FILENET CORPORATION
INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE OF THE PLAN
This International Employee Stock Purchase Plan is intended to promote the
interests of FileNET Corporation by providing eligible employees of the
Corporation's Foreign Subsidiaries with the opportunity to acquire a proprietary
interest in the Corporation through the purchase of shares of the Corporation's
Common Stock at periodic intervals.
Capitalized terms herein shall have the meanings assigned to such terms in
the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and construe
any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary. Decisions of the Plan
Administrator shall be final and binding on all parties having an interest in
the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares of Common Stock purchased
on the open market. The maximum number of shares of Common Stock which may be
issued over the term of the Plan and the U.S. Plan shall be limited to Four
Hundred Thousand (400,000) shares and shall consist of the following: (i) the
estimated One Hundred Thousand (100,000) shares of Common Stock remaining for
issuance under the Predecessor Plan on the Effective Date plus (ii) an
additional Three Hundred Thousand (300,000) shares of Common Stock.
B. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and class of securities issuable under the Plan
and the U.S. Plan, (ii) the maximum number and class of securities purchasable
per Participant on any one Purchase Date, (iii) the maximum number and class of
securities purchasable by all Participants in the aggregate on any one Purchase
Date and (iv) the number and class of securities and the price per share in
effect under each outstanding purchase right in order to prevent the dilution or
enlargement of benefits thereunder.
IV. PURCHASE PERIODS
A. Shares of Common Stock shall be offered for purchase under the Plan
through a series of successive purchase periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.
B. Each purchase period shall have a duration of six (6) months. Purchase
periods shall run from the first business day in May to the last business day in
October each year and from the first business day in November each year to the
last business day in April of the following year. However, the initial purchase
period under the Plan shall begin on September 1, 1998 and end on the last
business day in April 1999.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the start date of any
purchase period shall be eligible to participate in the Plan for that purchase
period.
B. To participate in the Plan for a particular purchase period, the
Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator and file such forms with the Plan Administrator (or its designate)
on or before the start date of the purchase period.
VI. PAYROLL DEDUCTIONS
A. Except to the extent otherwise provided in the Plan (or any addendum
thereto) or authorized by the Plan Administrator, the purchase price for the
shares of Common Stock acquired under the Plan shall be paid from accumulated
payroll deductions authorized by the Participant.
B. The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock under the Plan may be any multiple of one
percent (1%) of the Cash Earnings paid to the Participant during each purchase
period, up to a maximum of ten percent (10%). The payroll deduction authorized
by the Participant shall be collected in the currency in which paid by the
Foreign Subsidiary. The payroll deductions collected during each purchase period
shall be converted into U.S. Dollars on the Purchase Date for that purchase
period on the basis of the exchange rate in effect on that date. The Plan
Administrator shall have the absolute discretion to determine the applicable
exchange rate to be in effect for each Purchase Date by any reasonable method
that may be based on the exchange rate actually available in the ordinary course
of business on such date. Any changes or fluctuations in the exchange rate at
which the payroll deductions collected on the Participant's behalf are converted
into U.S. Dollars on each Purchase Date shall be borne solely by the
Participant.
C. The rate of payroll deduction so authorized by the Participant shall
continue in effect for the entire purchase period and for each subsequent
purchase period that the Participant remains in the Plan. The Participant may
not increase his or her rate of payroll deduction during a purchase period, but
may effect such increase as of the start date of any subsequent purchase period
following the filing of a new payroll deduction authorization with the Plan
Administrator. However, the Participant may, at any time during the purchase
period, reduce his or her rate of payroll deduction to become effective as soon
as possible after filing the appropriate form with the Plan Administrator. The
Participant may not, however, effect more than one (1) such reduction per
purchase period.
D. Payroll deductions shall begin on the first pay day following the start
date of the purchase period and shall (unless sooner terminated by the
Participant) continue through the pay day ending with or immediately prior to
the last day of the purchase period. The amounts so collected shall be credited
to the Participant's book account under the Plan, initially in the currency in
which paid by the Foreign Subsidiary until converted into U.S. Dollars on the
applicable Purchase Date. Except to the extent otherwise provided by the Plan
(including any addendum thereto) or by the Plan Administrator, no interest shall
be paid on the balance from time to time outstanding in any book account and the
amounts collected from the Participant shall not be required to be held in any
segregated account or trust fund and may be commingled with the general assets
of the Corporation and used for general corporate purposes.
E. Payroll deductions shall automatically cease upon the termination of the
Participant's purchase right in accordance with the provisions of the Plan.
F. The Participant's acquisition of Common Stock under the Plan on any
Purchase Date shall neither limit nor require the Participant's acquisition of
Common Stock on any subsequent Purchase Date.
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. A Participant shall be granted a separate
purchase right on the start date of each purchase period in which he or she
participates. The purchase right shall provide the Participant with the right to
purchase shares of Common Stock on the Purchase Date upon the terms set forth
below. The Participant shall execute such document or documents embodying such
terms and such other provisions (not inconsistent with the Plan) as the Plan
Administrator may deem advisable.
Under no circumstances shall purchase rights be granted under the Plan to
any Eligible Employee if such individual would, immediately after the grant, own
(within the meaning of Code Section 424(d)) or hold outstanding options or other
rights to purchase, stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Corporation or any
Corporate Affiliate.
B. Exercise of the Purchase Right. Each purchase right shall be
automatically exercised on the Purchase Date, and shares of Common Stock shall
accordingly be purchased on behalf of each Participant on such date. The
purchase shall be effected by applying the Participant's payroll deductions (as
converted into U.S. Dollars) for the purchase period ending on such Purchase
Date to the purchase of shares of Common Stock at the purchase price in effect
for that purchase period.
C. Purchase Price. The U.S. Dollar purchase price per share at which Common
Stock will be purchased on the Participant's behalf on each Purchase Date shall
be equal to eighty-five percent (85%) of the lower of (i) the Fair Market Value
per share of Common Stock on the start date of the purchase period or (ii) the
Fair Market Value per share of Common Stock on that Purchase Date.
D. Number of Purchasable Shares. The number of shares of Common Stock
purchasable by a Participant on each Purchase Date shall be the number of whole
shares obtained by dividing the amount collected from the Participant through
payroll deductions (as converted into U.S. Dollars) during the purchase period
ending with that Purchase Date by the purchase price in effect for that period.
However, the maximum number of shares of Common Stock purchasable per
Participant on any one Purchase Date shall not exceed Eight Hundred (800)
shares, subject to periodic adjustments in the event of certain changes in the
Corporation's capitalization. In addition, the maximum number of shares of
Common Stock purchasable by all Participants in the aggregate on any one
Purchase Date under the Plan and the U.S. Plan shall not exceed One Hundred
Seventy Thousand (170,000) shares, subject to periodic adjustments in the event
of certain changes in the Corporation's capitalization.
E. Excess Payroll Deductions. Any payroll deductions not applied to the
purchase of shares of Common Stock on any Purchase Date because they are not
sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable by the Participant on the
Purchase Date or the limitation on the maximum number of shares purchasable in
the aggregate on the Purchase Date by all Participants shall be promptly
refunded in the currency in which payroll (from which such deductions were made)
was paid to the Participant by the Foreign Subsidiary.
F. Termination of Purchase Right. The following provisions shall govern the
termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the last fifteen (15)
days of the purchase period, terminate his or her outstanding purchase
right by filing the appropriate form with the Plan Administrator (or
its designate), and no further payroll deductions shall be collected
from the Participant with respect to the terminated purchase right.
Any payroll deductions collected during the purchase period in which
such termination occurs shall, at the Participant's election, be
immediately refunded in the currency in which payroll (from which such
deductions were made) was paid to the Participant by the Foreign
Subsidiary or held for the purchase of shares on the next Purchase
Date. If no such election is made at the time the purchase right is
terminated, then the payroll deductions collected with respect to the
terminated right shall be refunded as soon as possible.
(ii) The termination of such purchase right shall be irrevocable,
and the Participant may not subsequently rejoin the purchase period
for which the terminated purchase right was granted. In order to
resume participation in any subsequent purchase period, such
individual must re-enroll in the Plan (by making a timely filing of
the prescribed enrollment forms) before the start date of the new
purchase period.
(iii) Should the Participant cease to remain an Eligible Employee
for any reason (including death, disability or change in status) while
his or her purchase right remains outstanding, then that purchase
right shall immediately terminate, and all of the Participant's
payroll deductions for the purchase period in which the purchase right
so terminates shall be immediately refunded in the currency in which
payroll (from which such deductions were made) was paid to the
Participant by the Foreign Subsidiary. However, should the Participant
cease to remain in active service by reason of an approved unpaid
leave of absence, then the Participant shall have the right,
exercisable up until the last business day of the purchase period in
which such leave commences, to (a) withdraw all the payroll deductions
collected to date on his or her behalf during such purchase period or
(b) have such funds held for the purchase of shares on the next
scheduled Purchase Date. In no event, however, shall any further
payroll deductions be collected on the Participant's behalf during
such leave. Upon the Participant's return to active service (i) within
ninety (90) days after the start of the leave or (ii) prior to the
expiration of any longer period during which his or her re-employment
rights are guaranteed by law or contract, his or her payroll
deductions under the Plan shall automatically resume at the rate in
effect at the time the leave began.
G. Transfer of Employment. In the event that a Participant who is an
Eligible Employee of a Foreign Subsidiary is transferred and becomes an Eligible
Employee of the Corporation during a purchase period under the Plan, such
individual shall continue to remain a Participant in the Plan and payroll
deductions shall continue to be collected until the next Purchase Date as if the
Participant had remained an Eligible Employee of the Foreign Subsidiary.
In the event that an employee of the Corporation who is a participant in
the U.S. Plan is transferred and becomes an Eligible Employee of a Foreign
Subsidiary during a purchase period in effect under the U.S. Plan, such
individual shall automatically become a Participant under the Plan for the
duration of the purchase period in effect at that time under the Plan and the
balance in such individual's book account maintained under the U.S. Plan shall
be transferred as a balance to a book account opened for such individual under
the Plan. Such balance, together with all other payroll deductions collected
from such individual by the Foreign Subsidiary for the remainder of the purchase
period under the Plan (as converted into U.S. Dollars), shall be applied on the
next Purchase Date to the purchase of Common Stock under the Plan.
H. Corporate Transaction. Each outstanding purchase right shall
automatically be exercised, immediately prior to the effective date of any
Corporate Transaction, by applying the payroll deductions of each Participant
for the purchase period in which such Corporate Transaction occurs, as converted
into U.S. Dollars on the basis of the exchange rate in effect as determined by
the Plan Administrator at the time of the Corporate Transaction, to the purchase
of whole shares of Common Stock at a purchase price per share equal to
eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of
Common Stock on the start date of the purchase period in which such Corporate
Transaction occurs or (ii) the Fair Market Value per share of Common Stock
immediately prior to the effective date of such Corporate Transaction. However,
the applicable limitation on the number of shares of Common Stock purchasable
per Participant shall continue to apply to any such purchase, but not the
limitation on the aggregate number of shares purchasable by all Participants.
The Corporation shall use its best efforts to provide at least ten (10)
days prior written notice of the occurrence of any Corporate Transaction, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Corporate Transaction.
I. Proration of Purchase Rights. Should the total number of shares of
Common Stock which are to be purchased pursuant to outstanding purchase rights
on any particular date exceed either (i) the number of shares then available for
issuance under the Plan and the U.S. Plan or (ii) the maximum number of shares
purchasable by all Participants (and all participants in the U.S. Plan) in the
aggregate on that Purchase Date, then the Plan Administrator shall make a
pro-rata allocation of the available shares on a uniform and nondiscriminatory
basis, and the payroll deductions of each Participant (and each participant in
the U.S. Plan), to the extent in excess of the aggregate purchase price payable
for the Common Stock pro-rated to such individual, shall be refunded in the
currency in which payroll (from which such deductions were made) was paid to the
Participant by the Foreign Subsidiary.
J. Assignability. The purchase right shall be exercisable only by the
Participant and shall not be assignable or transferable by the Participant.
K. Stockholder Rights. A Participant shall have no stockholder rights with
respect to the shares subject to his or her outstanding purchase right until the
shares are purchased on the Participant's behalf in accordance with the
provisions of the Plan and the Participant has become a holder of record of the
purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any purchase right outstanding under this Plan if and to the
extent such accrual, when aggregated with (i) rights to purchase Common Stock
accrued under any other purchase right granted under this Plan and (ii) similar
rights accrued under other employee stock purchase plans (within the meaning of
Code Section 423) of the Corporation or any Corporate Affiliate, would otherwise
permit such Participant to purchase more than Twenty-Five Thousand U.S. Dollars
(U.S.$25,000) worth of stock of the Corporation or any Corporate Affiliate
(determined on the basis of the Fair Market Value of such stock on the date or
dates such rights are granted) for each calendar year such rights are at any
time outstanding.
B. For purposes of applying such accrual limitations, the following
provisions shall be in effect:
(i) The right to acquire Common Stock under each outstanding
purchase right shall accrue on the Purchase Date in effect for the
purchase period for which such right is granted.
(ii) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has already
accrued in the same calendar year the right to acquire Common Stock
under one (1) or more other purchase rights at a rate equal to
Twenty-Five Thousand U.S. Dollars (U.S.$25,000) worth of Common Stock
(determined on the basis of the Fair Market Value per share on the
date or dates of grant) for each calendar year such rights were at any
time outstanding.
C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular purchase period, then the payroll
deductions which the Participant made during that purchase period with respect
to such purchase right shall be promptly refunded in the currency in which
payroll (from which such deductions were made) was paid to the Participant by
the Foreign Subsidiary.
D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on July 31, 1998 and shall become
effective on the Effective Date. No purchase rights granted under the Plan shall
be exercised, and no shares of Common Stock shall be issued hereunder, until the
Corporation shall have complied with all applicable requirements of the 1933 Act
(including the registration of the shares of Common Stock issuable under the
Plan on a Form S-8 registration statement filed with the Securities and Exchange
Commission), all applicable listing requirements of any stock exchange (or the
Nasdaq National Market, if applicable) on which the Common Stock is listed for
trading and all other applicable requirements established by law or regulation.
B. Unless sooner terminated by the Board, the Plan shall terminate upon the
earliest to occur of (i) the last business day in October 2008, (ii) the date on
which all shares available for issuance under the Plan and the U.S. Plan shall
have been sold pursuant to purchase rights exercised under the Plan and the U.S.
Plan or (iii) the date on which all purchase rights are exercised in connection
with a Corporate Transaction. No further purchase rights shall be granted or
exercised, and no further payroll deductions shall be collected, under the Plan
following such termination.
X. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the Plan at any time to
become effective immediately following the close of any purchase period.
However, the Board may not, without the approval of the Corporation's
stockholders, (i) increase the number of shares of Common Stock issuable under
the Plan and the U.S. Plan, except for permissible adjustments in the event of
certain changes in the Corporation's capitalization, (ii) alter the purchase
price formula so as to reduce the purchase price payable for the shares of
Common Stock purchasable under the Plan, or (iii) modify the requirements for
eligibility to participate in the Plan.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the Plan shall
be paid by the Corporation.
B. Nothing in the Plan shall confer upon the Participant any right to
continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.
C. Except to the extent otherwise provided in any addendum to the Plan, the
provisions of the Plan shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
D. A Foreign Subsidiary or the Plan Administrator, as the case may be,
shall have the right to deduct from any payment to be made under this Plan, or
to otherwise require, prior to the issuance or delivery of any shares of Common
Stock or the payment of any cash, payment by each Participant of any tax
required by applicable law to be withheld.
E. Additional provisions for individual Foreign Subsidiaries may be
incorporated in one or more Addenda to the Plan. Such Addenda shall have full
force and effect with respect to the Foreign Subsidiaries to which they apply.
In the event of a conflict between the provisions of such an Addendum and one or
more other provisions of the Plan, the provisions of the Addendum shall be
controlling.
Schedule A
Foreign Subsidiaries Participating in
International Employee Stock Purchase Plan
As of September 1, 1998
FileNET Canada, Inc. (Canada)
FileNET France (France)
FileNET GmbH (Germany)
FileNET Company Limited (Ireland)
FileNET BV (Netherlands)
FileNET Limited (United Kingdom)
Addendum A
FILENET CORPORATION
INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN
PLAN ADDENDUM FOR AUSTRALIAN PARTICIPANTS
The following provision shall apply with respect to the extension of the FileNET
Corporation International Employee Stock Purchase Plan to Participants (the
"Australian Participants") who are Eligible Employees of FileNET Corporation Pty
Limited (ACN 056 639 500) ("FileNET Australia").
Notwithstanding the last sentence of Paragraph D of Article VI, the
amounts collected from an Australian Participant (including amounts
converted into U.S. Dollars on the applicable Purchase Date) shall be
held on trust by FileNET Australia in a specific account established by
FileNET Australia for such purpose and may not be commingled with the
general assets of FileNET Australia or the Corporation or used for
general corporate purposes.
APPENDIX
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
B. Cash Earnings shall mean the (i) base salary payable to a Participant
by one or more Foreign Subsidiaries during such individual's period of
participation in one or more purchase periods under the Plan plus (ii)
all overtime payments, bonuses, commissions, and other incentive-type
payments before deduction of any income or employment taxes. Such Cash
Earnings shall be calculated before deduction of (A) any income or
employment tax withholdings or (B) any pre-tax contributions made by
the Participant to any plan or program now or hereafter established by
the Corporation or any Corporate Affiliate. However, Cash Earnings
shall not include any contributions made on the Participant's behalf
by the Corporation or any Corporate Affiliate to any employee benefit
or welfare plan now or hereafter established.
C. Code shall mean the U.S. Internal Revenue Code of 1986, as amended.
D. Common Stock shall mean the Corporation's common stock.
E. Corporate Affiliate shall mean any parent or subsidiary corporation of
the Corporation (as determined in accordance with Code Section 424),
whether now existing or subsequently established.
F. Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing
fifty percent (50%) or more of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities
immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete
liquidation or dissolution of the Corporation.
G. Corporation shall mean FileNET Corporation, a Delaware corporation and
any corporate successor to all or substantially all of the assets or
voting stock of FileNET Corporation which shall by appropriate action
adopt the Plan.
H. Effective Date shall mean September 1, 1998. Any Foreign Subsidiary
which elects, with the approval of the Board, to extend the benefits
of this Plan to its employees after such Effective Date shall
designate a subsequent Effective Date with respect to its
Participants.
I. Eligible Employee shall mean any person who is employed by a Foreign
Subsidiary on a basis under which he or she is regularly expected to
render more than twenty (20) hours of service per week for more than
five (5) months per calendar year for earnings considered wages under
Code Section 3401(a).
J. Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the average of
the high and low U.S. Dollar selling prices per share of Common Stock
on the date in question, as those prices are reported by the National
Association of Securities Dealers on the Nasdaq National Market. If
there are no selling prices for the Common Stock on the date in
question, then the Fair Market Value shall be the average of the high
and low U.S. Dollar selling prices on the last preceding date for
which such quotations exist.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the average of the high
and low U.S. Dollar selling prices per share of Common Stock on the
date in question on the Stock Exchange determined by the Plan
Administrator to be the primary market for the Common Stock, as those
prices are officially quoted in the composite tape of transactions on
such exchange. If there are no selling prices for the Common Stock on
the date in question, then the Fair Market Value shall be the average
of the high and low U.S. Dollar selling prices on the last preceding
date for which such quotations exist.
K. Foreign Subsidiary shall mean any non-U.S. Corporate Affiliate or
Affiliates as may be authorized from time to time by the Board to
extend the benefits of the Plan to their Eligible Employees. The
Foreign Subsidiaries in the Plan as of the Effective Date are listed
in attached Schedule A.
L. 1933 Act shall mean the Securities Act of 1933, as amended.
M. Participant shall mean any Eligible Employee of a Foreign Subsidiary
who is actively participating in the Plan.
N. Plan shall mean the Corporation's International Employee Stock
Purchase Plan, as set forth in this document.
O. Plan Administrator shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Plan.
P. Predecessor Plan shall mean the Corporation's 1988 Employee Stock
Purchase Plan to which the U.S. Plan is a successor.
Q. Purchase Date shall mean the last business day of each purchase
period. The initial Purchase Date shall be April 30, 1999.
R. Stock Exchange shall mean either the American Stock Exchange or the
New York Stock Exchange.
S. U.S. Plan shall mean the FileNET Corporation 1998 Employee Stock
Purchase Plan.