participating Company Group is terminated 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
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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. The Optionee's
Service shall be deemed to have terminated on account of death if the
Optionee dies within thirty (30) days (or such longer period of time as
determined by the Board, in its discretion) after the Optionee's termination
of Service.
(iii) OTHER TERMINATION OF SERVICE. If
the Optionee's Service with the Participating Company Group terminates for
any reason, except Disability or death, 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 within thirty (30) days (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 II below, the Option shall remain exercisable until
thirty (30) days (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.
(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.
7. STANDARD FORMS OF OPTION AGREEMENT.
7.1 GENERAL. 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 standard forms of Option Agreement
adopted 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 of the standard forms 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.
8.1 DEFINITIONS
(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
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exchange in a single or series of related transactions by the stockholders 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 stockholders 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 stock of the
Company or the corporation or corporations to which the assets of the Company
were transferred (the "TRANSFEREE CORPORATION(S)"), 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 stock of one or more corporations which, as a result of the
Transaction, own the Company or the Transferee Corporation(s), as the case
may be, either directly or through one or more subsidiary corporations. The
Board shall have the right to determine whether multiple sales or exchanges
of the voting stock of the Company or multiple Ownership Change Events are
related, and its determination shall be final, binding and conclusive.
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 parent corporation thereof, as the case may be (the
"ACQUIRING CORPORATION"), may either assume the Corporation's rights and
obligations under the outstanding Options or substitute for outstanding
Options substantially equivalent options for the Acquiring Corporation's
stock. For purposes of this Section 8.2, an Option shall be deemed assumed
if, following the Change in Control, the Option confers the rights to
purchase in accordance with its terms and conditions, for each share of Stock
subject to the Option immediately prior to the Change in Control, the
consideration (whether stock, cash or other securities or property) to which
a holder of a share of Stock on the effective date of the Change in Control
was entitled. 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.
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.
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10. NONTRANSFERABILITY 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.
11. 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 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.
12. 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.
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13. 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 stockholders,
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 stockholders under any applicable
law, regulation or rule. No termination or amendment of the Plan may
adversely affect any then outstanding Option or any unexercised portion
thereof, 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.
14. STOCKHOLDER APPROVAL.
The Plan or any increase in the maximum aggregate number of
shares of Stock issuable thereunder as provided in Section 4.1 (the
"Authorized Shares") shall be approved by the stockholders of the Company
within twelve (12) months of the date of adoption thereof by the Board.
Options granted prior to stockholder approval of the Plan or in excess of the
Authorized Shares previously approved by the stockholders shall become
exercisable no earlier than the date of stockholder approval of the Plan or
such increase in the Authorized Shares, as the case may be.
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