Peritus
Software Services, Inc.
1997 DIRECTOR STOCK OPTION PLAN, AS
AMENDED AND RESTATED
1.
Purpose
The purpose of
this 1997 Director Stock Option Plan, as amended and restated on March 24,
2000 (the "Plan") of Peritus Software Services, Inc., a
Massachusetts corporation (the "Company"), is to advance the
interests of the Company's shareholders by enhancing the Company's ability
to attract, retain and motivate outside directors of the Company by
providing such directors with equity ownership opportunities and
performance-based incentives and thereby better aligning the interests of
such directors with those of the Company's shareholders.
2.
Eligibility
Each Director
of the Company who is not an employee of the Company (an "Eligible
Director") is eligible to be granted options, under the Plan. Any
person who has been granted an option under the Plan shall be deemed a
"Participant".
3.
Administration
The Plan will be
administered by the Board of Directors of the Company (the
"Board"). Grants of stock options under the Plan and the amount
and nature of the grants to be awarded shall be automatic and
nondiscretionary in accordance with Section 5. However, the Board shall have
authority to adopt, amend and repeal such administrative rules, guidelines
and practices relating to the Plan as it shall deem advisable. The Board may
correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any option in the manner and to the extent it shall deem
expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. No member of the Board shall be liable for any
action or determination relating to the Plan. All decisions by the Board
shall be made in the Board's sole discretion and shall be final and binding
on all persons having or claiming any interest in the Plan or in any Award.
No director or person acting pursuant to the authority delegated by the
Board shall be liable for any action or determination under the Plan made in
good faith.
4. Stock
Available for Awards
(a)
Number of Shares. Subject to adjustment
under Section 4(b), options may be
Common Stock as listed on a nationally recognized securities exchange or other
securities market, on the date of grant (or, if no such price is reported on
such date, such price as reported on the nearest preceding day); or (ii) the
fair market value of the stock on the date of grant, as determined by the
Board of Directors, if the Common Stock is not publicly traded
(c)
Exercise Period. Each option granted on the
Effective Date shall vest and be exercisable on a cumulative basis as to
one-third of the shares subject to such option on each of the first, second
and third anniversaries of the date of the grant of such option,
provided that, subject to the provisions of Sections 5(d) and 5(e),
no option may be exercised more than 90 days after the optionee ceases to
serve as a director of the Company and such option may the only be exercised
for the purchase of such number of shares as were vested and exercisable at
the time of such termination. No option shall be exercisable after the
expiration of ten (10) years from the date of grant or prior to approval of
the Plan by the stockholders of the Company.
(d)
Exercise Period Upon Retirement.
Notwithstanding the provisions of Section 5(c), in the event an optionee
ceases to be a director by reason of retirement age determined by the
Company or by reason of the Company's failure to nominate the optionee for
reelection as a director (other than for such director's refusal to serve as
a director), each option then held by such director shall, at the time he or
she ceases to be a director, be exercisable for that number of shares of
Common Stock which equals the sum of (i) the shares which are then vested
and exercisable and (ii) the shares which would otherwise become vested and
exercisable at the next following anniversary of the date of grant of the
option.
(e)
Exercise Period Upon Death or Disability.
Notwithstanding the provisions of Section 5(c), any option granted under the
Plan:
| |
(i) |
may be exercised in full by an optionee
who becomes disabled (within the meaning of Section 22(e)(3) of the Code
or any successor provision thereto) while serving as a director of the
Company; or
|
| |
|
|
| |
(ii) |
may be exercised |
| |
|
|
|
| |
|
(x) |
in full upon the death of an optionee
while serving as a director of the Company, or |
| |
|
|
|
| |
|
(y) |
to the extent then exercisable upon
the death of an optionee within 90 days of ceasing to serve as a director
of the Company, |
by the person to whom it is transferred
by will, by the laws of descent and distribution, or by written designation
of beneficiary filed with the Company;
in each such case within the period of
one year after the date the optionee ceases to be such a director by reason
of such death or disability; provided, that no option shall be exercisable
after the expiration of ten (10) years from the date of grant.
(f)
Payment Upon Exercise. Common Stock
purchased upon the exercise of an Option granted under the Plan shall be
paid for as follows:
(1)
in cash or by check, payable to the order of
the Company;
(2)
except as the Board may otherwise provide in an Option,
delivery of an irrevocable and unconditional undertaking by a credit worthy
broker to deliver promptly to the Company sufficient funds to pay the
exercise price, or delivery by the Participant to the Company of a copy of
irrevocable and unconditional instructions to a credit worthy broker to
deliver promptly to the Company cash or a check sufficient to pay the
exercise price;
(3)
(i) by delivery of shares of Common Stock owned by the
Participant valued at their fair market value as determined by the Board in
good faith ("Fair Market Value"), which Common Stock was owned by
the Participant at least six months prior to such delivery, (ii) by delivery
of a promissory note of the Participant to the Company on terms determined
by the Board, or (iii)by payment of such other lawful consideration as the
Board may determine; or
(4)
any combination of the above permitted forms of
payment.
6.
General Provisions Applicable to Options
(a)
Transferability of Options. Except as the
Board may otherwise determine or provide in an option agreement, options
shall not be sold, assigned, transferred, pledged or otherwise encumbered by
the person to whom they are granted, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
life of the Participant, shall be exercisable only by the Participant.
References to a Participant, to the extent relevant in the context, shall
include references to authorized transferees.
(b)
Documentation. Each option under the Plan
shall be evidenced by a written instrument in such form as the Board shall
determine. Each option may contain terms and conditions in addition to, and
not inconsistent with, those set forth in the Plan.
(c)
Acquisition Events. Except to the extent
otherwise provided in the instrument evidencing the Award or in any other
agreement between the Participant and the Company, upon the occurrence of an
Acquisition Event or with respect to Options or any other similar Awards
only, upon the execution by the Company of any agreement with respect to an
Acquisition Event, (i) the Board shall cause all Options then outstanding to
become
immediately exercisable in full as of a specified date (the "Acceleration
Date") prior to the Acquisition Event, and shall provide written notice
to the Participants informing them that all such options have become
exercisable in full and will terminate immediately prior to the consummation
of such Acquisition Event, except to the extent exercised by the
Participants between the Acceleration Date and the consummation of such
Acquisition Event; (ii) all Restricted Stock Awards then outstanding shall
become immediately free of all restrictions; (iii) all other stock-based
Awards all become immediately exercisable, realizable or vested in full, or
shall be immediately free of all restrictions or conditions, as the case may
be.
An
"Acquisition Event" shall mean: (a) any merger or consolidation
which results in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving or
acquiring entity) less than 60% of the combined voting power of the voting
securities of the Company or such surviving or acquiring entity outstanding
immediately after such merger or consolidation; (b) any sale of all or
substantially all of the assets of the Company; (c) the complete liquidation
of the Company; or (d) the acquisition of "beneficial ownership"
(as defined in Rule 13d-3 under the Exchange Act) of securities of the
Company representing 50% or more of the combined voting power of the
Company's then outstanding securities (other than through a merger or
consolidation or an acquisition of securities directly from the Company) by
any "person", as such term is used in Sections 13(d) and 14(d) of
the Exchange Act other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
corporation owned directly or indirectly by the shareholders of the Company
in substantially the same proportion as their ownership of stock of the
Company.
(d)
Withholding. Each Participant shall pay to
the Company, or make provision satisfactory to the Board for payment of, any
taxes required by law to be withheld in connection with Awards to such
Participant no later than the date of the event creating the tax liability.
The Board may allow Participants to satisfy such tax obligations in whole or
in part in shares of Common Stock, including shares retained from the Award
creating the tax obligation, valued at their Fair Market Value. The Company
may, to the extent permitted by law, deduct any such tax obligations from
any payment of any kind otherwise due to a Participant.
(e)
Conditions on Delivery of Stock. The Company
will not be obligated to deliver any shares of Common Stock pursuant to the
Plan or to remove restrictions from shares previously delivered under the
Plan until (i) all conditions of the Award have been met or removed to the
satisfaction of the Company, (ii)in the opinion of the Company's counsel,
all other legal matters in connection with the issuance and delivery of such
shares have been satisfied, including any applicable securities laws and any
applicable stock exchange or stock market rules and regulations, and (iii)
the Participant has executed and delivered to the Company such
representations or agreements as the Company may consider appropriate to
satisfy the requirements of any applicable laws, rules or
regulations.
(f)
Acceleration. The Board may at any time
provide that any Options shall become immediately exercisable in full or in
part.
7.
Miscellaneous
(a)
No Right To Continue as a Director. Neither
the Plan nor the granting of an option nor any other action taken pursuant
to the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that the Company will retain a director
for any period of time.
(b)
No Rights As Stockholder. No Participant or
Designated Beneficiary shall have any rights as a stockholder with respect
to any shares of Common Stock to be distributed with respect to an option
until becoming the record holder of such shares.
(c)
Effective Date and Term of Plan. The Plan
shall become effective on the date on which it is adopted by the Board. No
options shall be granted under the Plan after the completion of ten years
from the earlier of (i) the date on which the Plan was adopted by the Board
or (ii) the date the Plan was approved by the Company's shareholders, but
options previously granted may extend beyond that date.
(d)
Amendment of Plan. The Board may amend,
suspend or terminate the Plan or any portion thereof at any time, provided
that no amendment shall be made without stockholder approval if such
approval is necessary to comply with any applicable tax or regulatory
requirements. Amendments requiring stockholder approval shall become
effective when adopted by the Board.
(e)
Governing Law. The provisions of the Plan and all options made
hereunder shall be governed by and interpreted in accordance with the laws
of the Commonwealth of Massachusetts, without regard to any applicable
conflicts of law.
| |
Originally adopted by the Board of
Directors
on May 5th
, 1997 |
| |
|
| |
Originally approved by the Stockholders
on
May 28th
, 1997 |
| |
|
| |
Amendment and Restatement adopted by
the Board of
Directors on March 24, 2000 |
