1999 Employee Stock Purchase Plan – Liberate Technologies
LIBERATE TECHNOLOGIES
1999 EMPLOYEE STOCK PURCHASE PLAN
(AS ADOPTED MAY 17, 1999)
TABLE OF CONTENTS
Page
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SECTION 1. PURPOSE OF THE PLAN...........................................1
SECTION 2. ADMINISTRATION OF THE PLAN....................................1
(a) Committee Composition.......................................1
(b) Committee Responsibilities..................................1
SECTION 3. ENROLLMENT AND PARTICIPATION..................................1
(a) Offering Periods............................................1
(b) Enrollment..................................................1
(c) Duration of Participation...................................1
SECTION 4. EMPLOYEE CONTRIBUTIONS........................................2
(a) Frequency of Payroll Deductions.............................2
(b) Amount of Payroll Deductions................................2
(c) Changing Withholding Rate...................................2
(d) Discontinuing Payroll Deductions............................2
(e) Limit on Number of Elections................................2
SECTION 5. WITHDRAWAL FROM THE PLAN......................................2
(a) Withdrawal..................................................2
(b) Re-Enrollment After Withdrawal..............................2
SECTION 6. CHANGE IN EMPLOYMENT STATUS...................................3
(a) Termination of Employment...................................3
(b) Leave of Absence............................................3
(c) Death.......................................................3
SECTION 7. PLAN ACCOUNTS AND PURCHASE OF SHARES..........................3
(a) Plan Accounts...............................................3
(b) Purchase Price..............................................3
(c) Number of Shares Purchased..................................3
(d) Available Shares Insufficient...............................4
(e) Issuance of Stock...........................................4
(f) Unused Cash Balances........................................4
(g) Stockholder Approval........................................4
SECTION 8. LIMITATIONS ON STOCK OWNERSHIP................................4
(a) Five Percent Limit..........................................4
(b) Dollar Limit................................................5
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SECTION 9. RIGHTS NOT TRANSFERABLE.......................................5
SECTION 10. NO RIGHTS AS AN EMPLOYEE.....................................5
SECTION 11. NO RIGHTS AS A STOCKHOLDER...................................6
SECTION 12. SECURITIES LAW REQUIREMENTS..................................6
SECTION 13. STOCK OFFERED UNDER THE PLAN.................................6
(a) Authorized Shares...........................................6
(b) Anti-Dilution Adjustments...................................6
(c) Reorganizations.............................................6
SECTION 14. AMENDMENT OR DISCONTINUANCE..................................6
SECTION 15. INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN...................7
SECTION 16. DEFINITIONS..................................................7
(a) 'Board'....................................................7
(b) 'Code'.....................................................8
(c) 'Committee'................................................8
(d) 'Company'..................................................8
(e) 'Compensation'.............................................8
(f) 'Corporate Reorganization'.................................8
(g) 'Eligible Employee'........................................8
(h) 'Exchange Act'.............................................8
(i) 'Fair Market Value'........................................8
(j) 'IPO'......................................................9
(k) 'Offering Period'..........................................9
(l) 'Participant'..............................................9
(m) 'Participating Company'....................................9
(n) 'Plan'.....................................................9
(o) 'Plan Account'.............................................9
(p) 'Purchase Price'...........................................9
(q) 'Stock'....................................................9
(r) 'Subsidiary'...............................................9
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LIBERATE TECHNOLOGIES
1999 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. PURPOSE OF THE PLAN.
The Plan was adopted by the Board to be effective as of the date of the
IPO. The purpose of the Plan is to provide Eligible Employees with an
opportunity to increase their proprietary interest in the success of the
Company by purchasing Stock from the Company on favorable terms and to pay
for such purchases through payroll deductions. The Plan is intended to
qualify under section 423 of the Code.
SECTION 2. ADMINISTRATION OF THE PLAN.
(a) COMMITTEE COMPOSITION. The Plan shall be administered by the
Committee.
(b) COMMITTEE RESPONSIBILITIES. The Committee shall interpret the Plan
and make all other policy decisions relating to the operation of the Plan.
The Committee may adopt such rules, guidelines and forms as it deems
appropriate to implement the Plan. The Committee's determinations under the
Plan shall be final and binding on all persons.
SECTION 3. ENROLLMENT AND PARTICIPATION.
(a) OFFERING PERIODS. While the Plan is in effect, two Offering Periods
shall commence in each calendar year. The Offering Periods shall consist of
the six-month periods commencing on each April 1 and October 1, except that
the first Offering Period shall commence on the date of the IPO and end on
March 31, 2000.
(b) ENROLLMENT. Any individual who, on the day preceding the first day
of an Offering Period, qualifies as an Eligible Employee may elect to become
a Participant in the Plan for such Offering Period by executing the
enrollment form prescribed for this purpose by the Committee. The enrollment
form shall be filed with the Company at the prescribed location not later
than 10 days prior to the commencement of such Offering Period.
(c) DURATION OF PARTICIPATION. Once enrolled in the Plan, a Participant
shall continue to participate in the Plan until he or she ceases to be an
Eligible Employee, withdraws from the Plan under Section 5(a) or reaches the
end of the Offering Period in which his or her employee contributions were
discontinued under Section 4(d) or 8(b). A Participant who discontinued
employee contributions under Section 4(d) or withdrew from the Plan under
Section 5(a) may again become a Participant, if he or she then is an Eligible
Employee, by following the procedure described in Subsection (b) above. A
Participant whose employee contributions were discontinued automatically
under Section 8(b) shall automatically resume participation at the beginning
of the earliest Offering Period ending in the next calendar year, if he or
she then is an Eligible Employee.
SECTION 4. EMPLOYEE CONTRIBUTIONS.
(a) FREQUENCY OF PAYROLL DEDUCTIONS. A Participant may purchase shares
of Stock under the Plan solely by means of payroll deductions. Payroll
deductions, as designated by the Participant pursuant to Subsection (b)
below, shall occur on each payday during participation in the Plan.
(b) AMOUNT OF PAYROLL DEDUCTIONS. An Eligible Employee shall designate
on the enrollment form the portion of his or her Compensation that he or she
elects to have withheld for the purchase of Stock. Such portion shall be a
whole percentage of the Eligible Employee's Compensation, but not less than
1% nor more than 15%.
(c) CHANGING WITHHOLDING RATE. If a Participant wishes to change the
rate of payroll withholding, he or she may do so by filing a new enrollment
form with the Company at the prescribed location at any time. The new
withholding rate shall be effective as soon as reasonably practicable after
such form has been received by the Company. The new withholding rate shall be
a whole percentage of the Eligible Employee's Compensation, but not less than
1% nor more than 15%.
(d) DISCONTINUING PAYROLL DEDUCTIONS. If a Participant wishes to
discontinue employee contributions entirely, he or she may do so by filing a
new enrollment form with the Company at the prescribed location at any time.
Payroll withholding shall cease as soon as reasonably practicable after such
form has been received by the Company. In addition, employee contributions
may be discontinued automatically pursuant to Section 8(b). A Participant who
has discontinued employee contributions may resume such contributions by
filing a new enrollment form with the Company at the prescribed location.
Payroll withholding shall resume as soon as reasonably practicable after such
form has been received by the Company.
(e) LIMIT ON NUMBER OF ELECTIONS. No Participant shall make more than
two elections under Subsection (c) or (d) above during any Offering Period.
SECTION 5. WITHDRAWAL FROM THE PLAN.
(a) WITHDRAWAL. A Participant may elect to withdraw from the Plan by
filing the prescribed form with the Company at the prescribed location at any
time before the last day of an Offering Period. As soon as reasonably
practicable thereafter, payroll deductions shall cease and the entire amount
credited to the Participant's Plan Account shall be refunded to him or her in
cash, without interest. No partial withdrawals shall be permitted.
(b) RE-ENROLLMENT AFTER WITHDRAWAL. A former Participant who has
withdrawn from the Plan shall not be a Participant until he or she re-enrolls
in the Plan under Section 3(c). Re-enrollment may be effective only at the
commencement of an Offering Period.
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SECTION 6. CHANGE IN EMPLOYMENT STATUS.
(a) TERMINATION OF EMPLOYMENT. Termination of employment as an Eligible
Employee for any reason, including death, shall be treated as an automatic
withdrawal from the Plan under Section 5(a). A transfer from one
Participating Company to another shall not be treated as a termination of
employment.
(b) LEAVE OF ABSENCE. For purposes of the Plan, employment shall not be
deemed to terminate when the Participant goes on a military leave, a sick
leave or another BONA FIDE leave of absence, if the leave was approved by the
Company in writing. Employment, however, shall be deemed to terminate 90 days
after the Participant goes on a leave, unless a contract or statute
guarantees his or her right to return to work. Employment shall be deemed to
terminate in any event when the approved leave ends, unless the Participant
immediately returns to work.
(c) DEATH. In the event of the Participant's death, the amount credited
to his or her Plan Account shall be paid to a beneficiary designated by him
or her for this purpose on the prescribed form or, if none, to the
Participant's estate. Such form shall be valid only if it was filed with the
Company at the prescribed location before the Participant's death.
SECTION 7. PLAN ACCOUNTS AND PURCHASE OF SHARES.
(a) PLAN ACCOUNTS. The Company shall maintain a Plan Account on its
books in the name of each Participant. Whenever an amount is deducted from
the Participant's Compensation under the Plan, such amount shall be credited
to the Participant's Plan Account. Amounts credited to Plan Accounts shall
not be trust funds and may be commingled with the Company's general assets
and applied to general corporate purposes. No interest shall be credited to
Plan Accounts.
(b) PURCHASE PRICE. The Purchase Price for each share of Stock
purchased at the close of an Offering Period shall be the lower of:
(i) 85% of the Fair Market Value of such share on the last trading
day in such Offering Period; or
(ii) 85% of the Fair Market Value of such share on the last trading
day before the commencement of such Offering Period or, in the case of
the first Offering Period under the Plan, 85% of the price at which one
share of Stock is offered to the public in the IPO.
(c) NUMBER OF SHARES PURCHASED. As of the last day of each Offering
Period, each Participant shall be deemed to have elected to purchase the
number of shares of Stock calculated in accordance with this Subsection (c),
unless the Participant has previously elected to withdraw from the Plan in
accordance with Section 5(a). The amount then in the Participant's Plan
Account shall be divided by the Purchase Price, and the number of shares that
results shall be purchased from the Company with the funds in the
Participant's Plan Account. The foregoing notwithstanding, no Participant
shall purchase more than 750 shares of Stock with respect to any Offering
Period nor more than the amounts of Stock set forth in Sections 8(b) and
13(a). The
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Committee may determine with respect to all Participants that any fractional
share, as calculated under this Subsection (c), shall be (i) rounded down to
the next lower whole share or (ii) credited as a fractional share.
(d) AVAILABLE SHARES INSUFFICIENT. In the event that the aggregate
number of shares that all Participants elect to purchase during an Offering
Period exceeds the maximum number of shares remaining available for issuance
under Section 13(a), then the number of shares to which each Participant is
entitled shall be determined by multiplying the number of shares available
for issuance by a fraction, the numerator of which is the number of shares
that such Participant has elected to purchase and the denominator of which is
the number of shares that all Participants have elected to purchase.
(e) ISSUANCE OF STOCK. Certificates representing the shares of Stock
purchased by a Participant under the Plan shall be issued to him or her as
soon as reasonably practicable after the close of the applicable Offering
Period, except that the Committee may determine that such shares shall be
held for each Participant's benefit by a broker designated by the Committee
(unless the Participant has elected that certificates be issued to him or
her). Shares may be registered in the name of the Participant or jointly in
the name of the Participant and his or her spouse as joint tenants with right
of survivorship or as community property.
(f) UNUSED CASH BALANCES. Any amount remaining in the Participant's
Plan Account that represents the Purchase Price for a fractional share shall
be carried over in the Participant's Plan Account to the next Offering
Period. Any amount remaining in the Participant's Plan Account that
represents the Purchase Price for whole shares that could not be purchased by
reason of Subsection (c) or (d) above, Section 8(b) or Section 13(a) shall be
refunded to the Participant in cash, without interest.
(g) STOCKHOLDER APPROVAL. Any other provision of the Plan
notwithstanding, no shares of Stock shall be purchased under the Plan unless
and until the Company's stockholders have approved the adoption of the Plan.
SECTION 8. LIMITATIONS ON STOCK OWNERSHIP.
(a) FIVE PERCENT LIMIT. Any other provision of the Plan
notwithstanding, no Participant shall be granted a right to purchase Stock
under the Plan if such Participant, immediately after his or her election to
purchase such Stock, would own stock possessing more than 5% of the total
combined voting power or value of all classes of stock of the Company or any
parent or Subsidiary of the Company. For purposes of this Subsection (a), the
following rules shall apply:
(i) Ownership of stock shall be determined after applying the
attribution rules of section 424(d) of the Code;
(ii) Each Participant shall be deemed to own any stock that he or
she has a right or option to purchase under this or any other plan; and
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(iii) Each Participant shall be deemed to have the right to
purchase 750 shares of Stock under this Plan with respect to each
Offering Period.
(b) DOLLAR LIMIT. Any other provision of the Plan notwithstanding, no
Participant shall purchase Stock with a Fair Market Value in excess of the
following limit:
(i) In the case of Stock purchased during an Offering Period that
commenced in the current calendar year, the limit shall be equal to (A)
$25,000 minus (B) the Fair Market Value of the Stock that the
Participant previously purchased in the current calendar year (under
this Plan and all other employee stock purchase plans of the Company or
any parent or Subsidiary of the Company).
(ii) In the case of Stock purchased during an Offering Period that
commenced in the immediately preceding calendar year, the limit shall be
equal to (A) $50,000 minus (B) the Fair Market Value of the Stock that
the Participant previously purchased (under this Plan and all other
employee stock purchase plans of the Company or any parent or Subsidiary
of the Company) in the current calendar year and in the immediately
preceding calendar year.
For purposes of this Subsection (b), the Fair Market Value of Stock shall be
determined in each case as of the beginning of the Offering Period in which
such Stock is purchased. Employee stock purchase plans not described in
section 423 of the Code shall be disregarded. If a Participant is precluded
by this Subsection (b) from purchasing additional Stock under the Plan, then
his or her employee contributions shall automatically be discontinued and
shall resume at the beginning of the earliest Offering Period ending in the
next calendar year (if he or she then is an Eligible Employee).
SECTION 9. RIGHTS NOT TRANSFERABLE.
The rights of any Participant under the Plan, or any Participant's
interest in any Stock or moneys to which he or she may be entitled under the
Plan, shall not be transferable by voluntary or involuntary assignment or by
operation of law, or in any other manner other than by beneficiary
designation or the laws of descent and distribution. If a Participant in any
manner attempts to transfer, assign or otherwise encumber his or her rights
or interest under the Plan, other than by beneficiary designation or the laws
of descent and distribution, then such act shall be treated as an election by
the Participant to withdraw from the Plan under Section 5(a).
SECTION 10. NO RIGHTS AS AN EMPLOYEE.
Nothing in the Plan or in any right granted under the Plan shall confer
upon the Participant any right to continue in the employ of a Participating
Company for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Participating Companies or of the
Participant, which rights are hereby expressly reserved by each, to terminate
his or her employment at any time and for any reason, with or without cause.
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SECTION 11. NO RIGHTS AS A STOCKHOLDER.
A Participant shall have no rights as a stockholder with respect to any
shares of Stock that he or she may have a right to purchase under the Plan until
such shares have been purchased on the last day of the applicable Offering
Period.
SECTION 12. SECURITIES LAW REQUIREMENTS.
Shares of Stock shall not be issued under the Plan unless the issuance
and delivery of such shares comply with (or are exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of
1933, as amended, the rules and regulations promulgated thereunder, state
securities laws and regulations, and the regulations of any stock exchange or
other securities market on which the Company's securities may then be traded.
SECTION 13. STOCK OFFERED UNDER THE PLAN.
A) AUTHORIZED SHARES. The number of shares of Stock available for
purchase under the Plan (which includes the International Employee Stock
Purchase Plan if and to the extent implemented) shall be 833,333 (subject to
adjustment pursuant to this Section 13). On June 1 of each year, commencing
with June 1,2000, the aggregate number of shares of Stock available for
purchase during the life of the Plan (which includes the International
Employee Stock Purchase Plan if and to the extent implemented) shall
automatically be increased by a number equal to the lesser of (a) 2% of the
total number of shares of Stock then outstanding or (b) 833,333 (subject to
adjustment pursuant to this Section 13).
(b) ANTI-DILUTION ADJUSTMENTS. The aggregate number of shares of Stock
offered under the Plan, the 750-share limitation described in Section 7(c)
and the price of shares that any Participant has elected to purchase shall be
adjusted proportionately by the Committee for any increase or decrease in the
number of outstanding shares of Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend, any other
increase or decrease in such shares effected without receipt or payment of
consideration by the Company, the distribution of the shares of a Subsidiary
to the Company's stockholders or a similar event.
(c) REORGANIZATIONS. Any other provision of the Plan notwithstanding,
immediately prior to the effective time of a Corporate Reorganization, the
Offering Period then in progress shall terminate and shares shall be
purchased pursuant to Section 7, unless the Plan is continued or assumed by
the surviving corporation or its parent corporation. The Plan shall in no
event be construed to restrict in any way the Company's right to undertake a
dissolution, liquidation, merger, consolidation or other reorganization.
SECTION 14. AMENDMENT OR DISCONTINUANCE.
The Board shall have the right to amend, suspend or terminate the Plan
at any time and without notice. Except as provided in Section 13, any
increase in the aggregate number of shares of Stock to be issued under the
Plan shall be subject to approval by a vote of the stockholders of the
Company. In addition, any other amendment of the Plan shall be subject to
approval by a
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vote of the stockholders of the Company to the extent required by an
applicable law or regulation.
SECTION 15. INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN.
Adoption of the Plan by the Board and approval of the Plan by the
stockholders of the Company shall constitute adoption by the Board and
approval by the stockholders of the Company of the International Employee
Stock Purchase Plan described herein. If the laws of a foreign jurisdiction
require an amendment to the Plan that (a) would disqualify the Plan as a plan
that satisfies the requirements of Code Section 423 or (b) would not be
required under any law of the United States including Code Section 423, then
a separate but identical employee stock purchase plan may be implemented for
Foreign Participants (as defined below). The plan for Participants who are
not Foreign Participants will continue to be called the Plan, and the plan
for Foreign Participants will be called the International Employee Stock
Purchase Plan. A separate plan document will be created to evidence the
International Employee Stock Purchase Plan when it is implemented. Except as
otherwise amended to comply with applicable laws of a foreign jurisdiction,
the terms of the International Employee Stock Purchase Plan will be identical
to the Plan.
Each Participant who (a) is not a U.S. citizen or (b) is a U.S. citizen
working abroad who is not paid in U.S. currency ('Foreign Participant') will
be automatically deemed to participate in this International Employee Stock
Purchase Plan, instead of the Plan. With respect to each such Foreign
Participant, the initial offering period for this International Employee
Stock Purchase Plan shall be deemed to have commenced at the same time as the
offering period that is in progress under the Plan when the International
Employee Stock Purchase Plan is initially implemented.
The Plan and the International Employee Stock Purchase Plan (if and to
the extent implemented) will have the same share reserve. Thus, the number of
shares of Stock available for purchase in the aggregate over the term of the
Plan (which includes the International Employee Stock Purchase Plan if and to
the extent implemented) shall be 833,333 (subject to adjustment pursuant to
Section 13). As of June 1 of each year, commencing with the year 2000, the
aggregate number of shares of Stock available for purchase during the life of
the Plan (which includes the International Employee Stock Purchase Plan if
and to the extent implemented) shall automatically increase by a number equal
to the lesser of (a) 2% of the total number of shares of Stock then
outstanding or (b) 833,333 (subject to adjustment pursuant to Section 13). If
the International Employee Stock Purchase Plan is implemented, the share
issuances under the Plan shall reduce on a share-for-share basis the number
of shares available for issuance under the International Employee Stock
Purchase Plan, and share issuances under the International Employee Stock
Purchase Plan shall reduce on a share-for-share basis the number of shares
available for issuance under the Plan.
SECTION 16. DEFINITIONS.
(a) 'BOARD' means the Board of Directors of the Company, as constituted
from time to time.
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(b) 'CODE' means the Internal Revenue Code of 1986, as amended.
(c) 'COMMITTEE' means the Compensation Committee of the Board.
(d) 'COMPANY' means Liberate Technologies, a Delaware corporation.
(e) 'COMPENSATION' means (i) the total compensation paid in cash to a
Participant by a Participating Company, including salaries, wages, bonuses,
incentive compensation, commissions, overtime pay and shift premiums, plus
(ii) any pre-tax contributions made by the Participant under section 401(k)
or 125 of the Code. 'Compensation' shall exclude all non-cash items, moving
or relocation allowances, cost-of-living equalization payments, car
allowances, tuition reimbursements, imputed income attributable to cars or
life insurance, severance pay, fringe benefits, contributions or benefits
received under employee benefit plans, income attributable to the exercise of
stock options, and similar items. The Committee shall determine whether a
particular item is included in Compensation.
(f) 'CORPORATE REORGANIZATION' means:
(i) The consummation of a merger or consolidation of the Company
with or into any other entity or any other corporate reorganization; or
(ii) The sale, transfer of other disposition of all or
substantially all of the Company's assets or the complete liquidation or
dissolution of the Company.
(g) 'ELIGIBLE EMPLOYEE' means any employee of a Participating Company
who meets the following requirements: his or her customary employment is for
more than five months per calendar year and for more than 20 hours per week.
The foregoing notwithstanding, an individual shall not be considered an
Eligible Employee if his or her participation in the Plan is prohibited by
the law of any country which has jurisdiction over him or her or if he or she
is subject to a collective bargaining agreement that does not provide for
participation in the Plan.
(h) 'EXCHANGE ACT' means the Securities Exchange Act of 1934, as
amended.
(i) 'FAIR MARKET VALUE' means the market price of Stock, determined by
the Committee as follows:
(i) If the Stock was traded on The Nasdaq National Market on the
date in question, then the Fair Market Value shall be equal to the
last-transaction price quoted for such date by The Nasdaq National
Market;
(ii) If the Stock was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing price
reported by the applicable composite transactions report for such date;
or
(iii) If none of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by the Committee in good faith on
such basis as it deems appropriate.
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Whenever possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported in THE WALL STREET JOURNAL or as
reported directly to the Company by Nasdaq or a stock exchange. Such
determination shall be conclusive and binding on all persons.
(j) 'IPO' means the initial offering of Stock to the public pursuant to
a registration statement filed by the Company with the Securities and
Exchange Commission.
(k) 'OFFERING PERIOD' means a six-month period with respect to which
the right to purchase Stock may be granted under the Plan, as determined
pursuant to Section 3(a).
(l) 'PARTICIPANT' means an Eligible Employee who elects to participate
in the Plan, as provided in Section 3(b).
(m) 'PARTICIPATING COMPANY' means (i) the Company and (ii) each present
or future Subsidiary designated by the Committee as a Participating Company,
as indicated on Exhibit A.
(n) 'PLAN' means this Liberate Technologies 1999 Employee Stock
Purchase Plan, as it may be amended from time to time.
(o) 'PLAN ACCOUNT' means the account established for each Participant
pursuant to Section 7(a).
(p) 'PURCHASE PRICE' means the price at which Participants may purchase
Stock under the Plan, as determined pursuant to Section 7(b).
(q) 'STOCK' means the Common Stock of the Company.
(r) 'SUBSIDIARY' means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
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EXHIBIT A
PARTICIPATING COMPANIES
Liberate Technologies
Network Computer Incorporated Nederland B.V.
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