EXHIBIT 4.3
PAYPAL, INC.
2001 EQUITY INCENTIVE PLAN
1. PURPOSES OF THE PLAN. The purposes of the PayPal, Inc. 2001 Equity
Incentive Plan are to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to
Employees, Directors and Consultants and to promote the success of the Company's
business. Options granted under the Plan may be Incentive Stock Options or
Non-Qualified Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "Acquisition" means (i) any consolidation or merger of the Company with
or into any other corporation or other entity or person in which the
stockholders of the Company prior to such consolidation or merger own less than
fifty percent (50%) of the Company's voting power immediately after such
consolidation or merger, excluding any consolidation or merger effected
exclusively to change the domicile of the Company; or (ii) a sale of all or
substantially all of the assets of the Company.
(b) "Administrator" means the Board or the Committee responsible for
conducting the general administration of the Plan, as applicable, in accordance
with Section 4 hereof.
(c) "Applicable Laws" means the requirements relating to the administration
of stock option plans under U.S. state corporate laws, U.S. federal and state
securities laws, the Code, any stock exchange or quotation system on which the
Common Stock is listed or quoted and the applicable laws of any foreign country
or jurisdiction where Options or Stock Purchase Rights are granted under the
Plan.
(d) "Board" means the Board of Directors of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute or statutes thereto. Reference to any particular Code section
shall include any successor section.
(f) "Committee" means a committee appointed by the Board in accordance with
Section 4 hereof.
(g) "Common Stock" means the common stock of the Company.
(h) "Company" means PayPal, Inc., a Delaware corporation.
(i) "Consultant" means any consultant or adviser if: (i) the consultant or
adviser renders bona fide services to the Company or any Parent or Subsidiary of
the Company; (ii) the services rendered by the consultant or adviser are not in
connection with the offer or sale of securities in a capital-raising transaction
and do not directly or indirectly promote or maintain a market for the Company's
securities; and (iii) the consultant or adviser is a natural person who has
contracted directly with the Company or any Parent or Subsidiary of the Company
to render such services.
(j) "Director" means a member of the Board.
(k) "Employee" means any person, including an Officer or Director, who is an
employee (as defined in accordance with Section 3401(c) of the Code) of the
Company or any Parent or Subsidiary of the Company. A Service Provider shall not
cease to be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive
Stock Options, no such leave may exceed ninety (90) days, unless reemployment
upon expiration of such leave is guaranteed by statute or contract. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient, by itself, to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto. Reference to any particular Exchange
Act section shall include any successor section.
(m) "Fair Market Value" means, as of any date, the value of a share of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a
national market system, including, without limitation, the Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market
Value shall be the closing sales price for a share of such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or system for the
last market trading day prior to the time of determination, as reported in The
Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall be the
mean between the high bid and low asked prices for a share of the Common Stock
on the last market trading day prior to the day of determination; or
(iii) In the absence of an established market for the Common Stock, the Fair
Market Value thereof shall be determined in good faith by the Administrator.
(n) "Holder" means a person who has been granted or awarded an Option or
Stock Purchase Right or who holds Shares acquired pursuant to the exercise of an
Option or Stock Purchase Right.
(o) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and which
is designated as an Incentive Stock Option by the Administrator.
(p) "Independent Director" means a Director who is not an Employee of the
Company.
(q) "Non-Qualified Stock Option" means an Option (or portion thereof) that
is not designated as an Incentive Stock Option by the Administrator, or which is
designated as an Incentive Stock Option by the Administrator but fails to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(r) "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "Option" means a stock option granted pursuant to the Plan.
(t) "Option Agreement" means a written agreement between the Company and a
Holder evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.
(u) "Parent" means any corporation, whether now or hereafter existing (other
than the Company), in an unbroken chain of corporations ending with the Company
if each of the corporations other than the last corporation in the unbroken
chain owns stock possessing more than fifty percent of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
(v) "Plan" means the PayPal, Inc. 2001 Equity Incentive Plan.
(w) "Public Trading Date" means the first date upon which Common Stock of
the Company is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system.
(x) "Restricted Stock" means Shares acquired pursuant to the exercise of an
unvested Option in accordance with Section 10(h) below or pursuant to a Stock
Purchase Right granted under Section 12 below.
(y) "Rule 16b-3" means that certain Rule 16b-3 under the Exchange Act, as
such Rule may be amended from time to time.
(z) "Section 16(b)" means Section 16(b) of the Exchange Act, as such Section
may be amended from time to time.
(aa) "Securities Act" means the Securities Act of 1933, as amended, or any
successor statute or statutes thereto. Reference to any particular Securities
Act section shall include any successor section.
(bb) "Service Provider" means an Employee, Director or Consultant.
(cc) "Share" means a share of Common Stock, as adjusted in accordance with
Section 13 below.
(dd) "Stock Purchase Right" means a right to purchase Common Stock pursuant
to Section 12 below.
(ee) "Subsidiary" means any corporation, whether now or hereafter existing
(other than the Company), in an unbroken chain of corporations beginning with
the Company if each of the corporations other than the last corporation in the
unbroken chain owns stock possessing more than fifty percent of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13 of the
Plan, the shares of stock subject to Options or Stock Purchase Rights shall be
Common Stock, initially shares of the Company's Common Stock. Subject to the
provisions of Section 13 of the Plan, the maximum aggregate number of Shares
which may be issued upon exercise of such Options or Stock Purchase Rights is
38,000,000 Shares. Shares issued upon exercise of Options or Stock Purchase
Rights may be authorized but unissued, or reacquired Common Stock. If an Option
or Stock Purchase Right expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares which are delivered by the Holder or withheld by the Company
upon the exercise of an Option or Stock Purchase Right under the Plan, in
payment of the exercise price thereof or tax withholding thereon, may again be
optioned, granted or awarded hereunder, subject to the limitations of this
Section 3. If Shares of Restricted Stock are repurchased by the Company at their
original purchase price, such Shares shall become available for future grant
under the Plan. Notwithstanding the provisions of this Section 3, no Shares may
again be optioned, granted or awarded if such action would cause an Incentive
Stock Option to fail to qualify as an Incentive Stock Option under Code Section
422.
4. ADMINISTRATION OF THE PLAN.
(a) Administrator. Unless and until the Board delegates administration to a
Committee as set forth below, the Plan shall be administered by the Board. The
Board may delegate administration of the Plan to a Committee or Committees of
one or more members of the Board, and the term "Committee" shall apply to any
person or persons to whom such authority has been delegated. If administration
is delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to
the Board shall thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. Notwithstanding the foregoing,
however, from and after the Public Trading Date, a Committee of the Board shall
administer the Plan and the Committee shall consist solely of two or more
Independent Directors each of whom is both an "outside director," within the
meaning of Section 162(m) of the Code, and a "non-employee director" within the
meaning of Rule 16b-3. Within the scope of such authority, the Board or the
Committee may (i) delegate to a committee of one or more members of the Board
who are not Independent Directors the authority to grant awards under the Plan
to eligible persons who are either (1) not then "covered employees," within the
meaning of Section 162(m) of the Code and are not expected to be "covered
employees" at the time of recognition of income resulting from such award or (2)
not persons with respect to whom the Company wishes to comply with Section
162(m) of the Code and/or (ii) delegate to a committee of one or more members of
the Board who are not "non-employee directors," within the meaning of Rule
16b-3, the authority to grant awards under the Plan to eligible persons who are
not then subject to Section 16 of the Exchange Act. The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan.
Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may only be filled by the Board.
(b) Powers of the Administrator. Subject to the provisions of the Plan and
the specific duties delegated by the Board to such Committee, and subject to the
approval of any relevant authorities, the Administrator shall have the authority
in its sole discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock Purchase
Rights may from time to time be granted hereunder;
(iii) to determine the number of Shares to be covered by each such award
granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions of any Option or Stock Purchase
Right granted hereunder (such terms and conditions include, but are not limited
to, the exercise price, the time or times when Options or Stock Purchase Rights
may vest or be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Option or Stock Purchase Right or the Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine);
(vi) to determine whether to offer to buyout a previously granted Option as
provided in subsection 10(i) and to determine the terms and conditions of such
offer and buyout (including whether payment is to be made in cash or Shares);
(vii) to prescribe, amend and rescind rules and regulations relating to the
Plan, including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax laws;
(viii) to allow Holders to satisfy withholding tax obligations by electing
to have the Company withhold from the Shares to be issued upon exercise of an
Option or Stock Purchase Right that number of Shares having a Fair Market Value
equal to the minimum amount required to be withheld based on the statutory
withholding rates for federal and state tax purposes that apply to supplemental
taxable income. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be
determined. All elections by Holders to have Shares withheld for this purpose
shall be made in such form and under such conditions as the Administrator may
deem necessary or advisable;
(ix) to amend the Plan or any Option or Stock Purchase Right granted under
the Plan as provided in Section 15; and
(x) to construe and interpret the terms of the Plan and awards granted
pursuant to the Plan and to exercise such powers and perform such acts as the
Administrator deems necessary or desirable to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) Effect of Administrator's Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all Holders.
5. ELIGIBILITY. Non-Qualified Stock Options and Stock Purchase Rights may be
granted to Service Providers. Incentive Stock Options may be granted only to
Employees. If otherwise eligible, an Employee or Consultant who has been granted
an Option or Stock Purchase Right may be granted additional Options or Stock
Purchase Rights.
6. LIMITATIONS.
(a) Each Option shall be designated by the Administrator in the Option
Agreement as either an Incentive Stock Option or a Non-Qualified Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of Shares subject to a Holder's Incentive Stock Options and
other incentive stock options granted by the Company, any Parent or Subsidiary,
which become exercisable for the first time during any calendar year (under all
plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess
Options
or other options shall be treated as Non-Qualified Stock Options.
For purposes of this Section 6(a), Incentive Stock Options shall be taken
into account in the order in which they were granted, and the Fair Market Value
of the Shares shall be determined as of the time of grant.
(b) Neither the Plan, any Option nor any Stock Purchase Right shall confer
upon a Holder any right with respect to continuing the Holder's employment or
consulting relationship with the Company, nor shall they interfere in any way
with the Holder's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.
(c) No Service Provider shall be granted, in any calendar year, Options or
Stock Purchase Rights to purchase more than 10,000,000 Shares; provided,
however, that the foregoing limitation shall not apply prior to the Public
Trading Date and, following the Public Trading Date, the foregoing limitation
shall not apply until the earliest of: (i) the first material modification of
the Plan (including any increase in the number of shares reserved for issuance
under the Plan in accordance with Section 3); (ii) the issuance of all of the
shares of Common Stock reserved for issuance under the Plan; (iii) the
expiration of the Plan; (iv) the first meeting of stockholders at which
Directors of the Company are to be elected that occurs after the close of the
third calendar year following the calendar year in which occurred the first
registration of an equity security of the Company under Section 12 of the
Exchange Act; or (v) such other date required by Section 162(m) of the Code and
the rules and regulations promulgated thereunder. The foregoing limitation shall
be adjusted proportionately in connection with any change in the Company's
capitalization as described in Section 13. For purposes of this Section 6(c), if
an Option is canceled in the same calendar year it was granted (other than in
connection with a transaction described in Section 15), the canceled Option will
be counted against the limit set forth in this Section 6(c). For this purpose,
if the exercise price of an Option is reduced, the transaction shall be treated
as a cancellation of the Option and the grant of a new Option.
7. TERM OF PLAN. The Plan shall become effective upon its initial adoption
by the Board and shall continue in effect until it is terminated under Section
17 of the Plan. No Options or Stock Purchase Rights may be issued under the Plan
after the tenth (10th) anniversary of the earlier of (i) the date upon which the
Plan is adopted by the Board or (ii) the date the Plan is approved by the
stockholders.
8. TERM OF OPTION. The term of each Option shall be stated in the Option
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option granted
to a Holder who, at the time the Option is granted, owns (or is treated as
owning under Code Section 424) stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Option shall be five (5) years from the date of
grant or such shorter term as may be provided in the Option Agreement.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) Except as provided in Section 13, the per share exercise price for the
Shares to be issued upon exercise of an Option shall be such price as is
determined by the Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of grant of such Option, owns
(or is treated as owning under Code Section 424) stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no less than one
hundred ten percent (110%) of the Fair Market Value per Share on the date of
grant.
(B) granted to any other Employee, the per Share exercise price shall be no
less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant.
(ii) In the case of a Non-Qualified Stock Option
(A) granted to a Service Provider who, at the time of grant of such Option,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the exercise price
shall be no less than one hundred ten percent (110%) of the Fair Market Value
per Share on the date of the grant.
(B) granted to any other Service Provider, the per Share exercise price
shall be no less than eighty-five percent (85%) of the Fair Market Value per
Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted with a per Share
exercise price other than as required above pursuant to a merger or other
corporate transaction.
(b) The consideration to be paid for the Shares to be issued upon exercise
of an Option, including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) with the consent of the Administrator, a full recourse promissory
note bearing interest (at a market rate of interest) and payable upon such terms
as may be prescribed by the Administrator, (4) with the consent of the
Administrator, other Shares which (x) in the case of Shares acquired from the
Company, have been owned by the Holder for more than six (6) months on the date
of surrender, and (y) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which such Option shall be
exercised, (5) with the consent of the Administrator, surrendered Shares then
issuable upon exercise of the Option having a Fair Market Value on the date of
exercise equal to the aggregate exercise price of the Option or exercised
portion thereof, (6) property of any kind which constitutes good and valuable
consideration, (7) with the consent of the Administrator, delivery of a notice
that the Holder has placed a market sell order with a broker with respect to
Shares then issuable upon exercise of the Options and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the Option exercise price, provided, that payment of
such proceeds is then made to the Company upon settlement of such sale, or (8)
with the consent of the Administrator, any combination of the foregoing methods
of payment.
10. EXERCISE OF OPTION.
(a) Vesting; Fractional Exercises. Except as provided in Section 13, Options
granted hereunder shall be vested and exercisable according to the terms hereof
at such times and under such conditions as determined by the Administrator and
set forth in the Option Agreement; provided, however, that, prior to the Public
Trading Date, except with regard to Options granted to Officers, Directors or
Consultants, in no event shall an Option granted hereunder become vested and
exercisable at a rate of less than twenty percent (20%) per year over five (5)
years from the date the Option is granted, subject to reasonable conditions,
such as continuing to be a Service Provider. An Option may not be exercised for
a fraction of a Share.
(b) Deliveries upon Exercise. All or a portion of an exercisable Option
shall be deemed exercised upon delivery of all of the following to the Secretary
of the Company or his or her office:
(i) A written or electronic notice complying with the applicable rules
established by the Administrator stating that the Option, or a portion thereof,
is exercised. The notice shall be signed by the Holder or other person then
entitled to exercise the Option or such portion of the Option;
(ii) Such representations and documents as the Administrator, in its sole
discretion, deems necessary or advisable to effect compliance with Applicable
Laws. The Administrator may, in its sole discretion, also take whatever
additional actions it deems appropriate to effect such compliance, including,
without limitation, placing legends on share certificates and issuing stop
transfer notices to agents and registrars;
(iii) Upon the exercise of all or a portion of an unvested Option pursuant
to Section 10(h), a Restricted Stock purchase agreement in a form determined by
the Administrator and signed by the Holder or other person then entitled to
exercise the Option or such portion of the Option; and
(iv) In the event that the Option shall be exercised pursuant to Section
10(f) by any person or persons other than the Holder, appropriate proof of the
right of such person or persons to exercise the Option.
(c) Conditions to Delivery of Share Certificates. The Company shall not be
required to issue or deliver any certificate or certificates for Shares
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
(i) The admission of such Shares to listing on all stock exchanges on which
such class of stock is then listed;
(ii) The completion of any registration or other qualification of such
Shares under any state or federal law, or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental regulatory body
which the Administrator shall, in its sole discretion, deem necessary or
advisable;
(iii) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Administrator shall, in its sole
discretion, determine to be necessary or advisable;
(iv) The lapse of such reasonable period of time following the exercise of
the Option as the Administrator may establish from time to time for reasons of
administrative convenience; and
(v) The receipt by the Company of full payment for such Shares, including
payment of any applicable withholding tax, which in the sole discretion of the
Administrator may be in the form of consideration used by the Holder to pay for
such Shares under Section 9(b).
(d) Termination of Relationship as a Service Provider. If a Holder ceases to
be a Service Provider other than by reason of the Holder's disability or death,
such Holder may exercise his or her Option within such period of time as is
specified in the Option Agreement to the extent that the Option is vested on the
date of termination; provided, however, that prior to the Public Trading Date,
such period of time shall not be less than thirty (30) days (but in no event
later than the expiration of the term of the Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for three (3) months following the Holder's
termination. If, on the date of termination, the Holder is not vested as to his
or her entire Option, the Shares covered by the unvested portion of the Option
immediately cease to be issuable under the Option and shall again become
available for issuance under the Plan. If, after termination, the Holder does
not exercise his or her Option within the time period specified herein, the
Option shall terminate, and the Shares covered by such Option shall again become
available for issuance under the Plan.
(e) Disability of Holder. If a Holder ceases to be a Service Provider as a
result of the Holder's disability, the Holder may exercise his or her Option
within such period of time as is specified in the Option Agreement to the extent
the Option is vested on the date of termination; provided, however, that prior
to the Public Trading Date, such period of time shall not be less than six (6)
months (but in no event later than the expiration of the term of such Option as
set forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for twelve (12) months
following the Holder's termination. If such disability is not a "disability" as
such term is defined in Section 22(e)(3) of the Code, in the case of an
Incentive Stock Option such Incentive Stock Option shall automatically cease to
be treated as an Incentive Stock Option and shall be treated for tax purposes as
a Non-Qualified Stock Option from and after the day which is three (3) months
and one (1) day following such termination. If, on the date of termination, the
Holder is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall immediately cease to be issuable under the
Option and shall again become available for issuance under the Plan. If, after
termination, the Holder does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall again become available for issuance under the Plan.
(f) Death of Holder. If a Holder dies while a Service Provider, the Option
may be exercised within such period of time as is specified in the Option
Agreement provided, however, that prior to the Public Trading Date, such period
of time shall not be less than six (6) months (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant), by
the Holder's estate or by a person who acquires the right to exercise the Option
by bequest or inheritance, but only to the extent that the Option is vested on
the date of death. In the absence of a specified time in the Option Agreement,
the Option shall remain exercisable for twelve (12) months following the
Holder's termination. If, at the time of death, the Holder is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall immediately cease to be issuable under the Option and shall again
become available for issuance under the Plan. The Option may be exercised by the
executor or administrator of the Holder's estate or, if none, by the person(s)
entitled to exercise the Option under the Holder's will or the laws of descent
or distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
again become available for issuance under the Plan.
(g) Regulatory Extension. A Holder's Option Agreement may provide that if
the exercise of the Option following the termination of the Holder's status as a
Service Provider (other than upon the Holder's death or Disability) would be
prohibited at any time solely because the issuance of shares would violate the
registration requirements under the Securities Act, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option set
forth in Section 8 or (ii) the expiration of a period of three (3) months after
the termination of the Holder's status as a Service Provider during which the
exercise of the Option would not be in violation of such registration
requirements.
(h) Early Exercisability. The Administrator may provide in the terms of a
Holder's Option Agreement that the Holder may, at any time before the Holder's
status as a Service Provider terminates, exercise the Option in whole or in part
prior to the full vesting of the Option; provided, however, that subject to
Section 22, Shares acquired upon exercise of an Option which has not fully
vested may be subject to any forfeiture, transfer or other restrictions as the
Administrator may determine in its sole discretion.
(i) Buyout Provisions. The Administrator may at any time offer to buyout for
a payment in cash or Shares, an Option previously granted, based on such terms
and conditions as the Administrator shall establish and communicate to the
Holder at the time that such offer is made.
11. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. Options and
Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the Holder,
only by the Holder.
12. STOCK PURCHASE RIGHTS.
(a) Rights to Purchase. Stock Purchase Rights may be issued either alone, in
addition to, or in tandem with Options granted under the Plan and/or cash awards
made outside of the Plan. After the Administrator determines that it will offer
Stock Purchase Rights under the Plan, it shall advise the offeree in writing of
the terms, conditions and restrictions related to the offer, including the
number of Shares that such person shall be entitled to purchase, the price to be
paid, and the time within which such person must accept such offer; provided,
however, that to the extent required to comply with applicable securities laws,
the purchase price of such Shares shall not be less than the purchase price
requirements set forth in Section 260.140.42 of Title 10 of the California Code
of Regulations. The offer shall be accepted by execution of a Restricted Stock
purchase agreement in the form determined by the Administrator.
(b) Repurchase Right. Unless the Administrator determines otherwise, the
Restricted Stock purchase agreement shall grant the Company the right to
repurchase Shares acquired upon exercise of a Stock Purchase Right upon the
termination of the purchaser's status as a Service Provider for any reason.
Subject to Section 22, the purchase price for Shares repurchased by the Company
pursuant to such repurchase right and the rate at which such repurchase right
shall lapse shall be determined by the Administrator in its sole discretion, and
shall be set forth in the Restricted Stock purchase agreement.
(c) Other Provisions. The Restricted Stock purchase agreement shall contain
such other terms, provisions and conditions not inconsistent with the Plan as
may be determined by the Administrator in its sole discretion.
(d) Rights as a Shareholder. Once the Stock Purchase Right is exercised, the
purchaser shall have rights equivalent to those of a shareholder and shall be a
shareholder when his or her purchase is entered upon the records of the duly
authorized transfer agent of the Company. No adjustment shall be made for a
dividend or other right for which the record date is prior to the date the Stock
Purchase Right is exercised, except as provided in Section 15 of the Plan.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET SALE.
(a) In the event that the Administrator determines that any dividend or
other distribution (whether in the form of cash, Common Stock, other securities,
or other property), recapitalization, reclassification, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale, transfer, exchange
or other disposition of all or substantially all of the assets of the Company,
or exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event, in the Administrator's
sole discretion, affects the Common Stock such that an adjustment is determined
by the Administrator to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended by the Company to be
made available under the Plan or with respect to any Option, Stock Purchase
Right or Restricted Stock, then the Administrator shall, in such manner as it
may deem equitable, adjust any or all of:
(i) the number and kind of shares of Common Stock (or other securities or
property) with respect to which Options or Stock Purchase Rights may be granted
or awarded (including, but not limited to, adjustments of the limitations in
Section 3 on the maximum number and kind of shares which may be issued and
adjustments of the maximum number of Shares that may be purchased by any Holder
in any calendar year pursuant to Section 6(c));
(ii) the number and kind of shares of Common Stock (or other securities or
property) subject to outstanding Options, Stock Purchase Rights or Restricted
Stock; and
(iii) the grant or exercise price with respect to any Option or Stock
Purchase Right.
(b) In the event of any transaction or event described in Section 15(a), the
Administrator, in its sole discretion, and on such terms and conditions as it
deems appropriate, either by the terms of the Option, Stock Purchase Right or
Restricted Stock or by action taken prior to the occurrence of such transaction
or event and either automatically or upon the Holder's request, is hereby
authorized to take any one or more of the following actions whenever the
Administrator determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended by the
Company to be made available under the Plan or with respect to any Option, Stock
Purchase Right or Restricted Stock granted or issued under the Plan or to
facilitate such transaction or event:
(i) To provide for either the purchase of any such Option, Stock Purchase
Right or Restricted Stock for an amount of cash equal to the amount that could
have been obtained upon the exercise of such Option or Stock Purchase Right or
realization of the Holder's rights had such Option, Stock Purchase Right or
Restricted Stock been currently exercisable or payable or fully vested or the
replacement of such Option, Stock Purchase Right or Restricted Stock with other
rights or property selected by the Administrator in its sole discretion;
(ii) To provide that such Option or Stock Purchase Right shall be
exercisable as to all shares covered thereby, notwithstanding anything to the
contrary in the Plan or the provisions of such Option or Stock Purchase Right;
(iii) To provide that such Option, Stock Purchase Right or Restricted Stock
be assumed by the successor or survivor corporation, or a parent or subsidiary
thereof, or shall be substituted for by similar options, rights or awards
covering the stock of the successor or survivor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices;
(iv) To make adjustments in the number and type of shares of Common Stock
(or other securities or property) subject to outstanding Options and Stock
Purchase Rights, and/or in the terms and conditions of (including the grant or
exercise price), and the criteria included in, outstanding Options, Stock
Purchase Rights or Restricted Stock or Options, Stock Purchase Rights or
Restricted Stock which may be granted in the future; and
(v) To provide that immediately upon the consummation of such event, such
Option or Stock Purchase Right shall not be exercisable and shall terminate;
provided, that for a specified period of time prior to such event, such Option
or Stock Purchase Right shall be exercisable as to all Shares covered thereby,
and the restrictions imposed under an Option Agreement or Restricted Stock
purchase agreement upon some or all Shares may be terminated and, in the case of
Restricted Stock, some or all shares of such Restricted Stock may cease to be
subject to repurchase, notwithstanding anything to the contrary in the Plan or
the provisions of such Option, Stock Purchase Right or Restricted Stock purchase
agreement.
(c) Subject to Section 3, the Administrator may, in its sole discretion,
include such further provisions and limitations in any Option, Stock Purchase
Right, Restricted Stock agreement or certificate, as it may deem equitable and
in the best interests of the Company.
(d) If the Company undergoes an Acquisition, then any surviving corporation
or entity or acquiring corporation or entity, or affiliate of such corporation
or entity, may assume any Options, Stock Purchase Rights or Restricted Stock
outstanding under the Plan or may substitute similar stock awards (including an
award to acquire the same consideration paid to the stockholders in the
transaction described in this subsection 15(d)) for those outstanding under the
Plan. In the event any surviving corporation or entity or acquiring corporation
or entity in an Acquisition, or affiliate of such corporation or entity, does
not assume such Options, Stock Purchase Rights or Restricted Stock or does not
substitute similar stock awards for those outstanding under the Plan, then with
respect to (i) Options, Stock Purchase Rights or Restricted Stock held by
participants in the Plan whose status as a Service Provider has not terminated
prior to such event, the vesting of such Options, Stock Purchase Rights or
Restricted Stock (and, if applicable, the time during which such awards may be
exercised) shall be accelerated and made fully exercisable and all restrictions
thereon shall lapse at least ten (10) days prior to the closing of the
Acquisition (and the Options
or Stock Purchase Rights terminated if not exercised prior to the closing of
such Acquisition), and (ii) any other Options or Stock Purchase Rights
outstanding under the Plan, such Options or Stock Purchase rights shall be
terminated if not exercised prior to the closing of the Acquisition.
(e) The existence of the Plan, any Option Agreement or Restricted Stock
purchase agreement and the Options or Stock Purchase Rights granted hereunder
shall not affect or restrict in any way the right or power of the Company or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
14. TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS. The date of grant of
an Option or Stock Purchase Right shall, for all purposes, be the date on which
the Administrator makes the determination granting such Option or Stock Purchase
Right, or such other date as is determined by the Administrator. Notice of the
determination shall be given to each Employee or Consultant to whom an Option or
Stock Purchase Right is so granted within a reasonable time after the date of
such grant.
15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Amendment and Termination. The Board may at any time wholly or partially
amend, alter, suspend or terminate the Plan. However, without approval of the
Company's stockholders given within twelve (12) months before or after the
action by the Board, no action of the Board may, except as provided in Section
15, increase the limits imposed in Section 3 on the maximum number of Shares
which may be issued under the Plan or extend the term of the Plan under Section
7.
(b) Stockholder Approval. The Board shall obtain stockholder approval of any
Plan amendment to the extent necessary and desirable to comply with Applicable
Laws.
(c) Effect of Amendment or Termination. No amendment, alteration, suspension
or termination of the Plan shall impair the rights of any Holder, unless
mutually agreed otherwise between the Holder and the Administrator, which
agreement must be in writing and signed by the Holder and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options, Stock Purchase
Rights or Restricted Stock granted or awarded under the Plan prior to the date
of such termination.
16. STOCKHOLDER APPROVAL. The Plan will be submitted for the approval of the
Company's stockholders within twelve (12) months after the date of the Board's
initial adoption of the Plan. Options, Stock Purchase Rights or Restricted Stock
may be granted or awarded prior to such stockholder approval, provided that such
Options, Stock Purchase Rights and Restricted Stock shall not be exercisable,
shall not vest and the restrictions thereon shall not lapse prior to the time
when the Plan is approved by the stockholders, and provided further that if such
approval has not been obtained at the end of said twelve-month period, all
Options, Stock Purchase Rights and Restricted Stock previously granted or
awarded under the Plan shall thereupon be canceled and become null and void.
17. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
18. RESERVATION OF SHARES. The Company, during the term of this Plan, shall
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. INFORMATION TO HOLDERS AND PURCHASERS. Prior to the Public Trading Date
and to the extent required by Section 260.140.46 of Title 10 of the California
Code of Regulations, the Company shall provide to each Holder and to each
individual who acquires Shares pursuant to the Plan, not less frequently than
annually during the period such Holder or purchaser has one or more Options or
Stock Purchase Rights outstanding, and, in the case of an individual who
acquires Shares pursuant to the Plan, during the period such individual owns
such Shares, copies of annual financial statements. Notwithstanding the
preceding sentence, the Company shall not be required to provide such statements
to key employees whose duties in connection with the Company assure their access
to equivalent information.
20. REPURCHASE PROVISIONS. The Administrator in its sole discretion may
provide that the Company may repurchase Shares acquired upon exercise of an
Option or Stock Purchase Right upon the occurrence of certain specified events,
including, without limitation, a Holder's termination as a Service Provider,
divorce, bankruptcy or insolvency; provided, however, that any such repurchase
right shall be set forth in the applicable Option Agreement or Restricted Stock
purchase agreement or in another agreement referred to in such agreement and,
provided further, that to the extent required by Section 260.140.41 and Section
260.140.42 of Title 10 of the California Code of Regulations, any such
repurchase right set forth in an Option or Stock Purchase Right granted prior to
the Public Trading Date to a person who is not an Officer, Director or
Consultant shall be upon the following terms: (i) if the repurchase option gives
the Company the right to repurchase the shares upon termination as a Service
Provider at not less than the Fair Market Value of the shares to be purchased on
the date of termination of status as a Service Provider, then (A) the right to
repurchase shall be exercised for cash or cancellation of purchase money
indebtedness for the shares within ninety (90) days of termination of status as
a Service Provider (or in the case of shares issued upon exercise of Options or
Stock Purchase Rights after such date of termination, within ninety (90) days
after the date of the exercise) or such longer period as may be agreed to by the
Administrator and the Plan participant and (B) the right terminates when the
shares become publicly traded; and (ii) if the repurchase option gives the
Company the right to repurchase the Shares upon termination as a Service
Provider at the original purchase price for such Shares, then (A) the right to
repurchase at the original purchase price shall lapse at the rate of at least
twenty percent (20%) of the shares per year over five (5) years from the date
the Option or Stock Purchase Right is granted (without respect to the date the
Option or Stock Purchase Right was exercised or became exercisable) and (B) the
right to repurchase shall be exercised for cash or cancellation of purchase
money indebtedness for the shares within ninety (90) days of termination of
status as a Service Provider (or, in the case of shares issued upon exercise of
Options or Stock Purchase Rights, after such date of termination, within ninety
(90) days after the date of the exercise) or such longer period as may be agreed
to by the Company and the Plan participant.
21. INVESTMENT INTENT. The Company may require a Plan participant, as a
condition of exercising or acquiring stock under any Option or Stock Purchase
Right, (i) to give written assurances satisfactory to the Company as to the
participant's knowledge and experience in financial and business matters and/or
to employ a purchaser representative reasonably satisfactory to the Company who
is knowledgeable and experienced in financial and business matters and that he
or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option or Stock Purchase
Right; and (ii) to give written assurances satisfactory to the Company stating
that the participant is acquiring the stock subject to the Option or Stock
Purchase Right for the participant's own account and not with any present
intention of selling or otherwise distributing the stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (A) the issuance of the shares upon the exercise or acquisition
of stock under the applicable Option or Stock Purchase Right has been registered
under a then currently effective registration statement under the Securities Act
or (B) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.
22. GOVERNING LAW. The validity and enforceability of this Plan shall be
governed by and construed in accordance with the laws of the State of Delaware
without regard to otherwise governing principles of conflicts of law.
* * * * * * *
I hereby certify that the Plan was duly adopted by the Board of Directors of
PayPal, Inc. on _______________________, 2001.
Executed at Palo Alto, California on this ___ day of _________________,
2001.
By:
Name:
Title:
* * * * * * *
I hereby certify that the foregoing Plan was approved by the stockholders of
PayPal, Inc. on _______________________, 200___.
Executed at Palo Alto, California on this ___ day of _________________,
2001.
Secretary