EXHIBIT 10.5
SHIVA CORPORATION
1997 STOCK INCENTIVE PLAN
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1. Purpose
The purpose of this 1997 Stock Incentive Plan (the "Plan")
of Shiva Corporation, a Massachusetts corporation (the
"Company"), is to advance the interests of the Company's
stockholders by enhancing the Company's ability to attract,
retain and motivate persons who make (or are expected to make)
important contributions to the Company by providing such persons
with equity ownership opportunities and performance-based
incentives and thereby better aligning the interests of such
persons with those of the Company's stockholders. Except where
the context otherwise requires, the term "Company" shall include
any present or future subsidiary corporations of Shiva
Corporation as defined in Section 424(f) of the Internal Revenue
Code of 1986, as amended, and any regulations promulgated
thereunder (the "Code") (a "Subsidiary").
2. Eligibility
All of the Company's employees, officers, directors,
consultants and advisors are eligible to be granted options to
purchase Common Stock (each an "Option"), Option under the Plan.
Any person who has been granted an Option under the Plan shall be
deemed a "Participant".
3. Administration, Delegation
(a) Administration by Board of Directors. The Plan will
be administered by the Board of Directors of the Company (the
"Board"). The Board shall have authority to grant Options and to
adopt, amend and repeal such administrative rules, guidelines and
practices relating to the Plan as it shall deem advisable from
time to time, to interpret and correct the provisions of the Plan
and any Option. No member of the Board shall be liable for any
action or determination relating to the Plan made in good faith.
All decisions by the Board shall be final and binding on all
persons having or claiming any interest in the Plan or in any
Option.
(b) Delegation to Executive Officers. To the extent
permitted by applicable law, the Board may delegate to one or more
executive officers of the Company the power to make Options and
exercise such other powers under the Plan as the Board may determine,
provided that the Board shall fix the maximum number of shares
subject to Options to be made by such executive officers and a
maximum number of shares for any one Participant.
(c) Appointment of Committees. To the extent permitted
by applicable law, the Board may delegate any or all of its
powers under the Plan to one or more committees or subcommittees,
each consisting of not less than two members of the Board (a
"Committee"). The Board shall appoint one such Committee, each
member of which shall be an "outside director" within the meaning
of Section 162(m) of the Code and a "non-employee director" as
defined in Rule 16b-3 promulgated under the Securities Exchange
Act of 1934. All references to the Board in the Plan shall mean
a Committee or the Board or the Executive Officer referred to in
Section 4(b) to the extent of such delegation.
4. Stock Available for Options
(a) Number of Shares. Subject to adjustment under
Section 4(c) below, Options may be made under the Plan for up to
one million, four hundred thousand (1,400,000) shares of the
common stock, $.01 par value per share, of the Company (the
"Common Stock"). If any Option expires or is terminated,
surrendered or canceled without having been fully exercised or is
forfeited in whole or in part or results in any Common Stock not
being issued, the unused Common Stock covered by such Option
shall again be available for the grant of Options under the Plan,
subject, however, in the case of Incentive Stock Options (as
defined hereinafter), to any limitation required under the Code.
Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(b) Per-Participant Limit. Subject to adjustment under
Section 4 (c) the maximum number of shares with respect to which
an Option may be granted to any Participant under the Plan shall
not exceed five hundred thousand (500,000) shares per calendar
year, or in the case of an initial Option made in connection with
the employment of a new employee, one million (1,000,000) shares
in the initial calendar year of employment. The per-Participant
limit described in this Section 4(b) shall be construed and
applied consistent with Section 162(m) of the Code.
(c) Adjustment to Common Stock. In the event that the
Board, in its sole discretion, determines that any stock
dividend, extraordinary cash dividend, recapitalization,
reorganization, split-up, spin-off or other similar transaction
affects the Common Stock in a manner that requires an adjustment
in order to preserve the benefits or potential benefits intended
to be made available under the Plan, then the Board may equitably
adjust any or all of (i) the total number and kind of shares
issuable under the Plan, (ii) the number and kind of shares
subject to Options then outstanding, and the exercise, conversion
price or other terms with respect to any outstanding Option. The
number of shares resulting from any such adjustment shall always
be a whole number.
5. Stock Options
(a) General. Subject to the provisions of the Plan, the
Board may grant options to purchase Common Stock (each an
"Option") and determine the number of shares of Common Stock to
be covered by each Option, the exercise price of each Option and
the conditions and limitations applicable to the exercise of each
Option, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.
An Option which is not intended to be an Incentive Stock Option
(as defined hereinafter) shall be designated a "Nonstatutory
Stock Option".
(b) Incentive Stock Options. An Option that the Board
intends to be an "incentive stock option" as defined in Section
422 of the Code (an "Incentive Stock Option") shall only be
granted to employees of the Company and shall be subject to and
shall be construed consistent with the requirements of Section
422 of the Code.
(c) Exercise Price. The Board shall establish the
exercise price at the time each Option is granted and specify it
in the applicable option agreement except that Options shall not
be granted with an exercise price that is less than the fair
market value of the Company's Common Stock at the date of grant.
(d) Duration of Options. Each Option shall be
exercisable at such times and subject to such terms and
conditions as the Board may specify in the applicable option
agreement.
(e) Exercise of Option. Options may be exercised only
by delivery to the Company of a written notice of exercise signed
by the proper person together with payment in full as specified
in Section 5(f) for the number of shares for which the Option is
exercised.
(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 determine or
provide in an Option, delivery of an irrevocable and
unconditional undertaking by a 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 broker to deliver promptly to the
Company cash or a check sufficient to pay the exercise price; or
(3) 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, 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 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 those set forth in the plan.
(c) Board Discretion. The terms of each type of Option
need not be identical, and the Board need not treat Participants
uniformly.
(d) Termination of Status. The Board shall determine
the effect on an Option of the disability, death, retirement,
authorized leave of absence or other change in the employment or
other status of a Participant and the extent to which, and the
period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary
may exercise rights under the Option.
(e) Mergers, Etc.
(1) Consequences of Mergers, etc. Upon the
occurrence of an Acquisition Event (as defined below), the Board
shall either (i) if there is a surviving or acquiring
corporation, arrange, subject to consummation of the Acquisition
Event, to have that corporation or an affiliate of that
corporation grant to Participants replacement Options (or assume
the Options of the Company), which in the case of Incentive Stock
Options, satisfy, in the determination of the Board, the
requirements of Section 424(a) of the Code, (ii) upon written
notice to Participants at least 10 days prior to the consummation
of the Acquisition Event, provide that all unexercised or
unvested Options will terminate upon the consummation of the
Acquisition Event, except to the extent exercised by the
Participant within a specified period following the date of such
notice; or (iii) make or provide for a cash payment to each
Participant, on or before the consummation of the Acquisition,
equal to the difference, if any, between (A) the fair market
value of the shares of Common Stock subject to outstanding Option
of such Participant, to the extent then exercisable and (B) the
aggregate exercise price, if any, of all such outstanding
Options, in exchange for the termination of all such Options held
by such Participant. 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 fifty percent 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; or (c) the complete liquidation of the Company.
(2) Assumption of Options Upon Mergers, etc. The
Board may grant Options under the Plan in substitution for stock
and stock-based Options held by employees of another corporation
who become employees of the Company as a result of a merger or
consolidation of the employing corporation with the Company or
the acquisition by the Company of property or stock of the
employing corporation. The substitute Options shall be granted
on such terms and conditions as the Board considers appropriate
in the circumstances.
(f) 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
Options to such Participant no later than the date of the event
creating the tax liability. In the Board's discretion, and
subject to such conditions as the Board may establish, such tax
obligations may be paid in whole or in part in shares of Common
Stock, including shares retained from the Option 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.
(g) Amendment of Option. The Board may amend, modify or
terminate any outstanding Option, including but not limited to,
substituting therefor another Option of the same or a different
type, changing the date of exercise or realization, converting an
Incentive Stock Option to a Nonstatutory Stock Option, and
accelerating the exercise or vesting of any Option. The
Participant's consent to such action shall not be required unless
the Board determines that the action, taking into account any
related action, would materially and adversely affect the
Participant.
(h) 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 Option
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, 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.
7. Miscellaneous
(a) No Right To Employment or Other Status. No person
shall have any claim or right to be granted an Option, and the
grant of an Option shall not be construed as giving a Participant
the right to continued employment or any other relationship with
the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a
Participant free from any liability or claim under the Plan,
except as expressly provided in the applicable Option.
(b) No Rights As Stockholder. Subject to the provisions
of the applicable Option, 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 thereof.
(c) Effective Date and Term of Plan. The Plan shall
become effective on the date on which it is approved by the
stockholders of the Company. Grants of Options under the Plan
may be made prior to that date (but contemporaneous with or after
Board adoption of the Plan), subject to approval of the Plan by
such stockholders. 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 stockholders, 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
(i) such approval is necessary to comply with any applicable tax
or regulatory requirements, including any securities laws, stock
exchange or stock market rules, or (ii) such amendment increases
the number of shares of Common Stock available under the Plan
pursuant to Section 4(a), other than such increases authorized
under Section 4(c). Amendments requiring stockholder approval
shall become effective when adopted by the Board, but no Option
granted after the date of such amendment shall become exercisable
or vested (to the extent that such amendment to the Plan was
required to grant such Option to a particular Participant) unless
and until such amendment shall have been approved by the
Company's stockholders. If such stockholder approval is not
obtained within twelve months of the Board's adoption of such
amendment, any Option granted on or after the date of such
amendment shall terminate to the extent that such amendment to
the Plan was required to enable the Company to grant such Option
to a particular Participant.
(e) Stockholder Approval. For purposes of this Plan,
stockholder approval shall mean approval by a vote of the
stockholders in accordance with the bylaws of the Company, unless
otherwise required by applicable tax or regulatory laws,
including Sections 162(m) and 422 of the Code, securities laws,
and stock exchange and stock market rules.
(f) 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.