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TELEDESIC CORPORATION
RESTATED 1994 STOCK OPTION/STOCK ISSUANCE PLAN
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This Restated 1994 Stock Option/Stock Issuance Plan (the "Plan") is
intended to promote the interests of Teledesic Corporation, a Delaware
corporation (the "Corporation"), by providing (i) employees (including officers)
of the Corporation (or its parent or subsidiary corporations) who are
responsible for the management, growth and financial success of the Corporation
(or its parent or subsidiary corporations), (ii) the non-employee members of the
board of directors of the Corporation (or its parent or subsidiary corporations)
and (iii) consultants and other independent contractors who provide valuable
services to the Corporation (or its parent or subsidiary corporations) with the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in
the service of the Corporation (or its parent or subsidiary corporations).
B. The Plan shall become effective upon its adoption by the Board.
II. DEFINITIONS
A. For purposes of the Plan, the following definitions shall be in
effect:
BOARD: the Corporation's Board of Directors.
CHANGE IN CONTROL: a change in ownership or control of the Corporation
effected through the following transactions:
a. the direct or indirect acquisition by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation's stockholders;
and
b. a change in the composition of the Board over a period of
eighteen (18) consecutive months or less such that a majority of the Board
members (rounded up to the next whole number) ceases to be comprised of
individuals who have been Board members continuously since the beginning of such
period.
CODE: the Internal Revenue Code of 1986, as amended.
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COMMITTEE: the committee of two (2) or more non-employee members of the
Board appointed by the Board to administer the Plan; and from and after the
Section 12(g) Registration Date, the Committee shall be comprised solely of at
least two (2) "non-employee directors" as that term is defined in Rule 16b-3
promulgated under Section 16 of the 1934 Act.
COMMON STOCK: shares of the Corporation's Class A Common Stock(1).
COMMON STOCK REGISTRATION DATE: the date on which the initial
registration of the Common Stock of the Corporation under Section 12(g) of the
Exchange Act first becomes effective.
CORPORATE TRANSACTION: any of the following stockholder-approved
transactions to which the Corporation is a party:
a. a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Corporation is incorporated,
b. 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, or
c. any reverse merger in which the Corporation is the surviving
entity but in which securities possessing more than fifty percent (50%) 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 merger.
EFFECTIVE DATE: June 24, 1994, the date of adoption of the Plan by the
Board.
EMPLOYEE: an individual who performs services while in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity not only as to the work to be performed but also as to
the manner and method of performance.
EXERCISE DATE: the date on which the Corporation shall have received
written notice of the option exercise.
FAIR MARKET VALUE: the Fair Market Value per share of Common Stock
determined in accordance with the following provisions:
a. If the Common Stock is not at the time listed or admitted to
trading on any national securities exchange but is traded on the Nasdaq National
Market, the Fair Market Value shall be the closing selling price per share on
the date in question, as such price is reported by the Nasdaq National
Association of Securities Dealers through the National Market or any successor
system. If there is no reported closing selling price for the Common Stock on
the date in question, then the closing selling price on the last preceding date
for which such quotation exists shall be determinative of Fair Market Value.
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(1) Reflects reclassification of common stock to Class A common stock
effected on July 25, 1997.
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b. If the Common Stock is at the time listed or admitted to
trading on any national securities exchange, then the Fair Market Value shall be
the closing selling price per share on the date in question on the securities
exchange determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of Common Stock on
such exchange on the date in question, then the Fair Market Value shall be the
closing selling price on the exchange on the last preceding date for which such
quotation exists.
c. If the Common Stock is on the date in question neither listed
nor admitted to trading on any national securities exchange nor traded on the
Nasdaq National Market, then the Fair Market Value of the Common Stock on such
date shall be determined by the Plan Administrator after taking into account
such factors as the Plan Administrator shall deem appropriate.
HOSTILE TAKE-OVER: a change in ownership of the Corporation effected
through the following transaction occurring after the Section 12(g) Registration
Date:
a. the direct or indirect acquisition by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation's stockholders
which the Board does not recommend such stockholders to accept, and
b. the acceptance of more than fifty percent (50%) of the
securities so acquired in such tender or exchange offer from holders other than
the officers and directors of the Corporation subject to the short-swing profit
restrictions of Section 16 of the Exchange Act.
INCENTIVE OPTION: a stock option which satisfies the requirements of
Code Section 422.
1934 ACT: the Securities and Exchange Act of 1934, as amended from time
to time.
NON-STATUTORY OPTION: a stock option not intended to meet the
requirements of Code Section 422.
OPTIONEE: any person to whom an option is granted under the Plan.
PARENT: any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation, provided each such
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
PARTICIPANT: any person who receives a direct issuance of Common Stock
under the Stock Issuance Program in effect under the Plan.
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PERMANENT DISABILITY OR PERMANENTLY DISABLED: the inability of the
Optionee or the Participant to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.
PLAN ADMINISTRATOR: either the Board or the Committee, to the extent the
Committee is at the time responsible for the administration of the Plan in
accordance with Section IV of Article One.
SECTION 12(g) REGISTRATION DATE: the date on which the initial
registration of any class of securities of the Corporation under Section 12(g)
of the 1934 Act first becomes effective.
SERVICE: the performance of services on a periodic basis to the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or an independent consultant or
advisor, except to the extent otherwise specifically provided in the applicable
stock option or stock issuance agreement.
SUBSIDIARY: each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation, provided each such
corporation in the unbroken chain (other than the last corporation) owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
TAKE-OVER PRICE: the greater of (a) the Fair Market Value per share of
Common Stock on the date the particular option to purchase such stock is
surrendered to the Corporation in connection with a Hostile Take-Over or (b) the
highest reported price per share of Common Stock paid by the tender offeror in
effecting such Hostile Take-Over. However, if the surrendered option is an
Incentive Option, the Take-Over Price shall not exceed the clause (a) price per
share.
III. STRUCTURE OF THE PLAN
A. STOCK PROGRAMS
The Plan shall be divided into two (2) separate components: the Option
Grant Program specified in Article Two and the Stock Issuance Program specified
in Article Three. Under the Option Grant Program, eligible individuals may, at
the discretion of the Plan Administrator, be granted options to purchase shares
of Common Stock in accordance with the provisions of Article Two. Under the
Stock Issuance Program, eligible individuals may be issued shares of Common
Stock directly, either through the immediate purchase of such shares at a price
not less than eighty-five percent (85%) of the Fair Market Value of the shares
at the time of issuance, as a bonus tied to the performance of services or the
Corporation's attainment of financial objectives, or pursuant to the
individual's election to receive such shares in lieu of base salary.
B. GENERAL PROVISIONS
Unless the context clearly indicates otherwise, the provisions of
Articles One and Four shall apply to the Option Grant Program and the Stock
Issuance Program and shall accordingly govern the interests of all individuals
under the Plan.
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IV. ADMINISTRATION OF THE PLAN
A. Until the Section 12(g) Registration Date, the Plan shall be
administered by the Board unless and until the Board delegates administration to
the Committee. From and after such Section 12(g) Registration Date, the Plan
shall be administered solely and exclusively by the Committee.
B. Members of the Committee shall serve for such period of time as the
Board may determine and shall be subject to removal by the Board at any time.
C. The Plan Administrator shall have full power and authority (subject
to the express provisions of the Plan) to establish rules and regulations for
the proper administration of the Plan and to make such determinations under, and
issue such interpretations of, the provisions of the Plan and any outstanding
option grants or stock issuances thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator shall be final and binding on all
parties who have an interest in the Plan or any outstanding option or share
issuance thereunder.
V. OPTION GRANTS AND STOCK ISSUANCES
A. The persons eligible to participate in the Option Grant Program under
Article Two or the Stock Issuance Program under Article Three shall be limited
to the following:
(i) Employees;
(ii) non-employee members of the Board or the non-employee
members of the board of directors of any Parent or Subsidiary; and
(iii) consultants or other independent contractors who provide
valuable services to the Corporation (or any Parent or Subsidiary).
B. Non-employee Board members who serve as members of the Committee
following the Section 12(g) Registration Date shall not be eligible during such
period of service to participate in the Plan or in any other stock option, stock
purchase, stock bonus or other stock plan of the Corporation (or its parent or
subsidiary corporations).
C. The Plan Administrator shall have full authority to determine (i)
with respect to the option grants made under the Option Grant Program, which
eligible individuals are to receive option grants, the number of shares to be
covered by each such grant, the status of the granted option as either an
Incentive Option or a Non-Statutory Option, the time or times at which each
granted option is to become exercisable and the maximum term for which the
option may remain outstanding and (ii) with respect to stock issuances under the
Stock Issuance Program, the eligible individuals who are to participate, the
number of shares to be issued to each Participant, the vesting schedule (if any)
to be applicable to the issued shares and the consideration to be paid by the
individual for such shares.
VI. STOCK SUBJECT TO THE PLAN
A. Shares of Common Stock shall be available for issuance under the Plan
and shall be drawn from either the Corporation's authorized but unissued shares
of Common Stock or from reacquired shares of Common Stock. The maximum number of
shares of Common Stock which
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may be issued over the term of the Plan shall not exceed 22,445,800(2) shares,
subject to adjustment from time to time in accordance with the provisions of
this Section VI.
B. From and after the Section 12(g) Registration Date, no individual
participating in the Plan shall be granted stock options, separately exercisable
stock appreciation rights and direct stock issuances for more than 1,250,000
shares of Common Stock in the aggregate over the remaining term of the Plan. For
purposes of such limitation, no stock options, stock appreciation rights or
direct stock issuances made prior to such Section 12(g) Registration Date shall
be taken into account.
C. Should one or more outstanding options under this Plan expire or
terminate for any reason prior to exercise in full (including any option
cancelled in accordance with the cancellation-regrant provisions of Section IV
of Article Two of the Plan), then the shares subject to the portion of each
option not so exercised shall be available for subsequent issuance under the
Plan. Shares subject to any option or portion thereof surrendered in accordance
with Section V of Article Two and all share issuances under the Plan, whether or
not the shares are subsequently repurchased by the Corporation pursuant to its
repurchase rights under the Plan, shall reduce on a share-for-share basis the
number of shares of Common Stock available for subsequent issuance under the
Plan. In addition, should the exercise price of an outstanding option under the
Plan be paid with shares of Common Stock, then the number of shares of Common
Stock available for issuance under the Plan shall be reduced by the gross number
of shares for which the option is exercised and not by the net number of shares
of Common Stock actually issued to the holder of such option.
D. Should any change be made to the Common Stock issuable under the Plan
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, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one individual participating in the Plan may be granted
stock options, separately exercisable stock appreciation rights and direct stock
issuances in the aggregate after the Section 12(g) Registration Date, and (iii)
the number and/or class of securities and price per share in effect under each
option outstanding under the Plan. Such adjustments to the outstanding options
are to be effected in a manner which shall preclude the enlargement or dilution
of rights and benefits under such options. The adjustments determined by the
Plan Administrator shall be final, binding and conclusive.
ARTICLE TWO
OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Option Grant Program shall be authorized
by action of the Plan Administrator and may, at the Plan Administrator's
discretion, be either Incentive Options or Non-Statutory Options. Individuals
who are not Employees of the Corporation or any
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(2) As adjusted to reflect 3-for-1 stock split effective January 22, 1997.
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Parent or Subsidiary may only be granted Non-Statutory Options. Each granted
option shall be evidenced by one or more instruments in the form approved by the
Plan Administrator; provided, however, that each such instrument shall comply
with the terms and conditions specified below. Each instrument evidencing an
Incentive Option shall, in addition, be subject to the applicable provisions of
Section II of this Article Two.
A. EXERCISE PRICE
1. The exercise price per share shall be fixed by the Plan
Administrator in accordance with the following provisions:
a. The exercise price per share of the Common Stock subject
to an Incentive Option shall in no event be less than one hundred percent (100%)
of the Fair Market Value of such Common Stock on the grant date.
b. The exercise price per share of the Common Stock subject
to a Non-Statutory Option shall in no event be less than eighty-five percent
(85%) of the Fair Market Value of such Common Stock on the grant date.
2. The exercise price shall become immediately due upon exercise
of the option and, subject to the provisions of Section I of Article Four and
the instrument evidencing the grant, shall be payable in cash or check made
payable to the Corporation. Should the option be exercised after the Common
Stock Registration Date, then the exercise price may also be paid in one of the
alternative forms specified below:
a. in shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date or
b. to the extent the option is exercised for vested shares,
through a broker-dealer sale and remittance procedure pursuant to which the
Optionee shall provide concurrent irrevocable written instructions (i) to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation in connection with such purchase and (ii) to the Corporation to
deliver the certificates for the purchased shares directly to such brokerage
firm in order to complete the sale transaction.
Except to the extent the sale and remittance procedure is utilized in
connection with the exercise of the option for vested shares, payment of the
exercise price for the purchased shares must accompany such notice.
B. TERM AND EXERCISE OF OPTIONS
Each option granted under this Option Grant Program shall be exercisable
at such time or times and during such period as is determined by the Plan
Administrator and set forth in the instrument evidencing the grant. No such
option, however, shall have a maximum term in excess of ten (10) years measured
from the grant date. During the lifetime of the Optionee, the option, together
with any stock appreciation rights pertaining to such option, shall be
exercisable only by
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the Optionee and shall not be assignable or transferable by the Optionee except
for a transfer of the option effected by will or by the laws of descent and
distribution following the Optionee's death.
C. TERMINATION OF SERVICE
1. The following provisions shall govern the exercise period
applicable to any outstanding options held by the Optionee at the time of
cessation of Service or death.
a. Should an Optionee cease Service for any reason
(including death or Permanent Disability) while holding one or more outstanding
options under this Article Two, then none of those options shall (except to the
extent otherwise provided pursuant to subparagraph 3 below) remain exercisable
for more than a thirty-six (36)-month period (or such shorter period determined
by the Plan Administrator and set forth in the instrument evidencing the grant)
measured from the date of such cessation of Service.
b. Any option held by the Optionee under this Article Two
and exercisable in whole or in part on the date of his or her death may be
subsequently exercised by the personal representative of the Optionee's estate
or by the person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and distribution.
However, the right to exercise such option shall lapse upon the earlier of (i)
the third anniversary of the date of the Optionee's death (or such shorter
period determined by the Plan Administrator and set forth in the instrument
evidencing the grant) or (ii) the specified expiration date of the option term.
Accordingly, upon the occurrence of the earlier event, the option shall
terminate and cease to remain outstanding.
c. Under no circumstances shall any such option be
exercisable after the specified expiration date of the option term.
d. During the applicable post-Service exercise period, the
option may not be exercised in the aggregate for more than the number of shares
(if any) in which the Optionee is vested at the time of his or her cessation of
Service. Upon the expiration of the limited post-Service exercise period or (if
earlier) upon the specified expiration date of the option term, each such option
shall terminate and cease to remain outstanding with respect to any vested
shares for which the option has not otherwise been exercised. However, each
outstanding option shall immediately terminate and cease to remain outstanding,
at the time of the Optionee's cessation of Service, with respect to any shares
for which the option is not otherwise at that time exercisable or in which the
Optionee is not otherwise vested.
e. Should (i) the Optionee's Service be terminated for
misconduct (including, but not limited to, any act of dishonesty, willful
misconduct, fraud or embezzlement) or (ii) the Optionee make any unauthorized
use or disclosure of confidential information or trade secrets of the
Corporation or any Parent or Subsidiary, then in any such event all outstanding
options held by the Optionee under this Article Two shall terminate immediately
and cease to remain outstanding.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the Optionee
under this Article Two to be exercised, during the
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limited post-Service exercise period applicable under this paragraph C not only
with respect to the number of vested shares of Common Stock for which each such
option is exercisable at the time of the Optionee's cessation of Service but
also with respect to one or more subsequent installments of vested shares for
which the option would otherwise have become exercisable had such cessation of
Service not occurred.
3. The Plan Administrator shall also have full power and
authority, exercisable either at the time the option is granted or at any time
while the option remains outstanding, to extend the period of time for which the
option is to remain exercisable following the Optionee's cessation of Service or
death from the limited period in effect under subparagraph 1 above to such
greater period of time as the Plan Administrator shall deem appropriate. In no
event, however, shall such option be exercisable after the specified expiration
date of the option term.
D. STOCKHOLDER RIGHTS
An Optionee shall have no stockholder rights with respect to any
shares covered by the option until such individual shall have exercised the
option and paid the exercise price for the purchased shares.
E. REPURCHASE RIGHTS
The shares of Common Stock acquired upon the exercise of any Article Two
option grant may be subject to repurchase by the Corporation in accordance with
the following provisions:
1. The Plan Administrator shall have the discretion to authorize
the issuance of unvested shares of Common Stock under this Article Two. Should
the Optionee cease Service while holding such unvested shares, the Corporation
shall have the right to repurchase any or all of those unvested shares at the
exercise price paid per share. The terms and conditions upon which such
repurchase right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares) shall be
established by the Plan Administrator and set forth in the instrument evidencing
such repurchase right.
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2. All of the Corporation's outstanding repurchase rights under
this Article Two shall automatically terminate, and all shares subject to such
terminated rights shall immediately vest in full, upon the occurrence of a
Corporate Transaction, except to the extent: (i) any such repurchase right is
expressly assigned to the successor corporation (or parent thereof) in
connection with the Corporate Transaction or (ii) such termination is precluded
by other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.
3. The Plan Administrator shall have the discretionary authority,
exercisable either before or after the Optionee's cessation of Service, to
cancel the Corporation's outstanding repurchase rights with respect to one or
more shares purchased or purchasable by the Optionee under this Option Grant
Program and thereby accelerate the vesting of such shares in whole or in part at
any time.
F. FIRST REFUSAL RIGHTS
Until the Common Stock Registration Date, the Corporation shall have the
right of first refusal with respect to any proposed sale or other disposition by
the optionee (or any successor in interest by reason of purchase, gift or other
transfer) of any shares of Common Stock issued under the Plan. Such right of
first refusal shall be exercisable in accordance with the terms and conditions
established by the Plan Administrator and set forth in the agreement evidencing
such right.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under this Article Two. Incentive Options may only be
granted to individuals who are Employees. Options which are specifically
designated as Non-Statutory Options when issued under the Plan shall not be
subject to such terms and conditions.
A. DOLLAR LIMITATION
The aggregate Fair Market Value (determined as of the respective date or
dates of grant) of the Common Stock for which one or more options granted to any
Employee under this Plan (or any other option plan of the Corporation or any
Parent or Subsidiary) may for the first time become exercisable as incentive
stock options under the Federal tax laws during any one calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as incentive stock options under the Federal tax
laws shall be applied on the basis of the order in which such options are
granted. Should the number of shares of Common Stock for which any Incentive
Option first becomes exercisable in any calendar year exceed the applicable One
Hundred Thousand Dollar ($100,000) limitation, then that option may nevertheless
be exercised in such calendar year for the excess number of shares as a
non-statutory option under the Federal tax laws.
B. 10% STOCKHOLDER
If any individual to whom an Incentive Option is granted is the owner of
stock (as determined under Section 424(d) of the Code) possessing ten percent
(10%) or more of the total
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combined voting power of all classes of stock of the Corporation or any Parent
or Subsidiary, then the exercise price per share shall not be less than one
hundred ten percent (110%) of the Fair Market Value per share of Common Stock on
the grant date, and the option term shall not exceed five (5) years, measured
from the grant date.
Except as modified by the preceding provisions of this Section II, the
provisions of Articles One, Two and Four of the Plan shall apply to all
Incentive Options granted hereunder.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, each option which is at
the time outstanding under this Article Two shall automatically accelerate so
that each such option shall, immediately prior to the specified effective date
for the Corporate Transaction, become fully exercisable with respect to the
total number of shares of Common Stock at the time subject to such option and
may be exercised for all or any portion of such shares. However, an outstanding
option under this Article Two shall not so accelerate if and to the extent: (i)
such option is, in connection with the Corporate Transaction, either to be
assumed by the successor corporation or parent thereof or to be replaced with a
comparable option to purchase shares of the capital stock of the successor
corporation or parent thereof, (ii) such option is to be replaced with a cash
incentive program of the successor corporation which preserves the option spread
existing at the time of the Corporate Transaction and provides for subsequent
payout in accordance with the same vesting schedule applicable to such option or
(iii) the acceleration of such option is subject to other limitations imposed by
the Plan Administrator at the time of the option grant. The determination of
option comparability under clause (i) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive.
B. Immediately following the consummation of the Corporate Transaction,
all outstanding options under this Article Two shall terminate and cease to
remain outstanding, except to the extent assumed by the successor corporation or
its parent company.
C. Each outstanding option under this Article Two which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have been
issued to the option holder, in consummation of such Corporate Transaction, had
such person exercised the option immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the exercise price
payable per share, provided the aggregate exercise price payable for such
securities shall remain the same. In addition, the class and number of
securities available for issuance under the Plan on both an aggregate and per
individual basis following the consummation of the Corporate Transaction shall
be appropriately adjusted.
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D. The Plan Administrator shall have the discretion, exercisable either
at the time the option is granted or at any while the option remains
outstanding, to provide (upon such terms as it may deem appropriate) for the
automatic acceleration of one or more outstanding options under this Article Two
which are assumed or replaced in the Corporate Transaction and do not otherwise
accelerate at that time, in the event the Optionee's Service should subsequently
terminate within a designated period following such Corporate Transaction. To
the extent any outstanding repurchase rights of the Corporation applicable to
the Optionee's unvested shares are assigned to the successor corporation in the
Corporate Transaction and do not otherwise terminate at that time, the Plan
Administrator shall also have the discretionary authority to provide for the
immediate termination of those repurchase rights upon the subsequent termination
of the Optionee's Service within a designated period following the Corporate
Transaction.
E. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the Option is granted or at any time while the
option remains outstanding of an actual Change in Control, to provide for the
automatic acceleration of one or more outstanding options under this Article Two
(and the immediate termination of one or more of the Corporation's outstanding
repurchase rights under this Article Two) upon the occurrence of the Change in
Control. The Plan Administrator shall also have full power and authority to
condition any such option acceleration (and the termination of any outstanding
repurchase rights) upon the subsequent termination of the Optionee's Service
within a specified period following the Change in Control.
F. Any options accelerated in connection with the Change in Control
shall remain fully exercisable until the expiration or sooner termination of the
option term.
G. The grant of options under this Article Two shall in no way affect
the right of the Corporation 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.
H. The portion of any Incentive Option accelerated under this Section
III in connection with a Corporate Transaction or Change in Control shall remain
exercisable as an incentive stock option under the Federal tax laws only to the
extent the dollar limitation of Section II of this Article Two is not exceeded.
To the extent such dollar limitation is exceeded, the accelerated portion of
such option shall be exercisable as a non-statutory option under the Federal tax
laws.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected Optionees, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution new options under the Plan covering the same or different numbers
of shares of Common Stock but with an exercise price per share not less than (i)
eighty-five percent (85%) of the Fair Market Value per share of Common Stock on
the new grant date or (ii) one hundred percent (100%) of such Fair Market Value
in the case of an Incentive Option.
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V. STOCK APPRECIATION RIGHTS
A. Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this Section
V, one or more Optionees may be granted the right, exercisable upon such terms
and conditions as the Plan Administrator may establish, to surrender all or part
of an unexercised option under this Article Two in exchange for a distribution
from the Corporation in an amount equal to the excess of (i) the Fair Market
Value (on the option surrender date) of the number of shares in which the
Optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (ii) the aggregate exercise price payable for such vested
shares.
B. No surrender of an option shall be effective hereunder unless it is
approved by the Plan Administrator. If the surrender is so approved, then the
distribution to which the Optionee shall accordingly become entitled under this
Section V may be made in shares of Common Stock valued at Fair Market Value on
the option surrender date, in cash, or partly in shares and partly in cash, as
the Plan Administrator shall in its sole discretion deem appropriate.
C. If the surrender of an option is rejected by the Plan Administrator,
then the Optionee shall retain whatever rights the Optionee had under the
surrendered option (or surrendered portion thereof) on the option surrender date
and may exercise such rights at any time prior to the later of (i) five (5)
business days after the receipt of the rejection notice or (ii) the last day on
which the option is otherwise exercisable in accordance with the terms of the
instrument evidencing such option, but in no event may such rights be exercised
more than ten (10) years after the date of the option grant.
D. One or more officers of the Corporation may, in the Plan
Administrator's sole discretion, be granted limited stock appreciation rights in
tandem with their outstanding options under this Article Two. Upon the
occurrence of a Hostile Take-Over after the Section 12(g) Registration Date, the
officer shall have a thirty (30)-day period in which he or she may surrender any
outstanding options with such a limited stock appreciation right in effect for
at least six (6) months to the Corporation, to the extent such option is at the
time exercisable for fully vested shares of Common Stock. The officer shall in
return be entitled to a cash distribution from the Corporation in an amount
equal to the excess of (i) the Take-Over Price of the vested shares of Common
Stock at the time subject to each surrendered option (or surrendered portion of
such option) over (ii) the aggregate exercise price payable for such shares. The
cash distribution shall be made within five (5) days following the date the
option is surrendered to the Corporation, and neither the approval of the Plan
Administrator nor the consent of the Board shall be required in connection with
the option surrender and cash distribution. Any unsurrendered portion of the
option shall continue to remain outstanding and become exercisable in accordance
with the terms of the instrument evidencing such grant.
E. The shares of Common Stock subject to any option surrendered for an
appreciation distribution pursuant to this Section V shall NOT be available for
subsequent issuance under the Plan.
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ARTICLE THREE
STOCK ISSUANCE PROGRAM
I. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate purchases without any intervening stock option
grants. The issued shares shall be evidenced by a Stock Issuance Agreement
("Issuance Agreement") that complies with the terms and conditions of this
Article Three.
A. CONSIDERATION
1. Shares of Common Stock drawn from the Corporation's authorized
but unissued shares of Common Stock shall be issued under the Stock Issuance
Program for such consideration which the Plan Administrator may deem appropriate
in each individual instance including one or more of the following:
a. full payment in cash or check made payable to the
Corporation's order;
b. a promissory note payable to the Corporation's order in
one or more installments, which may be subject to cancellation in whole or in
part upon terms and conditions established by the Plan Administrator;
c. past services rendered or future services to be rendered
to the Corporation or any Parent or Subsidiary; or
d. attainment of specified performance objectives
established by the Plan Administrator.
2. Such Shares may, in the absolute discretion of the Plan
Administrator, be issued for consideration with a value less than one hundred
percent (100%) of the Fair Market Value of such shares at the time of issuance,
but in no event less than eighty- five percent (85%) of such Fair Market Value.
3. Shares of Common Stock may also, in the Plan Administrator's
absolute discretion, be issued pursuant to an irrevocable election by the
Participant to receive a portion of his or her base salary in shares of Common
Stock in lieu of such base salary. Any such issuance shall be effected in
accordance with the following guidelines:
a. On the first trading day in January of the calendar year
for which the election is effective, the portion of base salary subject to such
election shall automatically be applied to the acquisition of Common Stock by
dividing the elected dollar amount by the Fair Market Value per share of the
Common Stock on that trading day. The number of issuable shares shall be rounded
down to the next whole share, and the issued shares shall be held in escrow by
the Secretary of the Corporation until the Participant vests in those shares.
The Participant shall have full stockholder rights, including voting, dividend
and liquidation rights, with respect to all issued shares held in escrow on his
or her behalf, but such shares shall not be assignable or transferable while
they remain unvested.
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b. Upon completion of each calendar month of Service during
the year for which the election is in effect, the Participant shall vest in
one-twelfth (1/12) of the issued shares, and the stock certificate for those
shares shall be released from escrow. All the issued shares shall immediately
vest upon the occurrence of a Corporate Transaction or Change in Control while
such individual remains in Service. Should the Participant otherwise cease
Service prior to vesting in one or more monthly installments of the issued
shares, then those unvested shares shall immediately be surrendered to the
Corporation for cancellation, and the Participant shall not be entitled to any
cash payment or other consideration from the Corporation with respect to the
cancelled shares and shall have no further stockholder rights with respect to
such shares.
B. VESTING PROVISIONS
1. Shares of Common Stock issued under the Stock Issuance Program
may, in the absolute discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service. The elements of the vesting schedule
applicable to any unvested shares of Common Stock issued under the Stock
Issuance Program, namely:
a. the Service period to be completed by the Participant or
the performance objectives to be achieved by the Corporation,
b. the number of installments in which the shares are to
vest,
c. the interval or intervals (if any) which are to lapse
between installments, and
d. the effect which death, Permanent Disability or other
event designated by the Plan Administrator is to have upon the vesting schedule,
shall be determined by the Plan Administrator and incorporated into the Issuance
Agreement executed by the Corporation and the Participant at the time such
unvested shares are issued.
2. The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to him or her under the Plan,
whether or not his or her interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular
cash dividends paid on such shares. Any new, additional or different shares of
stock or other property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive with respect to
his or her unvested shares by reason of any stock dividend, stock split,
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 or by reason of any Corporate Transaction shall be
issued, subject to (i) the same vesting requirements applicable to his or her
unvested shares and (ii) such escrow arrangements as the Plan Administrator
shall deem appropriate.
3. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock under the Stock Issuance
Program, then those shares shall be immediately surrendered to the Corporation
for cancellation, and the Participant shall have no further stockholder rights
with respect to those shares. To the extent the surrendered
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shares were previously issued to the Participant for consideration paid in cash
or cash equivalent (including the Participant's purchase-money promissory note),
the Corporation shall repay to the Participant the cash consideration paid for
the surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable to such
surrendered shares.
4. The Plan Administrator may in its discretion elect to waive
the surrender and cancellation of one or more unvested shares of Common Stock
(or other assets attributable thereto) which would otherwise occur upon the
non-completion of the vesting schedule applicable to such shares. Such waiver
shall result in the immediate vesting of the Participant's interest in the
shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. Upon the occurrence of any Corporate Transaction, all unvested shares
of Common Stock at the time outstanding under this Stock Issuance Program shall
immediately vest in full and the Corporation's repurchase rights shall
terminate, except to the extent: (i) any such repurchase right is expressly
assigned to the successor corporation (or parent thereof) in connection with the
Corporate Transaction or (ii) such termination is precluded by other limitations
imposed in the Issuance Agreement.
B. The Plan Administrator shall have the discretionary authority,
exercisable either in advance of any actually-anticipated Change in Control or
at the time of an actual Change in Control, to provide for the automatic vesting
of one or more unvested shares outstanding under the Stock Issuance Program (and
the immediate termination of the Corporation's repurchase rights with respect to
those shares) at the time of such Change in Control. The Plan Administrator
shall also have full power and authority to condition any such accelerated
vesting upon the subsequent termination of the Participant's Service within a
specified period following the Change in Control.
III. TRANSFER RESTRICTIONS/SHARE ESCROW
A. Unvested shares may, in the Plan Administrator's discretion, be held
in escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends on
the certificates evidencing such unvested shares. To the extent an escrow
arrangement is utilized, the unvested shares and any securities or other assets
distributed with respect to such shares (other than regular cash dividends)
shall be delivered in escrow to the Corporation to be held until the
Participant's interest in such shares (or the distributed securities or assets)
vests. If the unvested shares are issued directly to the Participant, the
restrictive legend on the certificates for such shares shall read substantially
as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE
ACCORDINGLY SUBJECT TO (I) CERTAIN TRANSFER RESTRICTIONS AND (II)
CANCELLATION OR REPURCHASE IN THE EVENT THE REGISTERED HOLDER (OR
HIS/HER PREDECESSOR IN INTEREST) CEASES TO REMAIN IN THE CORPORATION'S
SERVICE.
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SUCH TRANSFER RESTRICTIONS AND THE TERMS AND CONDITIONS OF SUCH
CANCELLATION OR REPURCHASE ARE SET FORTH IN A STOCK ISSUANCE AGREEMENT
BETWEEN THE CORPORATION AND THE REGISTERED HOLDER (OR HIS/HER
PREDECESSOR IN INTEREST) DATED _________,199__, A COPY OF WHICH IS ON
FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION.
B. The Participant shall have no right to transfer any unvested shares
of Common Stock issued to him or her under the Stock Issuance Program. For
purposes of this restriction, the term "transfer" shall include (without
limitation) any sale, pledge, assignment, encumbrance, gift or other disposition
of such shares, whether voluntary or involuntary. Upon any such attempted
transfer, the unvested shares shall immediately be cancelled in accordance with
substantially the same procedure in effect under Section I.B.3 of this Article
Four, and neither the Participant nor the proposed transferee shall have any
rights with respect to such cancelled shares. However, the Participant shall
have the right to make a gift of unvested shares acquired under the Stock
Issuance Program to his or her spouse or issue, including adopted children, or
to a trust established for such spouse or issue, provided the donee of such
shares delivers to the Corporation a written agreement to be bound by all the
provisions of the Stock Issuance Program and the Issuance Agreement applicable
to the gifted shares.
ARTICLE FOUR
MISCELLANEOUS
I. LOANS OR INSTALLMENT PAYMENTS
A. The Plan Administrator may, in its discretion, assist any Optionee or
Participant, to the extent such Optionee or Participant is an Employee
(including an Optionee or Participant who is an officer of the Corporation), in
the exercise of one or more options granted to such Optionee under the Option
Grant Program or the purchase of one or more shares issued to such Participant
under the Stock Issuance Program, including the satisfaction of any Federal,
state and local income and employment tax obligations arising therefrom, by (i)
authorizing the extension of a loan from the Corporation to such Optionee or
Participant or (ii) permitting the Optionee or Participant to pay the exercise
price or purchase price for the purchased shares in installments over a period
of years. The terms of any loan or installment method of payment (including the
interest rate and terms of repayment) shall be upon such terms as the Plan
Administrator specifies in the applicable option or issuance agreement or
otherwise deems appropriate under the circumstances. Loans or installment
payments may be authorized with or without security or collateral. However, the
maximum credit available to the Optionee or Participant may not exceed the
exercise or purchase price of the acquired shares plus any Federal, state and
local income and employment tax liability incurred by the Optionee or
Participant in connection with the acquisition of such shares.
B. The Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under this financial assistance program shall be
subject to forgiveness by the Corporation in whole or in part upon such terms
and conditions as the Plan Administrator may deem appropriate.
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II. TAX WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock upon the
exercise of stock options for such shares or the direct issuance or vesting of
such shares under the Plan shall be subject to the satisfaction of all
applicable Federal, State and local income and employment tax withholding
requirements.
The Plan Administrator may, in its discretion and in accordance with the
provisions of this Section II of Article Four and such supplemental rules as the
Plan Administrator may from time to time adopt (including the applicable
safe-harbor provisions of SEC Rule 16b-3), provide any or all holders of
non-statutory options or unvested shares under the Plan with the right to use
shares of the Corporation's Common Stock in satisfaction of all or part of the
Federal, State and local income and employment tax liabilities incurred by such
holders in connection with the exercise of their options or the vesting of their
shares (the "Taxes"). Such right may be provided to any such holder in either or
both of the following formats:
A. Stock Withholding: The holder of the non-statutory option or
unvested shares may be provided with the election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such non-statutory option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the
applicable Taxes (not to exceed one hundred percent (100%)) designated by the
holder.
B. Stock Delivery: The Plan Administrator may, in its discretion,
provide the holder of the non-statutory option or unvested shares purchased
thereunder with the election to deliver to the Corporation, at the time the non-
statutory option is exercised or the shares vest, one or more shares of Common
Stock previously acquired by such individual (other than in connection with the
option exercise or share vesting triggering the Taxes) with an aggregate Fair
Market Value equal to the percentage of the Taxes incurred in connection with
such option exercise or share vesting (not to exceed one hundred percent (100%))
designated by the holder.
III. AMENDMENT OF THE PLAN AND AWARDS
A. The Board has complete and exclusive power and authority to amend or
modify the Plan (or any component thereof) in any or all respects whatsoever.
However, no such amendment or modification shall adversely affect rights and
obligations with respect to options at the time outstanding under the Plan, nor
adversely affect the rights of any Participant with respect to Common Stock
issued under the Stock Issuance Program prior to such action, unless the
Optionee or Participant consents to such amendment. In addition, the Board may
not, without the approval of the Corporation's stockholders, amend the Plan to
(i) materially increase the maximum number of shares issuable under the Plan or
the maximum number of shares for which any one individual participating in the
Plan may be granted stock options, separately exercisable stock appreciation
rights and direct stock issuances in the aggregate from and after the Section
12(g) Registration Date, except for permissible adjustments under Section VI.C.
of Article One, (ii) materially modify the eligibility requirements for Plan
participation or (iii) materially increase the benefits accruing to Plan
participants.
B. (i) Options to purchase shares of Common Stock may be granted under
the Option Grant Program and (ii) shares of Common Stock may be issued under the
Stock Issuance
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Program, which are in both instances in excess of the number of shares then
available for issuance under the Plan, provided any excess shares actually
issued under the Option Grant Program or the Stock Issuance Program are held in
escrow until stockholder approval is obtained for a sufficient increase in the
number of shares available for issuance under the Plan. If such stockholder
approval is not obtained within twelve (12) months after the date the first such
excess option grants or excess share issuances are made, then (i) any
unexercised excess options shall terminate and cease to be exercisable and (ii)
the Corporation shall promptly refund the purchase price paid for any excess
shares actually issued under the Plan and held in escrow, together with interest
(at the applicable Short Term Federal Rate) for the period the shares were held
in escrow.
IV. EFFECTIVE DATE AND TERM OF PLAN
A. This Plan shall become effective immediately upon adoption by the
Board and stock options and share issuances may be made under Articles Two and
Three of the Plan from and after such Effective Date. However, no stock options
granted under the Plan shall become exercisable, and no shares of Common Stock
issued under the Plan shall vest, unless and until the Plan is approved by the
Corporation's stockholders within twelve (12) months after the Effective Date.
Should such stockholder approval not be obtained, then all stock options and
share issuances made under this Plan shall terminate and cease to remain
outstanding, and no further stock option grants or share issuances shall be made
under the Plan.
B. The Plan shall terminate upon the earlier of (i) March 31, 2004 or
(ii) the date on which all shares available for issuance under the Plan shall
have been issued or cancelled pursuant to the exercise, surrender or cash-out of
the options granted under the Plan or the issuance of shares (whether vested or
unvested) under the Stock Issuance Program. If the date of termination is
determined under clause (i) above, then all option grants and unvested share
issuances outstanding on such date shall thereafter continue to have force and
effect in accordance with the provisions of the instruments evidencing such
grants or issuances.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
pursuant to option grants or share issuances under the Plan shall be used for
general corporate purposes.
VI. REGULATORY APPROVALS
The implementation of the Plan, the granting of any stock option or
stock appreciation right under the Plan, the issuance of any shares under the
Stock Issuance Program and the issuance of Common Stock upon the exercise of the
stock options or stock appreciation rights granted hereunder shall be subject to
the Corporation's procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the stock options and
stock appreciation rights granted under it and the Common Stock issued pursuant
to it.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the Plan, nor any
action taken by the Plan Administrator hereunder, nor any provision of the Plan
shall be construed so as to grant any individual the right to remain in the
Service of the Corporation (or any Parent or Subsidiary) for
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any period of specific duration, and the Corporation (or any Parent or
Subsidiary retaining the services of such individual) may terminate such
individual's Service at any time and for any reason, with or without cause.
VIII. MISCELLANEOUS PROVISIONS
A. Except to the extent otherwise expressly provided in the Plan, the
right to acquire Common Stock or other assets under the Plan may not be
assigned, encumbered or otherwise transferred by any Optionee or Participant.
B. The provisions of the Plan relating to the exercise of options and
the vesting of shares shall be governed by the laws of the State of Washington
without resort to that State's conflict-of-laws rules, as such laws are applied
to contracts entered into and performed in such State.
C. The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Participants and Optionees, the
legal representatives of their respective estates, their respective heirs or
legatees and their permitted assignees.
*****
Originally adopted by the Board of Directors on June 24, 1994 and
approved by the stockholders on November 7, 1994; original plan provided for
issuance of 2,500,000 shares.
Amendment No. 1 increasing the number of shares covered by the plan to
3,648,600 adopted by the Board of Directors on October 31, 1995 and approved by
the stockholders on December 14, 1995.
Amendment No. 2 increasing the number of shares covered by the plan to
6,648,600 adopted by the Board of Directors on October 25, 1996 and approved by
the stockholders on October 31, 1996.
Amendment No. 3 amending the definition of "Committee" and providing for
administration by the Committee adopted by the Board of Directors on October 25,
1996.
Pursuant to Section VI of Article I, the number of shares covered by the
plan was adjusted to 19,945,800 to reflect 3-for-1 stock split effected on
January 31, 1997.
Pursuant to Section VI of Article I, the class of shares covered by the
plan was adjusted to Class A Common Stock to reflect the reclassification
effected on July 25, 1997.
Amendment No. 4 increasing the number of shares covered by the plan to
22,445,800 adopted by the Board of Directors on July 8, 1999 and approved by the
stockholders on September 22, 1999.
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