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EXHIBIT 10.13
NETWORK APPLIANCE, INC.
SPECIAL NON-OFFICER STOCK OPTION PLAN
ARTICLE ONE
GENERAL
A. This Special Non-Officer Stock Option Plan is intended to
promote the interests of Network Appliance, Inc., a California corporation, by
authorizing an additional reserve of shares of the Corporation's common stock
for issuance through long-term option grants to individuals in the employ of the
Corporation (or any Parent or Subsidiary) who are neither officers of the
Corporation nor members of the Board and who are not otherwise Section 16
Insiders.
B. The Plan shall become effective immediately upon adoption by
the Board on April 30, 1997.
C. This Plan shall supplement the authorized share reserve under
the Corporation's 1995 Stock Incentive Plan, and share issuances under this Plan
shall not reduce or otherwise affect the number of shares of the Corporation's
common stock available for issuance under the 1995 Stock Incentive Plan. In
addition, share issuances under the 1995 Stock Incentive Plan shall not reduce
or otherwise affect the number of shares of the Corporation's common stock
available for issuance under this Plan.
Capitalized terms shall have the meanings assigned to such terms
in the attached Appendix.
I. ADMINISTRATION OF THE PLAN
A. The Plan Administrator shall have full power and discretion
(subject to the express provisions of the Plan) to establish such rules and
regulations as it may deem appropriate 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 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 thereunder.
B. The individuals serving as Plan Administrator shall serve for
such period as the Board may determine and shall be subject to removal by the
Board at any time.
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C. Service as Plan Administrator shall constitute service as a
Board member, and each Board member serving as Plan Administrator shall
accordingly be entitled to full indemnification and reimbursement as a Board
member for such service. No individual serving as Plan Administrator shall be
liable for any act or omission made in good faith with respect to the Plan or
any option granted under the Plan.
II. ELIGIBILITY
A. The persons eligible to participate in the Plan shall be
limited to those Employees who are neither officers of the Corporation nor
members of the Board and who are not otherwise Section 16 Insiders.
B. The Plan Administrator shall have full authority to determine
which eligible Employees are to receive option grants under the Plan, the number
of shares to be covered by each such grant, the time or times at which each
granted option is to become exercisable and the maximum term for which the
option may remain outstanding. All options granted under the Plan shall be
Non-Statutory Options.
III. 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,
including shares repurchased by the Corporation on the open market. The maximum
number of shares of Common Stock reserved for issuance over the term of the Plan
shall be limited to 400,000 shares, subject to adjustment from time to time in
accordance with the provisions of this Section III.
B. 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 III
of Article Two), then the shares subject to the portion of each option not so
exercised shall be available for subsequent issuance under the Plan. 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.
C. 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, and (ii) 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
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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.
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ARTICLE TWO
OPTION GRANT PROGRAM
I. OPTION TERMS
Options granted under the Plan shall be authorized by action of
the Plan Administrator and 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. All such
granted options shall be Non-Statutory Options.
A. Exercise Price.
1. The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the grant date.
2. Full payment of the exercise price shall become
immediately due upon exercise of the option and shall be payable in one or more
of the forms specified below:
(i) cash or check made payable to the Corporation's
order,
(ii) 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
(iii) through a special sale and remittance procedure
pursuant to which the Optionee shall concurrently provide irrevocable
instructions to (a) 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 to (b) 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 such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
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B. Term and Exercise of Options. Each option shall be exercisable
at such time or times, during such period and for such number of shares as shall
be determined by the Plan Administrator and set forth in the documents
evidencing such option. No option shall have a maximum term in excess of ten
(10) years. During the lifetime of the Optionee, the option shall be exercisable
only by the Optionee and shall not be assignable or transferable except for a
transfer of the option effected by will or by the laws of inheritance following
the Optionee's death.
C. Effect of Termination of Service.
1. The following provisions shall govern the exercise of
any options held by the Optionee at the time of cessation of Service or death:
(i) Should Optionee cease to remain in Service for
any reason (other than death, Permanent Disability or Misconduct) while
this option is outstanding, then Optionee shall retain the right to
exercise this option until the expiration of the earlier of (A) the
three (3)-month period commencing with the date of such cessation of
Service or (B) the ten (10)-year option term.
(ii) If the Optionee dies while holding an outstanding
option, then the personal representative of Optionee's estate or the
person or persons to whom the option is transferred pursuant to
Optionee's will or in accordance with the laws of inheritance shall have
the right to exercise this option. Such right shall lapse, and this
option shall cease to be outstanding, upon the expiration of the earlier
of (A) the twelve (12)-month period measured from the date of Optionee's
death or (B) the ten (10)-year option term.
(iii) Should Optionee cease Service by reason of
Permanent Disability while this option is outstanding, then Optionee
shall retain the right to exercise this option until the expiration of
the earlier of (A) the twelve (12)-month period commencing with the date
of such cessation of Service or (B) the ten (10)-year option term.
(iv) Should Optionee's Service be terminated for
Misconduct, then this option shall terminate immediately and cease to
remain outstanding.
(v) During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more than
the number of shares for which the option is exercisable on the date of
Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term,
the option shall
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terminate and cease to be outstanding for any otherwise exercisable
shares for which the option has not been exercised. However, the option
shall, immediately upon Optionee's cessation of Service for any reason,
terminate and cease to be outstanding with respect to any and all option
shares for which the option is not otherwise at the time exercisable.
2. The Plan Administrator shall have the discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(i) extend the period of time for which the option is
to remain exercisable following Optionee's cessation of Service or death
from the limited period otherwise in effect for that option to such
greater period of time as the Plan Administrator shall deem appropriate,
but in no event beyond the expiration of the option term, and/or
(ii) permit the option to be exercised, during the
applicable post-Service exercise period, not only with respect to the
number of shares of Common Stock for which such option is exercisable at
the time of the Optionee's cessation of Service but also with respect to
one or more additional installments for which the option would have
become exercisable had the Optionee continued in Service.
D. Shareholder Rights. A Optionee shall have none of the rights
of a shareholder with respect to any option shares until such person shall have
exercised the option and paid the exercise price for the purchased shares.
II. CORPORATE TRANSACTION
A. In the event of any Corporate Transaction, each option which
is at the time outstanding under the Plan shall automatically accelerate so that
each such option shall, immediately prior to the specified effective date for
such Corporate Transaction, become fully exercisable with respect to the total
number of shares of Common Stock at the time subject to that option and may be
exercised for all or any portion of those shares as fully-vested shares.
However, an outstanding option under the Plan shall NOT so accelerate if and to
the extent: (i) such option is, in connection with the Corporate Transaction, to
be assumed by 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 exercise 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.
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B. The Plan Administrator shall have the discretionary authority
to structure one or more options under the Plan so that those options shall
immediately accelerate upon an Involuntary Termination of the Optionee's Service
within a designated period (not to exceed twelve (12) months) following the
effective date of a Corporate Transaction in which those options are assumed by
the successor corporation and accordingly do not accelerate at the time of such
Corporate Transaction.
C. Immediately following the consummation of the Corporate
Transaction, all outstanding options under the Plan shall terminate and cease to
remain outstanding, except to the extent assumed by the successor corporation or
its parent company.
D. Each outstanding option which is assumed in connection with
the Corporate Transaction 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 Optionee, in consummation of the
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 following the consummation of
the Corporate Transaction shall be appropriately adjusted.
E. The grant of options under the Plan 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.
III. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the sole and exclusive
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 the Fair Market Value of the Common Stock on the new grant
date.
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ARTICLE THREE
MISCELLANEOUS
I. AMENDMENT OF THE PLAN
The Board has complete and exclusive power and authority to amend
or modify the Plan in any or all respects whatsoever. However, no such amendment
or modification shall adversely affect rights and obligations with respect to
stock options at the time outstanding under the Plan, unless the affected
Optionees consent to such amendment.
II. TAX WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock
upon the exercise of stock options under the Plan shall be subject to the
satisfaction of all applicable Federal, state and local income tax and
employment tax withholding requirements.
III. EFFECTIVE DATE AND TERM OF PLAN
A. This Plan became effective upon approval by the Board at
the April 30, 1997 Board meeting and shall not be subject to shareholder
approval.
B. The Plan shall terminate upon the earlier of (i) December 31,
2007 or (ii) the date on which all shares available for issuance under the Plan
shall have been issued pursuant to the exercise of options under the Plan. If
the date of termination is determined under clause (i) above, then all option
grants outstanding on such date shall thereafter continue to have force and
effect in accordance with the provisions of the instruments evidencing those
grants.
IV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares pursuant to option grants under the Plan shall be used for general
corporate purposes.
V. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option
under the Plan, and the issuance of Common Stock upon the exercise of the stock
options 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 granted under it and the Common Stock issued
pursuant to it.
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B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which the Common Stock is then listed for trading.
VI. 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
Service for any period of specific duration, and the Corporation (or any Parent
or Subsidiary employing such individual) may terminate such individual's Service
at any time and for any reason, with or without cause.
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APPENDIX
The following definitions shall be in effect under the Plan:
A. BOARD shall mean the Corporation's Board of Directors.
B. CODE shall mean the Internal Revenue Code of 1986, as amended.
C. COMMON STOCK shall mean the Corporation's common stock.
D. CORPORATE TRANSACTION shall mean either of the following
shareholder-approved transactions to which the Corporation is a party:
- a merger or consolidation 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 transaction; or
- the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution
of the Corporation.
E. CORPORATION shall mean Network Appliance, Inc., a California
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Network Appliance, Inc. which shall by appropriate
action adopt the Plan.
F. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
G. EXERCISE DATE shall mean the date on which the Corporation shall have
received written notice of the option exercise.
H. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
- If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price
is reported by the National Association of Securities Dealers on the
Nasdaq National Market or any successor system. If there is no closing
selling price for the Common Stock on the date in question, then the
Fair Market Value shall be
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the closing selling price on the last preceding date for which such
quotation exists.
- If the Common Stock is at the time listed on any national
securities exchange, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question on that
exchange, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which
such quotation exists.
I. INVOLUNTARY TERMINATION shall mean the termination of the Service
of any individual which occurs by reason of:
- such individual's involuntary dismissal or discharge by
the Corporation for reasons other than Misconduct, or
- such individual's voluntary resignation following (A) a change
in his or her position with the Corporation which materially reduces his
or her level of responsibility, (B) a reduction in his or her level of
compensation (including base salary, fringe benefits and target bonuses
under corporate-performance based bonus or incentive programs) by more
than fifteen percent (15%) or (C) a relocation of such individual's
place of employment by more than fifty (50) miles, provided and only if
such change, reduction or relocation is effected by the Corporation
without the individual's consent.
J. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure
by the Optionee of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary), or any other intentional misconduct by the
Optionee adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not
be deemed to be inclusive of all the acts or omissions which the Corporation (or
any Parent or Subsidiary) may consider as grounds for the dismissal or discharge
of any Optionee or other person in the Service of the Corporation (or any Parent
or Subsidiary).
K. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.
L. OPTIONEE shall mean any person to whom an option is granted under the
Plan.
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M. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
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.
N. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the inability
of the Optionee 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.
O. PLAN shall mean the Corporation's Special Non-Officer Stock Option
Plan, as set forth in this document.
P. PLAN ADMINISTRATOR shall mean the committee comprised of one or more
Board members appointed by the Board to administer the Plan.
Q. SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit restrictions of Section 16 of the
1934 Act.
R. SERVICE shall mean the provision of services on a periodic basis to
the Corporation (or any Parent or Subsidiary) in the capacity of an Employee or
an independent consultant or advisor, except to the extent otherwise
specifically provided in the applicable stock option agreement.
S. SUBSIDIARY shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain 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.
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