AMAZON.COM, INC.
1997 STOCK OPTION PLAN
(AS RESTATED ON SEPTEMBER 8, 1999)
SECTION 1. PURPOSE
The purpose of the Amazon.com, Inc. 1997 Stock Option Plan (the 'Plan')
is to enhance the long-term stockholder value of Amazon.com, Inc., a Delaware
corporation (the 'Company'), by offering opportunities to employees, directors,
officers, consultants, agents, advisors and independent contractors of the
Company and its Subsidiaries (as defined in Section 2) to participate in the
Company's growth and success, and to encourage them to remain in the service of
the Company and its Subsidiaries and to acquire and maintain stock ownership in
the Company.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set
forth below:
2.1 AWARD
'Award' means an award or grant made pursuant to the Plan, including,
without limitation, awards or grants of Stock Awards and Options, or any
combination of the foregoing.
2.2 BOARD
'Board' means the Board of Directors of the Company.
2.3 CAUSE
'Cause' means dishonesty, fraud, misconduct, unauthorized use or
disclosure of confidential information or trade secrets, or conviction or
confession of a crime punishable by law (except minor violations), in each case
as determined by the Plan Administrator, and its determination shall be
conclusive and binding.
2.4 CODE
'Code' means the Internal Revenue Code of 1986, as amended from time to
time.
2.5 COMMON STOCK
'Common Stock' means the common stock, par value $.01 per share, of the
Company.
2.6 CORPORATE TRANSACTION
'Corporate Transaction' means any of the following events:
(a) Consummation of any merger or consolidation of the
Company in which the Company is not the continuing or surviving
corporation, or pursuant to which shares of the Common Stock are
converted into cash, securities or other property (other than a merger
of the Company in which the holders of Common Stock immediately prior to
the merger have the same proportionate ownership of capital stock of the
surviving corporation immediately after the merger);
(b) Consummation of any sale, lease, exchange or other
transfer in one transaction or a series of related transactions of all
or substantially all of the Company's assets other than a transfer of
the Company's assets to a majority-owned subsidiary corporation (as the
term 'subsidiary corporation' is defined in Section 8.3) of the Company;
or
(c) Approval by the holders of the Common Stock of any plan
or proposal for the liquidation or dissolution of the Company.
Ownership of voting securities shall take into account and shall include
ownership as determined by applying Rule 13d-3(d)(1)(i) (as in effect on the
date of adoption of the Plan) under the Exchange Act.
2.7 DISABILITY
'Disability' means 'disability' as that term is defined for purposes of
Section 22(e)(3) of the Code.
2.8 EARLY RETIREMENT
'Early Retirement' means early retirement as that term is defined by the
Plan Administrator from time to time for purposes of the Plan.
2.9 EXCHANGE ACT
'Exchange Act' means the Securities Exchange Act of 1934, as amended.
2.10 FAIR MARKET VALUE
The 'Fair Market Value' shall be as established in good faith by the
Plan Administrator or (a) if the Common Stock is listed on the Nasdaq National
Market, the average of the high and low per share sales prices for the Common
Stock as reported by the Nasdaq National Market for a single trading day or (b)
if the Common Stock is listed on the New York Stock Exchange or the American
Stock Exchange, the average of the high and low per share sales prices for the
Common Stock as such price is officially quoted in the composite tape of
transactions on such exchange for a single trading day. If there is no such
reported price for the Common Stock for the date in question, then such price on
the last preceding date for which such price exists shall be determinative of
the Fair Market Value.
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2.11 GRANT DATE
'Grant Date' means the date the Plan Administrator adopted the granting
resolution and all conditions precedent to the grant have been satisfied,
provided that conditions to the exercisability or vesting of Awards shall not
defer the Grant Date. If, however, the Plan Administrator designates in a
resolution a later date as the date an Award is to be granted, then such later
date shall be the 'Grant Date.'
2.12 INCENTIVE STOCK OPTION
'Incentive Stock Option' means an Option to purchase Common Stock
granted under Section 7 with the intention that it qualify as an 'incentive
stock option' as that term is defined in Section 422 of the Code.
2.13 NONQUALIFIED STOCK OPTION
'Nonqualified Stock Option' means an Option to purchase Common Stock
granted under Section 7 other than an Incentive Stock Option.
2.14 OPTION
'Option' means the right to purchase Common Stock granted under Section
7.
2.15 PARTICIPANT
'Participant' means (a) the person to whom an Award is granted; (b) for
a Participant who has died, the personal representative of the Participant's
estate, the person(s) to whom the Participant's rights under the Award have
passed by will or by the applicable laws of descent and distribution, or the
beneficiary designated in accordance with Section 10; or (c) person(s) to whom
an Award has been transferred in accordance with Section 10.
2.16 PLAN ADMINISTRATOR
'Plan Administrator' means the Board or any committee of the Board
designated to administer the Plan under Section 3.1.
2.17 RETIREMENT
'Retirement' means retirement as of the individual's normal retirement
date as that term is defined by the Plan Administrator from time to time for
purposes of the Plan.
2.18 SECURITIES ACT
'Securities Act' means the Securities Act of 1933, as amended.
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2.19 STOCK AWARD
'Stock Award' means shares of Common Stock or units denominated in
Common Stock granted under Section 9, the rights of ownership of which may be
subject to restrictions prescribed by the Plan Administrator.
2.20 SUBSIDIARY
'Subsidiary,' except as provided in Section 8.3 in connection with
Incentive Stock Options, means any entity that is directly or indirectly
controlled by the Company or in which the Company has a significant ownership
interest, as determined by the Plan Administrator, and any entity that may
become a direct or indirect parent of the Company.
SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Board or a committee or committees
(which term includes subcommittees) appointed by, and consisting of two or more
members of, the Board. If and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, the Board shall consider in
selecting the Plan Administrator and the membership of any committee acting as
Plan Administrator, with respect to any persons subject or likely to become
subject to Section 16 of the Exchange Act, the provisions regarding (a) 'outside
directors' as contemplated by Section 162(m) of the Code and (b) 'nonemployee
directors' as contemplated by Rule 16b-3 under the Exchange Act. The Board may
delegate the responsibility for administering the Plan with respect to
designated classes of eligible persons to different committees consisting of one
or more members of the Board, subject to such limitations as the Board deems
appropriate. Committee members shall serve for such term as the Board may
determine, subject to removal by the Board at any time.
3.2 ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR
Except for the terms and conditions explicitly set forth in the Plan,
the Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Awards under the Plan, including the selection
of individuals to be granted Awards, the type of Awards, the number of shares of
Common Stock subject to an Award, all terms, conditions, restrictions and
limitations, if any, of an Award and the terms of any instrument that evidences
the Award. The Plan Administrator shall also have exclusive authority to
interpret the Plan and may from time to time adopt, and change, rules and
regulations of general application for the Plan's administration. The Plan
Administrator's interpretation of the Plan and its rules and regulations, and
all actions taken and determinations made by the Plan Administrator pursuant to
the Plan, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate administrative duties to such of the
Company's officers as it so determines.
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SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 AUTHORIZED NUMBER OF SHARES
Subject to adjustment from time to time as provided in Section 11.1, a
maximum of 72 million(1) shares of Common Stock shall be available for issuance
under the Plan, except that any shares of Common Stock that, as of the date the
Plan is approved by the Company's stockholders, are available for issuance under
the Company's Amended and Restated 1994 Stock Option Plan (or that thereafter
become available for issuance under that Plan in accordance with its terms as in
effect on such date) and that are not issued under that Plan shall be added to
the aggregate number of shares available for issuance under the Plan. Shares
issued under the Plan shall be drawn from authorized and unissued shares or
shares now held or subsequently acquired by the Company as treasury shares.
4.2 LIMITATIONS
Subject to adjustment from time to time as provided in Section 11.1, not
more than 4,500,000 shares of Common Stock may be made subject to Awards under
the Plan to any individual in the aggregate in any one fiscal year of the
Company, except that the Company may make additional one-time grants of up to 18
million shares to newly hired individuals, such limitation to be applied in a
manner consistent with the requirements of, and only to the extent required for
compliance with, the exclusion from the limitation on deductibility of
compensation under Section 162(m) of the Code.
4.3 REUSE OF SHARES
Any shares of Common Stock that have been made subject to an Award that
cease to be subject to the Award (other than by reason of exercise or payment of
the Award to the extent it is exercised for or settled in shares) and/or shares
of Common Stock subject to repurchase or forfeiture which are subsequently
reacquired by the Company, shall again be available for issuance in connection
with future grants of Awards under the Plan; provided, however, that for
purposes of Section 4.2, any such shares shall be counted in accordance with the
requirements of Section 162(m) of the Code.
SECTION 5. ELIGIBILITY
Awards may be granted under the Plan to those officers, directors and
employees of the Company and its Subsidiaries as the Plan Administrator from
time to time selects. Awards may also be granted to consultants, agents,
advisors and independent contractors who provide services to the Company and its
Subsidiaries.
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(1) This number and all other share numbers referred to in this Plan
reflect the adjustments pursuant to the Company's stock splits through September
1, 1999.
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SECTION 6. AWARDS
6.1 FORM AND GRANT OF AWARDS
The Plan Administrator shall have the authority, in its sole discretion,
to determine the type or types of Awards to be made under the Plan. Such Awards
may include, but are not limited to, Incentive Stock Options, Nonqualified Stock
Options and Stock Awards. Awards may be granted singly or in combination.
6.2 SETTLEMENT OF AWARDS
The Company may settle Awards through the delivery of shares of Common
Stock, cash payments, the granting of replacement Awards or any combination
thereof as the Plan Administrator shall determine. Any Award settlement,
including payment deferrals, may be subject to such conditions, restrictions and
contingencies as the Plan Administrator shall determine. The Plan Administrator
may permit or require the deferral of any Award payment, subject to such rules
and procedures as it may establish, which may include provisions for the payment
or crediting of interest, or dividend equivalents, including converting such
credits into deferred stock equivalents. The Plan Administrator may at any time
offer to buy out, for a payment in cash or Common Stock, an Award previously
granted based on such terms and conditions as the Plan Administrator shall
establish and communicate to the Participant at the time such offer is made.
6.3 ACQUIRED COMPANY OPTION AWARDS
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Awards under the Plan in substitution for awards issued
under other plans, or assume under the Plan awards issued under other plans, if
the other plans are or were plans of other acquired entities ('Acquired
Entities') (or the parent of an Acquired Entity) and the new Award is
substituted, or the old award is assumed, by reason of a merger, consolidation,
acquisition of property or of stock, reorganization or liquidation (the
'Acquisition Transaction'). In the event that a written agreement pursuant to
which the Acquisition Transaction is completed is approved by the Board and said
agreement sets forth the terms and conditions of the substitution for or
assumption of outstanding awards of the Acquired Entity, said terms and
conditions shall be deemed to be the action of the Plan Administrator without
any further action by the Plan Administrator, except as may be required for
compliance with Rule 16b-3 under the Exchange Act, and the persons holding such
awards shall be deemed to be Participants.
SECTION 7. TERMS AND CONDITIONS OF OPTIONS
7.1 GRANT OF OPTIONS
The Plan Administrator is authorized under the Plan, in its sole
discretion, to issue Options as Incentive Stock Options or as Nonqualified Stock
Options, which shall be appropriately designated.
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7.2 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator, but shall not be less than 100% of the
Fair Market Value of the Common Stock on the Grant Date with respect to
Incentive Stock Options.
7.3 TERM OF OPTIONS
The term of each Option shall be as established by the Plan
Administrator or, if not so established, shall be 10 years from the Grant Date.
7.4 EXERCISE AND VESTING OF OPTIONS
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option the time at which, or the installments in which, the
Option shall vest and become exercisable, which provisions may be waived or
modified by the Plan Administrator at any time. If not so established in the
instrument evidencing the Option, the Option will be immediately exercisable and
the shares subject to the Option will vest according to the following schedule,
which may be waived or modified by the Plan Administrator at any time:
Period of Participant's Continuous Employment or
Service With the Company or Its Subsidiaries Percent of Total Option
From the Grant Date That Is Vested
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After 1 year 20%
After 2 years 40%
Each three-month period completed thereafter An additional 5%
After 5 years 100%
Any unvested shares acquired upon exercise of an Option shall be subject to
repurchase by the Company upon termination of the Participant's employment or
services in accordance with the provisions of Section 14.1.
To the extent that the right to purchase shares has accrued thereunder,
an Option may be exercised from time to time by written notice to the Company,
in accordance with procedures established by the Plan Administrator, setting
forth the number of shares with respect to which the Option is being exercised
and accompanied by payment in full as described in Section 7.5. The Plan
Administrator may determine at any time that an Option may not be exercised as
to less than 100 shares at any one time for vested shares and any number in its
discretion for unvested shares (or the lesser number of remaining shares covered
by the Option).
To the extent required by the Plan Administrator, as a condition to
exercise by the Participant of an Award, the Participant shall execute and
deliver to the Company a Shareholders Agreement in substantially the form in use
at the time of exercise, unless either (i) the Participant has previously
executed and delivered such Shareholder Agreement and it is in effect at the
time
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the Participant exercises the Award or (ii) such Shareholders Agreement is no
longer in effect with respect to other holders of Common Stock.
7.5 PAYMENT OF EXERCISE PRICE
The exercise price for shares purchased under an Option shall be paid in
full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such consideration
must be paid in cash or by check or, unless the Plan Administrator in its sole
discretion determines otherwise, either at the time the Option is granted or at
any time before it is exercised, a combination of cash and/or check (if any) and
one or both of the following alternative forms: (a) tendering (either actually
or, if and so long as the Common Stock is registered under Section 12(b) or
12(g) of the Exchange Act, by attestation) Common Stock already owned by the
Participant for at least six months (or any shorter period necessary to avoid a
charge to the Company's earnings for financial reporting purposes) having a Fair
Market Value on the day prior to the exercise date equal to the aggregate Option
exercise price or (b) if and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed
exercise notice, together with irrevocable instructions, to (i) a brokerage firm
designated by the Company to deliver promptly to the Company the aggregate
amount of sale or loan proceeds to pay the Option exercise price and any
withholding tax obligations that may arise in connection with the exercise and
(ii) the Company to deliver the certificates for such purchased shares directly
to such brokerage firm, all in accordance with the regulations of the Federal
Reserve Board. In addition, the exercise price for shares purchased under an
Option may be paid, either singly or in combination with one or more of the
alternative forms of payment authorized by this Section 7.5, by (y) a promissory
note delivered pursuant to Section 12 or (z) such other consideration as the
Plan Administrator may permit.
7.6 POST-TERMINATION EXERCISES
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option whether the Option will continue to be exercisable, and
the terms and conditions of such exercise, if a Participant ceases to be
employed by, or to provide services to, the Company or its Subsidiaries, which
provisions may be waived or modified by the Plan Administrator at any time. If
not so established in the instrument evidencing the Option, the Option will be
exercisable according to the following terms and conditions, which may be waived
or modified by the Plan Administrator at any time.
In case of termination of the Participant's employment or services other
than by reason of death or Cause, the Option shall be exercisable, to the extent
of the number of shares vested at the date of such termination, only (a) within
one year if the termination of the Participant's employment or services is
coincident with Retirement, Early Retirement at the Company's request or
Disability or (b) within three months after the date the Participant ceases to
be an employee, director, officer, consultant, agent, advisor or independent
contractor of the Company or a Subsidiary if termination of the Participant's
employment or services is for any reason other than Retirement, Early Retirement
at the Company's request or Disability, but in no event later than the remaining
term of the Option. Any Option exercisable at the time of the Participant's
death may be exercised, to the extent of the number of shares vested at the date
of the Participant's death, by
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the personal representative of the Participant's estate, the person(s) to whom
the Participant's rights under the Option have passed by will or the applicable
laws of descent and distribution or the beneficiary designated pursuant to
Section 10 at any time or from time to time within one year after the date of
death, but in no event later than the remaining term of the Option. Any portion
of an Option that is not vested on the date of termination of the Participant's
employment or services shall terminate on such date, unless the Plan
Administrator determines otherwise. In case of termination of the Participant's
employment or services for Cause, the Option shall automatically terminate upon
first notification to the Participant of such termination, unless the Plan
Administrator determines otherwise. If a Participant's employment or services
with the Company are suspended pending an investigation of whether the
Participant shall be terminated for Cause, all the Participant's rights under
any Option likewise shall be suspended during the period of investigation.
With respect to employees, unless the Plan Administrator at any time
determines otherwise, 'termination of the Participant's employment or services'
for purposes of the Plan (including without limitation this Section 7 and
Section 14) shall mean any reduction in the Participant's regular hours of
employment to less than thirty (30) hours per week. A transfer of employment or
services between or among the Company and its Subsidiaries shall not be
considered a termination of employment or services. The effect of a
Company-approved leave of absence on the terms and conditions of an Option shall
be determined by the Plan Administrator, in its sole discretion.
SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS
To the extent required by Section 422 of the Code, Incentive Stock
Options shall be subject to the following additional terms and conditions:
8.1 DOLLAR LIMITATION
To the extent the aggregate Fair Market Value (determined as of the
Grant Date) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time during any calendar year (under the Plan and all
other stock option plans of the Company) exceeds $100,000, such portion in
excess of $100,000 shall be subject to delayed exercisability or treated as a
Nonqualified Stock Option as set forth by the Plan Administrator in the
agreement(s) evidencing the Option. In the event the Participant holds two or
more such Options that become exercisable for the first time in the same
calendar year, such limitation shall be applied on the basis of the order in
which such Options are granted.
8.2 10% STOCKHOLDERS
If an individual owns more than 10% of the total voting power of all
classes of the Company's stock, then the exercise price per share of an
Incentive Stock Option shall not be less than 110% of the Fair Market Value of
the Common Stock on the Grant Date and the Option term shall not exceed five
years. The determination of 10% ownership shall be made in accordance with
Section 422 of the Code.
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8.3 ELIGIBLE EMPLOYEES
Individuals who are not employees of the Company or one of its parent
corporations or subsidiary corporations may not be granted Incentive Stock
Options. For purposes of this Section 8.3, 'parent corporation' and 'subsidiary
corporation' shall have the meanings attributed to those terms for purposes of
Section 422 of the Code.
8.4 TERM
The term of an Incentive Stock Option shall not exceed 10 years.
8.5 EXERCISABILITY
To qualify for Incentive Stock Option tax treatment, an Option
designated as an Incentive Stock Option must be exercised within three months
after termination of employment for reasons other than death, except that, in
the case of termination of employment due to total disability, such Option must
be exercised within one year after such termination. Employment shall not be
deemed to continue beyond the first 90 days of a leave of absence unless the
Participant's reemployment rights are guaranteed by statute or contract. For
purposes of this Section 8.5, 'total disability' shall mean a mental or physical
impairment of the Participant that is expected to result in death or that has
lasted or is expected to last for a continuous period of 12 months or more and
that causes the Participant to be unable, in the opinion of the Company, to
perform his or her duties for the Company and to be engaged in any substantial
gainful activity. Total disability shall be deemed to have occurred on the first
day after the Company has furnished its opinion of total disability to the Plan
Administrator.
8.6 TAXATION OF INCENTIVE STOCK OPTIONS
In order to obtain certain tax benefits afforded to Incentive Stock
Options under Section 422 of the Code, the Participant must hold the shares
issued upon the exercise of an Incentive Stock Option for two years after the
Grant Date of the Incentive Stock Option and one year from the date of exercise.
A Participant may be subject to the alternative minimum tax at the time of
exercise of an Incentive Stock Option. The Plan Administrator may require a
Participant to give the Company prompt notice of any disposition of shares
acquired by the exercise of an Incentive Stock Option prior to the expiration of
such holding periods.
8.7 PROMISSORY NOTES
The amount of any promissory note delivered pursuant to Section 13 in
connection with an Incentive Stock Option shall bear interest at a rate
specified by the Plan Administrator but in no case less than the rate required
to avoid imputation of interest (taking into account any exceptions to the
imputed interest rules) for federal income tax purposes.
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SECTION 9. STOCK AWARDS
9.1 GRANT OF STOCK AWARDS
The Plan Administrator is authorized to make Awards of Common Stock or
Awards denominated in units of Common Stock on such terms and conditions and
subject to such restrictions, if any (which may be based on continuous service
with the Company or the achievement of performance goals, where such goals may
be stated in absolute terms or relative to comparison companies), as the Plan
Administrator shall determine, in its sole discretion, which terms, conditions
and restrictions shall be set forth in the instrument evidencing the Award. The
terms, conditions and restrictions that the Plan Administrator shall have the
power to determine shall include, without limitation, the manner in which shares
subject to Stock Awards are held during the periods they are subject to
restrictions and the circumstances under which forfeiture of the Stock Award
shall occur by reason of termination of the Participant's employment or service
relationship.
9.2 ISSUANCE OF SHARES
Upon the satisfaction of any terms, conditions and restrictions
prescribed in respect to a Stock Award, or upon the Participant's release from
any terms, conditions and restrictions of a Stock Award, as determined by the
Plan Administrator, the Company shall release, as soon as practicable, to the
Participant or, in the case of the Participant's death, to the personal
representative of the Participant's estate or as the appropriate court directs,
the appropriate number of shares of Common Stock.
9.3 WAIVER OF RESTRICTIONS
Notwithstanding any other provisions of the Plan, the Plan Administrator
may, in its sole discretion, waive the forfeiture period and any other terms,
conditions or restrictions on any Stock Award under such circumstances and
subject to such terms and conditions as the Plan Administrator shall deem
appropriate.
SECTION 10. ASSIGNABILITY
No Awards granted under the Plan or any interest therein may be
assigned, pledged or transferred by the Participant other than by will or by the
applicable laws of descent and distribution, and, during the Participant's
lifetime, such Award may be exercised only by the Participant or a permitted
assignee or transferee of the Participant (as provided below). Notwithstanding
the foregoing, and to the extent permitted by Section 422 of the Code, the Plan
Administrator, in its sole discretion, may permit such assignment, transfer and
exercisability and may permit a Participant to designate a beneficiary who may
exercise the Award or receive compensation under the Award after the
Participant's death; provided, however, that any Award so assigned or
transferred shall be subject to all the same terms and conditions contained in
the instrument evidencing the Award.
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SECTION 11. ADJUSTMENTS
11.1 ADJUSTMENT OF SHARES
In the event that, at any time or from time to time, a stock dividend,
stock split, spin-off, combination or exchange of shares, recapitalization,
merger, consolidation, distribution to stockholders other than a normal cash
dividend, or other change in the Company's corporate or capital structure
results in (a) the outstanding shares, or any securities exchanged therefor or
received in their place, being exchanged for a different number or class of
securities of the Company or of any other corporation or (b) new, different or
additional securities of the Company or of any other corporation being received
by the holders of shares of Common Stock of the Company, then the Plan
Administrator shall make proportional adjustments in (i) the maximum number and
kind of securities subject to the Plan as set forth in Section 4.1, (ii) the
maximum number and kind of securities that may be made subject to Awards to any
individual as set forth in Section 4.2, and (iii) the number and kind of
securities that are subject to any outstanding Award and the per share price of
such securities, without any change in the aggregate price to be paid therefor.
The determination by the Plan Administrator as to the terms of any of the
foregoing adjustments shall be conclusive and binding.
11.2 CORPORATE TRANSACTION
11.2.1 OPTIONS
Except as otherwise provided in the instrument that evidences the
Option, in the event of a Corporate Transaction, the Plan Administrator shall
determine whether provision will be made in connection with the Corporate
Transaction for an appropriate assumption of the Options theretofore granted
under the Plan (which assumption may be effected by means of a payment to each
Participant (by the Company or any other person or entity involved in the
Corporate Transaction), in exchange for the cancellation of the Options held by
such Participant, of the difference between the then Fair Market Value of the
aggregate number of shares of Common Stock then subject to such Options and the
aggregate exercise price that would have to be paid to acquire such shares) or
for substitution of appropriate new options covering stock of a successor
corporation to the Company or stock of an affiliate of such successor
corporation. If the Plan Administrator determines that such an assumption or
substitution will be made, the Plan Administrator shall give notice of such
determination to the Participants, and the provisions of such assumption or
substitution, and any adjustments made (i) to the number and kind of shares
subject to the outstanding Options (or to the options in substitution therefor),
(ii) to the exercise prices, and/or (iii) to the terms and conditions of the
stock options, shall be binding on the Participants. Any such determination
shall be made in the sole discretion of the Plan Administrator and shall be
final, conclusive and binding on all Participants. If the Plan Administrator, in
its sole discretion, determines that no such assumption or substitution will be
made, the Plan Administrator shall give notice of such determination to the
Participants, and each Option that is at the time outstanding shall
automatically accelerate so that each such Option shall, immediately prior to
the specified effective date for the Corporate Transaction, become 100% vested
and exercisable, except that such acceleration will not occur if, in the opinion
of the Company's outside accountants, it would render unavailable 'pooling of
interest' accounting for a
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Corporate Transaction that would otherwise qualify for such accounting
treatment. All such Options shall terminate and cease to remain outstanding
immediately following the consummation of the Corporate Transaction, except to
the extent assumed by the successor corporation or an affiliate thereof.
11.2.2 STOCK AWARDS
Except as otherwise provided in the instrument that evidences the Award,
in the event of a Corporate Transaction, the vesting of shares subject to Stock
Awards shall accelerate, and the forfeiture provisions to which such shares are
subject shall lapse, if and to the same extent that the vesting of outstanding
Options accelerates in connection with the Corporate Transaction. If unvested
Options are to be assumed, continued or substituted by a successor corporation
without acceleration upon the occurrence of a Corporate Transaction, the
forfeiture provisions to which such Stock Awards are subject will continue with
respect to shares of the successor corporation that may be issued in exchange
for such shares subject to Stock Awards.
11.3 FURTHER ADJUSTMENT OF AWARDS
Subject to Section 11.2, the Plan Administrator shall have the
discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation or change in control of the Company, as defined by
the Plan Administrator, to take such further action as it determines to be
necessary or advisable, and fair and equitable to Participants, with respect to
Awards. Such authorized action may include (but shall not be limited to)
establishing, amending or waiving the type, terms, conditions or duration of, or
restrictions on, Awards so as to provide for earlier, later, extended or
additional time for exercise and other modifications, and the Plan Administrator
may take such actions with respect to all Participants, to certain categories of
Participants or only to individual Participants. The Plan Administrator may take
such action before or after granting Awards to which the action relates and
before or after any public announcement with respect to such sale, merger,
consolidation, reorganization, liquidation or change in control that is the
reason for such action.
11.4 LIMITATIONS
The grant of Awards will in no way affect the Company's right to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
SECTION 12. WITHHOLDING
The Company may require the Participant to pay to the Company the amount
of any withholding taxes that the Company is required to withhold with respect
to the grant, vesting or exercise of any Award. Subject to the Plan and
applicable law, the Plan Administrator may, in its sole discretion, permit the
Participant to satisfy withholding obligations, in whole or in part, (a) by
paying cash, (b) by electing to have the Company withhold shares of Common Stock
or (c) by transferring shares of Common Stock to the Company, in such amounts as
are equivalent to the Fair Market Value of the withholding obligation. The
Company shall have the right to withhold from any shares of Common Stock
issuable pursuant to an Award or from any cash amounts
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otherwise due or to become due from the Company to the Participant an amount
equal to such taxes. The Company may also deduct from any Award any other
amounts due from the Participant to the Company or a Subsidiary.
SECTION 13. LOANS, INSTALLMENT PAYMENTS AND LOAN GUARANTEES
To assist a Participant (including a Participant who is an officer or a
director of the Company) in acquiring shares of Common Stock pursuant to an
Award granted under the Plan, the Plan Administrator, in its sole discretion,
may authorize, either at the Grant Date or at any time before the acquisition of
Common Stock pursuant to the Award, (a) the extension of a loan to the
Participant by the Company, (b) the payment by the Participant of the purchase
price, if any, of the Common Stock in installments, or (c) the guarantee by the
Company of a loan obtained by the Participant from a third party. The terms of
any loans, installment payments or loan guarantees, including the interest rate
and terms of repayment, will be subject to the Plan Administrator's discretion.
Loans, installment payments and loan guarantees may be granted with or without
security. The maximum credit available is the purchase price, if any, of the
Common Stock acquired, plus the maximum federal and state income and employment
tax liability that may be incurred in connection with the acquisition.
SECTION 14. REPURCHASE RIGHTS; ESCROW
14.1 REPURCHASE RIGHTS
The Plan Administrator shall have the discretion to authorize the
issuance of unvested shares of Common Stock pursuant to the exercise of an
Option. In the event of termination of the Participant's employment or services,
all shares of Common Stock issued upon exercise of an Option which are unvested
at the time of cessation of employment or services shall be subject to
repurchase at the exercise price paid for such shares. The terms and conditions
upon which such repurchase right shall be exercisable (including the period and
procedure for exercise) shall be established by the Plan Administrator and set
forth in the agreement evidencing such right.
All of the Company's outstanding repurchase rights under this Section
14.1 are assignable by the Company at any time and shall remain in full force
and effect in the event of a Corporate Transaction; provided that if the vesting
of Options is accelerated pursuant to Section 11.2, the repurchase rights under
this Section 14.1 shall terminate and all shares subject to such terminated
rights shall immediately vest in full.
The Plan Administrator shall have the discretionary authority,
exercisable either before or after the Participant's cessation of employment or
services, to cancel the Company's outstanding repurchase rights with respect to
one or more shares purchased or purchasable by the Participant under an Option
and thereby accelerate the vesting of such shares in whole or in part at any
time.
14.2 ESCROW
To ensure that shares of Common Stock acquired pursuant to an Award that
are subject to any repurchase or forfeiture right, stockholders agreement and/or
security for any promissory
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note will be available for repurchase or forfeiture, the Plan Administrator may
require the Participant to deposit the certificate or certificates evidencing
such shares with an agent designated by the Plan Administrator under the terms
and conditions of escrow and security agreements approved by the Plan
Administrator. If the Plan Administrator does not require such deposit as a
condition of exercise of an Option or grant of a Stock Award, the Plan
Administrator reserves the right at any time to require the Participant to so
deposit the certificate or certificates in escrow. The Company shall bear the
expenses of the escrow.
As soon as practicable after the expiration of any repurchase or
forfeiture rights or stockholders agreement, and after full repayment of any
promissory note secured by the shares in escrow, the agent shall deliver to the
Participant the shares no longer subject to such restrictions and no longer
security for any promissory note.
In the event shares held in escrow are subject to the Company's exercise
of a repurchase or forfeiture right or a stockholders agreement, the notices
required to be given to the Participant shall be given to the agent and any
payment required to be given to the Participant shall be given to the agent.
Within 30 days after payment by the Company, the agent shall deliver the shares
which the Company has purchased to the Company and shall deliver the payment
received from the Company to the Participant.
In the event of any stock dividend, stock split or consolidation of
shares or any like capital adjustment of any of the outstanding securities of
the Company, any and all new, substituted or additional securities or other
property to which the Participant is entitled by reason of ownership of shares
acquired upon exercise of an Option or grant of a Stock Award shall be subject
to any repurchase or forfeiture rights, stockholders agreement, and/or security
for any promissory note with the same force and effect as the shares subject to
such repurchase or forfeiture rights, stockholders agreement and/or security
interest immediately before such event.
SECTION 15. MARKET STANDOFF
In connection with any underwritten public offering by the Company of
its equity securities pursuant to an effective registration statement filed
under the Securities Act, including the Company's initial public offering, a
person shall not sell, or make any short sale of, loan, hypothecate, pledge,
grant any option for the purchase of, or otherwise dispose or transfer for value
or otherwise agree to engage in any of the foregoing transactions with respect
to, any shares issued pursuant to an Award granted under the Plan without the
prior written consent of the Company or its underwriters. Such limitations shall
be in effect only if and to the extent and for such period of time as may be
requested by the Company or such underwriters and agreed to by the Company's
officers and directors; provided, however, that in no event shall the weighted
average number of days in such period exceed 180 days. The limitations of this
paragraph shall in all events terminate two years after the effective date of
the Company's initial public offering.
In the event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
Company's outstanding Common Stock effected as a class without the Company's
receipt of consideration, then any new, substituted or additional securities
distributed with respect to the purchased shares shall be immediately subject to
the
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provisions of this Section 15, to the same extent the purchased shares are at
such time covered by such provisions.
In order to enforce the limitations of this Section 15, the Company may
impose stop-transfer instructions with respect to the purchased shares and any
new, substituted or additional securities distributed with respect to the
purchased shares until the end of the applicable standoff period.
SECTION 16. AMENDMENT AND TERMINATION OF PLAN
16.1 AMENDMENT OF PLAN
The Plan may be amended only by the Board in such respects as it shall
deem advisable; however, to the extent required for compliance with Section 422
of the Code or any applicable law or regulation, stockholder approval will be
required for any amendment that will (a) increase the total number of shares
available for issuance under the Plan, (b) modify the class of persons eligible
to receive Options, or (c) otherwise require stockholder approval under any
applicable law or regulation.
16.2 TERMINATION OF PLAN
The Board may suspend or terminate the Plan at any time. The Plan will
have no fixed expiration date; provided, however, that no Incentive Stock
Options may be granted more than 10 years after the earlier of the Plan's
adoption by the Board and approval by the stockholders.
16.3 CONSENT OF PARTICIPANT
The amendment or termination of the Plan shall not, without the consent
of the Participant, impair or diminish any rights or obligations under any Award
theretofore granted under the Plan.
Any change or adjustment to an outstanding Incentive Stock Option shall
not, without the consent of the Participant, be made in a manner so as to
constitute a 'modification' that would cause such Incentive Stock Option to fail
to continue to qualify as an Incentive Stock Option.
SECTION 17. GENERAL
17.1 EVIDENCE OF AWARDS
Awards granted under the Plan shall be evidenced by a written agreement
that shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem advisable and that are not inconsistent with the
Plan.
17.2 CONTINUED EMPLOYMENT OR SERVICES; RIGHTS IN AWARDS
None of the Plan, participation in the Plan or any action of the Plan
Administrator taken under the Plan shall be construed as giving any person any
right to be retained in the employ of the Company or limit the Company's right
to terminate the employment or services of any person.
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17.3 REGISTRATION
The Company shall be under no obligation to any Participant to register
for offering or resale or to qualify for exemption under the Securities Act, or
to register or qualify under state securities laws, any shares of Common Stock,
security or interest in a security paid or issued under, or created by, the
Plan, or to continue in effect any such registrations or qualifications if made.
The Company may issue certificates for shares with such legends and subject to
such restrictions on transfer and stop-transfer instructions as counsel for the
Company deems necessary or desirable for compliance by the Company with federal
and state securities laws.
Inability of the Company to obtain, from any regulatory body having
jurisdiction, the authority deemed by the Company's counsel to be necessary for
the lawful issuance and sale of any shares hereunder or the unavailability of an
exemption from registration for the issuance and sale of any shares hereunder
shall relieve the Company of any liability in respect of the nonissuance or sale
of such shares as to which such requisite authority shall not have been
obtained.
As a condition to the exercise of an Award, the Company may require the
Participant to represent and warrant at the time of any such exercise or receipt
that such shares are being purchased or received only for the Participant's own
account 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 relevant provision of the aforementioned laws. At the option of the Company,
a stop-transfer order against any such shares may be placed on the official
stock books and records of the Company, and a legend indicating that such shares
may not be pledged, sold or otherwise transferred, unless an opinion of counsel
is provided (concurred in by counsel for the Company) stating that such transfer
is not in violation of any applicable law or regulation, may be stamped on stock
certificates to ensure exemption from registration. The Plan Administrator may
also require such other action or agreement by the Participant as may from time
to time be necessary to comply with the federal and state securities laws.
17.4 NO RIGHTS AS A STOCKHOLDER
No Option or Stock Award denominated in units shall entitle the
Participant to any dividend, voting or other right of a stockholder unless and
until the date of issuance under the Plan of the shares that are the subject of
such Award, free of all applicable restrictions.
17.5 COMPLIANCE WITH LAWS AND REGULATIONS
Notwithstanding anything in the Plan to the contrary, the Board, in its
sole discretion, may bifurcate the Plan so as to restrict, limit or condition
the use of any provision of the Plan to Participants who are officers or
directors subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other Participants.
Additionally, in interpreting and applying the provisions of the Plan, any
Option granted as an Incentive Stock Option pursuant to the Plan shall, to the
extent permitted by law, be construed as an 'incentive stock option' within the
meaning of Section 422 of the Code.
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17.6 NO TRUST OR FUND
The Plan is intended to constitute an 'unfunded' plan. Nothing contained
herein shall require the Company to segregate any monies or other property, or
shares of Common Stock, or to create any trusts, or to make any special deposits
for any immediate or deferred amounts payable to any Participant, and no
Participant shall have any rights that are greater than those of a general
unsecured creditor of the Company.
17.7 SEVERABILITY
If any provision of the Plan or any Option is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Option under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator's determination, materially altering the intent of the
Plan or the Option, such provision shall be stricken as to such jurisdiction,
person or Option, and the remainder of the Plan and any such Option shall remain
in full force and effect.
SECTION 18. EFFECTIVE DATE
The Plan's effective date is the date on which it is adopted by the
Board, so long as it is approved by the Company's stockholders at any time
within 12 months of such adoption.
Adopted by the Board on February 25, 1997 and approved by the Company's
stockholders on February 26, 1997. Amended and restated on September 8, 1999 to
permit issuance of stock awards in addition to option grants.
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: PAGE> 19
PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS
Date of
Adoption/
Amendment/ Date of Stockholder
Adjustment Section Effect of Amendment Approval
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