Exhibit 4.6
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FACTORYMALL.COM, INC.
1998 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the factorymall.com, inc. 1998 Stock Option Plan (the
"Plan") is to enhance the long-term shareholder value of factorymall.com,
inc., a Washington corporation (the "Company"), by offering opportunities
to employees, directors, officers, consultants, agents, advisors and
independent contractors of the Company and its Subsidiaries (as defined in
Section 2) to participate.in the Company's growth and success, and to
encourage them to remain in the service of the Company and its Subsidiaries
and to acquire and maintain stock ownership in the Company.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set
forth below:
2.1 BOARD
"Board" means the Board of Directors of the Company.
2.2 CAUSE
"Cause" means dishonesty, fraud, misconduct, unauthorized use or
disclosure of confidential information or trade secrets, or conviction or
confession of a crime punishable by law (except minor violations), in each
case as determined by the Plan Administrator, and its determination shall
be conclusive and binding.
2.3 CODE
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
2.4 COMMON STOCK
"Common Stock" means the common stock, no par value per share, of the
Company.
2.5 CORPORATE TRANSACTION
"Corporate Transaction" means any of the following events:
(a) Consummation of any merger or consolidation of the Company in
which the Company is not the continuing or surviving corporation, or
pursuant to which shares of the Common Stock are converted into cash,
securities or other property, if following such merger or
consolidation the holders of the Company's outstanding voting
securities immediately prior to such merger or consolidation own less
than a majority of the outstanding voting securities of the surviving
corporation;
(b) Consununation of any sale, lease, exchange or other transfer
in one transaction or a series of related transactions of all or
substantially all of the Company's assets other than a transfer of the
Company's assets to a majority-owned subsidiary corporation (as the
term "subsidiary corporation" is defined in Section 8.3) of the
Company; or
(c) Approval by the holders of the Common Stock of any plan or
proposal for the liquidation or dissolution of the Company.
Ownership of voting securities shall take into account and shall
include ownership as determined by applying Rule 13d-3(d)(1)(i) (as in
effect on the date of adoption of the Plan) under the Exchange Act.
2.6 Disability
"Disability" means "disability" as that term is defined for purposes
of Section 22(e)(3) of the Code.
2.7 EARLY RETIREMENT
"Early Retirement" means early retirement as that term is defined by
the Plan Administrator from time to time for purposes of the Plan.
2.8 EXCHANGE ACT
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.9 FAIR MARKET VALUE
The "Fair Market Value" shall be as established in good faith by the
Plan Administrator or (a) if the Common Stock is listed on the Nasdaq
National Market, the average of the high and low per share sales prices for
the Common Stock as reported by the Nasdaq National Market for a single
trading day or (b) if the Common Stock is listed on the New York Stock
Exchange or the American Stock Exchange, the average of the high and low
per share sales prices for the Common Stock as such price is officially
quoted in the composite tape of transactions on such exchange for a single
trading day. lf there is no such reported price for the Common Stock for
the date in question, then such price on the last preceding date for which
such price exists shall be determinative of the Fair Market Value.
2.10 GOOD REASON
"Good Reason" means the occurrence of any of the following events or
conditions and the failure of the Successor Corporation to cure such event
or condition within 30 days after reccipt of written notice by the
Optionee:
(a) a change in the Optionee's status, title, position or
responsibilities (including reporting responsibilities) that, in the
Optionee's reasonable judgment, represents a substantial reduction in the
status, title, position or responsibilities as in effect immediately prior
thereto; the assignment to the Optionee of any duties or responsibilities
that, in the Optionee's reasonable judgment, are materially inconsistent
with such status, title, position or responsibilities; or any removal of
the Optionee from or failure to reappoint or reelect the Optionee to any of
such positions, except in connection with the termination of the Optionee's
employment for Cause, for Disability or as a result of his or her death, or
by the Optionee other than for Good Reason;
(b) a reduction in the Optionee's annual base salary;
(c) the Successor Corporation's requiring the Optionee (without
the Optionee's consent) to be based at any place outside a 35-mile radius
of his or her place of employment prior to a Corporate Transaction, except
for reasonably required travel on the Successor Corporation's business that
is not materially greater than such travel requirements prior to the
Corporate Transaction;
(d) the Successor Corporation's failure to (i) continue in effect
any material compensation or benefit plan (or the substantial equivalent
thereof in which the Optionee was participating at the time of a Corporate
Transaction, including, but not limited to, the Plan, or (il) provide the
Optionee with compensation and benefits substantially equivalent (in terms
of benefit levels and/or reward opportunities) to those provided for under
each material employee benefit plan, program and practice as in effect
immediately prior to the Corporate Transaction;
(e) any material breach by the Successor Corporation of its
obligations to the Optionee under the Plan or any substantiafly equivalent
plan of the Successor Corporation; or
(f) any purported termination of the Optionee's employment or
services for Cause by the Successor Corporation that does not comply with
the terms of the Plan or any substantially equivalent plan of the Successor
Corporation.
2.11 GRANT DATE
"Grant Date" means the date the Plan Administrator adopted the
granting resolution or a later date designated in a resolution of the Plan
Administrator as the date an Option is to be granted.
2.12 INCENTIVE STOCK OPTION
"Incentive Stock Option" means an Option to purchase Common Stock
granted under Section 7 with the intention that it qualify as an "incentive
stock option" as that term is defined in Section 422 of the Code.
2.13 NONQUALIFIED STOCK OPTION
"Nonqualified Stock Option" means an Option to purchase Common Stock
granted under Section 7 other than an Incentive Stock Option.
2.14 OPTION
"Option" means the right to purchase Common Stock granted under
Section 7.
2.15 OPTIONEE
"Optionee" means (i) the person to whom an Option is granted; (ii) for
an Optionee who has died, the personal representative of the Optionee's
estate, the person(s) to whom the Optionee's rights under the Option have
passed by will or by the applicable laws of descent and distribution, or
the beneficiary designated in accordance with Section 9; or (iii) person(s)
to whom an Option has been transferred in accordance with Section 9.
2.16 PLAN ADMINISTRATOR
"Plan Administrator" means the Board or any committee of the Board
designated to administer the Plan under Section 3.1.
2.17 RETIREMENT
"Retirement" means retirement as of the individual's normal retirement
date, as that term is defined by the Plan Administrator from time to time
for purposes of the Plan.
2.18 SECURITIES ACT
"Securities Act" means the Securities Act of 1933, as amended.
2.19 SUBSIDIARY
"Subsidiary," except as provided in Section 8.3 in connection with
Incentive Stock Options, means any entity that is directly or indirectly
controlled by the Company or in which the Company has a significant
ownership interest, as determined by the Plan Administrator, and any entity
that may become a direct or indirect parent of the Company.
2.20 SUCCESSOR CORPORATION
"Successor Corporation" has the meaning set forth under Section 10.2.
SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Board or a committee or
committees (which term includes subcommittees) appointed by, and consisting
of two or more members of, the Board. If and so long as the Common Stock is
registered under Section 12(b) or 12(g) of the Exchange Act, the Board
shall consider in selecting the Plan Administrator and the membership of
any committee acting as Plan Administrator, with respect to any persons
subject or likely to become subject to Section 16 of the Exchange Act, the
provisions regarding (a) "outside directors" as contemplated by Section
162(m) of the Code and (b) "nonemployee directors" as contemplated by Rule
l6b-3 under the Exchange Act. The Board may delegate the responsibility for
administering the Plan with respect to designated classes of eligible
persons to different committees consisting of two or more members of the
Board, subject to such limitations as the Board deems appropriate.
Committee members shall serve for such term as the Board may determine,
subject to removal by the Board at any time.
3.2 ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR
Except for the terms and conditions explicitly set forth in the Plan,
the Plan Adrninistrator shall have exclusive authority, in its discretion,
to determine all matters relating to Options under the Plan, including the
selection of individuals to be granted Options, the type of Options, the
number of shares of Common Stock subject to an Option, all terms,
conditions, restrictions and limitations, if any, of an Option and the
terms of any instrument that evidences the Option. The Plan Administrator
shall also have exclusive authority to interpret the Plan and may from time
to time adopt, and change, rules and regulations of general application for
the Plan's administration. The Plan Administrator's interpretation of the
Plan and its rules and regulations, and all actions taken and
determinations made by the Plan Administrator pursuarit to the Plan, shall
be conclusive and binding on all parties involved or affected. The Plan
Administrator may delegate administrative duties to such of the Company's
officers as it so determines.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 AUTHORIZED NUMBER OF SHARES
Subject to adjustment from time to time as provided in Section 10.1,
a maximum of 1,500,000 shares of Common Stock shall be available for
issuance under the Plan. Shares issued under the Plan shall be drawn from
authorized and unissued shares or shares now held or subsequently acquired
by the Company.
4.2 REUSE OF SHARES
Any shares of Common Stock that have been made subject to an Option
that cease to be subject to the Option (other than by reason of exercise of
the Option to the extent it is exercised for shares) shall again be
available for issuance in connection with future grants of Options under
the Plan.
SECTION 5. ELIGIBILITY
Options may be granted under the Plan to those officers, directors and
employees of the Company and its Subsidiaries as the Plan Administrator
from time to time selects. Options may also be made to consultants, agents,
advisors and independent contractors who provide services to the Company
and its Subsidiaries.
SECTION 6. AWARDS
6.1 FORM AND GRANT OF OPTIONS
The Plan Administrator shall have the authority, in its sole
discretion, to determine the type or types of awards to be made under the
Plan. Such awards may consist of Incentive Stock Options and/or
Nonqualified Stock Options. Options may be granted singly or in
combination.
6.2 ACQUIRED COMPANY OPTION AWARDS
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Options under the Plan in substitution for awards
issued under other plans, or assume under the Plan awards issued under
other plans, if the other plans are or were plans of other acquired
entities ("Acquired Entities") (or the parent of the Acquired Entity) and
the new Option is substituted, or the old award is assumed, by reason of a
merger, consolidation, acquisition of property or of stock, reorganization
or liquidation (the "Acquisition Transaction"). In the event that a written
agreement pursuant to which the Acquisition Transaction is completed is
approved by the Board and said agreement sets forth the terms and
conditions of the substitution for or assumption of outstanding awards of
the Acquired Entity, said terms and conditions shall be deemed to be the
action of the Plan Administrator without any further action by the Plan
Administrator, except as may be required for compliance with Rule 16b-3
under the Exchange Act, and the persons holding such awards shall be deemed
to be Optionees.
SECTION 7. TERMS AND CONDITIONS OF OPTIONS
7.1 GRANT OF OPTIONS
The Plan Administrator is authorized under the Plan, in its sole
discretion, to issue Options as Incentive Stock Opfions or as Nonqualified
Stock Options, which shah be appropriately designated.
7.2 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator, but shall not be less than 100% of
the Fair Market Value of the Common Stock on the Grant Date with respect to
Incentive Stock Options and not less than 90% of the Fair Market Value of
the Common Stock on the Grant Date with respect to Nonqualified Stock
Options.
7.3 TERM OF OPTIONS
The term of each Option shall be as established by the Plan
Administrator or, if not so established, shall be 10 years from the Grant
Date.
7.4 EXERCISE OF OPTIONS
The Plan Administrator shall establish and set forth in each
instrument that evidences an Option the time at which or the installments
in which the Option sha11 vest and become exercisable, which provisions
may be waived or modified by the Plan Administrator at any time. If not so
established in the instrument evidencing the Option, the Option will vest
and become exercisable according to the following schedule, which may be
waived or modified by the Plan Administrator at any time:
Period of Optionee's Continuous Employment or
Service With the Company or Its Subsidiaries Percent of Total Option
From the Grant Date That Is Vested and Exercisabe
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After 1 year 25%
After 2 years 50%
After 3 years 75%
After 4 years 100%
To the extent that the right to purchase shares has accrued
thereunder, an Option may be exercised from time to time by written notice
to the Company, in accordance with procedures established by the Plan
Administrator, setting forth the number of shares with respect to which the
Option is being exercised and accompanied by payment in full as described in
Section 7.5. The Plan Administrator may determine at any time that an
Option may not be exercised as to less than 100 shares at any one time (or
the lesser number of remaining shares covered by the Option).
7.5 PAYMENT OF EXERCISE PRICE
The exercise price for shares purchased under an Option shall be paid
in full to the Company by delivery of consideration equal to the product of
the Option exercise price and the number of shares purchased. Such
consideration must be paid in cash or by check or, unless the Plan
Administrator in its sole discretion determines otherwise, either at the
time the Option is granted or at any time before it is exercised, a
combination of cash and/or check (if any) and one or both of the following
alternative forms: (a) tendering (either actually or, if and so long as the
Common Stock is registered under Section 12(b) or 12(g) of the Exchange
Act, by attestation) Common Stock already owned by the Optionee for at
least six months (or any shorter period necessary to avoid a charge to the
Company's earnings for financial reporting purposes) having a Fair Market
Value on the day prior to the exercise date equal to the aggregate Option
exercise price or (b) if and so long as the Common Stock is registered
under Section 12(b) or 12(g) of the Exchange Act, delivery of a properly
executed exercise notice, together with irrevocable instructions, to (i) a
brokerage firm designated by the Company to deliver promptly to the Company
the aggregate amount of sale or loan proceeds to pay the Option exercise
price and any withholding tax obligations that may arise in connection with
the exercise and (ii) the Company to deliver the certificates for such
purchased shares directly to such brokerage firm, all in accordance with the
regulations of the Federal Reserve Board. In addition, to the extent
permitted by the Plan Administrator in its sole discretion, the price for
shares purchased under an Option may be paid, either singly or in
combination with one or more of the alternative forms of payment authorized
by this Section 7.5, by (y) a full-recourse promissory note delivered
pursuant to Section 12 or (z) such other consideration as the Plan
Administrator may permit.
7.6 POST-TERMINATION EXERCISES
The Plan Administrator shall establish and set forth in each
instrument that evidences an Option whether the Option will continue to be
exercisable, and the terms and conditions of such exercise, if a Optionee
ceases to be employed by, or to provide services to, the Company or its
Subsidiaries, which provisions may be waived or modified by the Plan
Administrator at any time. If not so established in the instrument
evidencing the Option, the Option will be exercisable according to The
following terms and conditions, which may be waived or modified by the Plan
Administrator at any time.
In case of termination of the Optionee's employment or services other
than by reason of death or Cause, the Option shall be exercisable, to the
extent of the number of shares purchasable by the Optionee at the date of
such termination, only (a) within one year if the termination of the
Optionee's employment or services is coincident with Retirement, Early
Retirement at the Company's request or Disability or (b) within three
months after the date the Optionee ceases to be an employee, director,
officer, consultant, agent, advisor or independent contractor of the
Company or a Subsidiary if termination of the Optionee's employment or
services is for any reason other than Retirement, Early Retirement at the
Company's request or Disability, but in no event later than the remaining
term of the Option. Any Option exercisable at the time of the Optionee's
death may be exercised, to the extent of the number of shares purchasable
by the Optionee at the date of the Optionee's death, by the personal
representative of the Optionee's estate, the person(s) to whom the
Optionee's rights under the Option have passed by will or the applicable
laws of descent and distribution or the beneficiary designated pursuant to
Section 9 at any time or from time to time within one year after the date
of death, but in no event later than the remaining term of the Option. Any
portion of an Option that is not exercisable on the date of termination of
the Optionee's employment or services shall terminate on such date, unless
the Plan Administrator determines otherwise. In case of termination of the
Optionee's employment or services for Cause, the Option shall automatically
terminate upon first notification to the Optionee of such termination,
unless the Plan Administrator determines otherwise. If an Optionee's
employment or services with the Company are suspended pending an
investigation of whether the Optionee shall be terminated for Cause, all
the Optionee's rights under any Option likewise shall be suspended during
the period of investigation.
A transfer of employment or services between or among the Company and
its Subsidiaries shall not be considered a termination of employment or
services. The effect of a Company-approved leave of absence on the terms
and conditions of an Option shall be determined by the Plan Administrator,
in its sole discretion.
SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS
To the extent required by Section 422 of the Code, Incentive Stock
Options shall be subject to the following additional terms and conditions:
8.1 DOLLAR LIMITATION
To the extent the aggregate Fair Market Value (determined as of the
Grant Date) of Common Stock with respect to which Incentive Stock Options
are exercisable for the first time during any calendar year (under the
Plan and all other stock option plans of the Company) exceeds $100,000,
such portion in excess of $100,000 shall be treated as a Nonqualified Stock
Option. In the event the Optionee holds two or more such Options that
become exercisable for the first time in the same calendar year, such
limitation shall be applied on the basis of the order in which such
Options are granted.
8.2 10% SHAREHOLDERS
If an individual owns more than 10% of the total voting power of all
classes of the Company's stock, then the exercise price per share of an
Incentive Stock Option shall not be less than 110% of the Fair Market
Value of the Common Stock on the Grant Date and the Option term shall not
exceed five years. The determination of 10% ownership shall be made in
accordance with Section 422 of the Code.
8.3 ELIGIBLE EMPLOYEES
Individuals who are not employees of the Company or one of its parent
corporations or subsidiary corporations may not be granted Incentive Stock
Options. For purposes of this Section 8.3, "parent corporation" and
"subsidiary corporation" shall have the meanings attributed to those terms
for purposes of Section 422 of the Code.
8.4 TERM
The term of an Incentive Stock Option shall not exceed 10 years.
8.5 EXERCISABILITY
To qualify for Incentive Stock Option tax treatment, an Option
designated as an Incentive Stock Option must be exercised within three
months after termination of employment for reasons other than death, except
that, in the case of termination of employment due to total disability,
such Option must be exercised within one year after such termination.
Employment shall not be deemed to continue beyond the first 90 days of a
leave of absence unless the Optionee's reemployment rights are guaranteed
by statute or contract. For purposes of this Section 8.5, "total
disability" shall mean a mental or physical impairment of the Optionee that
is expected to result in death or that has lasted or is expected to last
for a continuous period of 12 months or more and that causes the Optionee
to be unable, in the opinion of the Company and two independent physicians,
to perform his or her duties for the Company and to be engaged in any
substantial gainful activity. Total disability shall be deemed to have
occurred on the first day after the Company and the two independent
physicians have furnished their opinion of total disability to the Plan
Administrator.
8.6 TAXATION OF INCENTIVE STOCK OPTIONS
In order to obtain certain tax benefits afforded to Incentive Stock
Options under Section 422 of the Code, the Optionee must hold the shares
issued upon the exercise of an Incentive Stock Option for two years after
the Grant Date of the Incentive Stock Option and one year from the date of
exercise. An Optionee may be subject to the alternative minimum tax at the
time of exercise of an Incentive Stock Option. The Plan Administrator may
require an Optionee to give the Company prompt notice of any disposition of
shares acquired by the exercise of an Incentive Stock Option prior to the
expiration of such holding periods.
8.7 PROMISSORY NOTES
The amount of any promissory note delivered pursuant to Section 12 in
connection with an Incentive Stock Option shall bear interest at a rate
specified by the Plan Administrator but in no case less than the rate
required to avoid imputation of interest (taking into account any
exceptions to the imputed interest rules) for federal income tax purposes.
SECTION 9. ASSIGNABILITY
No Option granted under the Plan may be assigned, pledged or
transferred by the Optionee other than by will or by the applicable laws of
descent and distribution, and, during the Optionee's lifetime, such Option
may be exercised only by the Optionee or a permitted assignee or transferee
of the Optionee (as provided below). Notwithstanding the foregoing, and to
the extent permitted by Section 422 of the Code, the Plan Administrator, in
its sole discretion, may permit such assignment, transfer and
exercisability and may permit an Optionee to designate a beneficiay who
may exercise the Option after the Optionee's death; provided, however,
that any Option so assigned or transferred shall be subject to all the same
terms and conditions contained in the instrument evidencing the Option.
SECTION 10. ADJUSTMENTS
10.1 ADJUSTMENT OF SHARES
In the event that, at any time or from time to time, a stock dividend,
stock split, spin-off, combination or exchange of shares, recapitalization,
merger, consolidation, distribution to shareholders other than a normal
cash dividend, or other change in the Company's corporate or capital
structure results in (a) the outstanding shares, or any securities
exchanged therefor or received in their place, being exchanged for a
different number or class of securities of the Company or of any other
corporation or (b) new, different or additional securities of the Company
or of any other corporation being received by the holders of shares of
Common Stock of the Company, then the Plan Administmtor shall make
proportional adjustments in (1) the maximum number and kind of securities
subject to the Plan as set forth in Section 4.1 and (ii) the number and
kind of securities that are subject to any outstanding Option and the per
share price of such securities, without any change in the aggregate price
to be paid therefor. The determination by the Plan Administrator as to the
terms of any of the foregoing adjustments shall be conclusive and binding.
Notwithstanding the foregoing, a Corporate Transaction shall not be
governed by this Section 10.1 but shall be governed by Section 10.2.
10.2 CORPORATE TRANSACTION
(a) Except as otherwise provided in the instrument that evidences the
Option, in the event of any Corporate Transaction, each Option that is at
the time outstanding shall automatically accelerate so that each such
Option shall, immediately prior to the specified effective date for the
Corporate Transaction, become 100% vested and exercisable.
(b) Such Option shall not so accelerate, however, if and to the extent
that such Option is, in connection with the Corporate Transaction, either
to be assumed by the successor corporation or parent thereof (the
"Successor Corporation") or to be replaced with a comparable award for the
purchase of shares of the capital stock of the Successor Corporation. The
determination of Option comparability shall be made by the Plan
Administrator, and its determination shall be conclusive and binding. Any
such Options granted to an "executive officer" (as that term is defined for
purposes of Section 16 of the Exchange Act) of the Company that are assumed
or replaced in the Corporate Transaction and do not otherwise accelerate at
that time shall be accelerated in the event that the Optionee's employment
or services should subsequently terminate within two years following such
Corporate Transaction, unless such employment or services are terminated by
the Successor Corporation for Cause or by the Optionee voluntarily without
Good Reason.
(c) All such Options shall terminate and cease to remain outstanding
immediately following the consummation of the Corporate Transaction, except
to the extent assumed by the Successor Corporation.
(d) The acceleration will not occur if, in the opinion of the
Company's outside accountants, it would render unavailable "pooling of
interest" accounting for a Corporate Transaction that would otherwise
qualify for such accounting treatment.
10.3 FURTHER ADJUSTMENT OF OPTIONS
Subject to Section 10.2, the Plan Administrator shall have the
discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation or change in control of the Company, as defined
by the Plan Administrator, to take such further action as it determines to
be necessary or advisable, and fair and equitable to Optionees, with
respect to Options. Such authorized action may include (but shall not be
limited to) establishing, amending or waiving the type, terms, conditions
or duration of, or restrictions on, Options so as to provide for earlier,
later, extended or additional time for exercise and other modifications,
and the Plan Administrator may take such actions with respect to all
Optionees, to certain categories of Optionees or only to individual
Optionees. The Plan Administrator may take such action before or after
granting Options to which the action relates and before or after any public
announcement with respect to such sale, merger, consolidation,
reorganization, liquidation or change in control that is the reason for
such action.
10.4 LIMITATIONS
The grant of Options will in no way affect the Company's right 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.
SECTION 11 WITHHOLDING
The Company may require the Optionee to pay to the Company the amount
of any withholding taxes that the Company is required to withhold with
respect to the grant or exercise of any Option. Subject to the Plan and
applicable law, the Plan Administrator may, in its sole discretion, permit
the Optionee to satisfy withholding obligations, in whole or in part, by
paying cash, by electing to have the Company withhold shares of Common Stock
or by transferring shares of Common Stock to the Company, in such amounts
as are equivalent to the Fair Market Value of the withholding obligation.
The Company shall have the right to withhold from any shares of Common
Stock issuable pursuant to an Option or from any cash amounts otherwise due
or to become due from the Company to the Optionee an amount equal to such
taxes. The Company may also deduct from any Option any other amounts due
from the Optionee to the Company or a Subsidiary.
SECTION 12. LOANS, INSTALLMENT PAYMENTS AND LOAN
GUARANTEES
To assist an Optionee (including an Optionee who is an officer or a
director of the Company) in acquiring shares of Common Stock pursuant to an
Option granted under the Plan, the Plan Administrator, in its sole
discretion, may authorize, either at the Grant Date or at any time before
the acquisition of Common Stock pursuant to the Option, (a) the extension
of a full-recourse loan to the Optionee by the Company, (b) the payment by
the Optionee of the purchase price, if any, of the Common Stock in
installments, or (c) the guarantee by the Company of a loan obtained by the
Optionee from a third party. The terms of any loans, installment payments
or loan guarantees, including the interest rate and terms of repayment,
will be subject to the Plan Administrator's discretion. The maximum credit
available is the purchase price, if any, of the Cornmon Stock acquired,
plus the maximum federal and state income and employment tax liability
that may be incurred in connection with the acquisition.
SECTION 13. FIRST REFUSAL RIGHTS
Until the date on which the in~itial registration of the Common Stock
under Section 12(b) or 12(g) of the Exchange Act first becomes effective,
the Company shall have the right of first refusal with respect to any
proposed sale or other disposition by the holder of any shares of Common
Stock issued pursuant to an Option granted 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.
In the event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
Company's outstanding Common Stock effected as a class without the
Company's receipt of consideration, then any new, substituted or additional
securities distributed with respect to the purchased shares shall be
immediately subject to the provisions of this Section 13, to the same
extent the purchased shares are at such time covered by such provisions
SECTION 14. MARKET STANDOFF
In connection with any underwritten public offering by the Company of
its equity securities pursuant to an effective registration statement filed
under the Securities Act, including the Company's initial public offering,
a person shall not sell, or make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise dispose or
transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to, any shares issued pursuant to an Option
granted under the Plan without the prior written consent of the Company or
its underwriters. Such limitations shall be in effect for such period of
time as may be requested by the Company or such underwriters and agreed to
by the Company's officers and directors with respect to their shares;
provided, however, that in no event shall such period exceed 180 days. The
limitations of this paragraph shall in all events terminate two years after
the effective date of the Company's initial public offering. Holders of
shares issued pursuant to an Option granted under the Plan shall be subject
to the market standoff provisions of this paragraph only if the officers
and directors of the Company are also subject to similar arrangements.
In the event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
Company's outstanding Common Stock effected as a class without the
Company's receipt of consideration, then any new, substituted or additional
securities distributed with respect to the purchased shares shall be
immediately subject to the provisions of this Section 14, to the same
extent the purchased shares are at such time covered by such provisions.
In order to enforce the limitations of this Section 14, the Company
may impose stop-transfer instructions with respect to the purchased shares
until the end of the applicable standoff period.
SECTION 15. AMENDMENT AND TERMINATION OF PLAN
15.1 AMENDMENT OF PLAN
The Plan may be amended only by the Board in such respects as it shall
deem advisable; however, to the extent required for compliance with Section
422 of the Code or any applicable law or regulation, shareholder approval
will be required for any amendment that will (a) increase the total number
of shares as to which Options may be granted under the Plan, (b) modify the
class of persons eligible to receive Options, or (c) otherwise require
shareholder approval under any applicable law or regulation.
15.2 TERMINATION OF PLAN
The Board may suspend or terminate the Plan at any time. The Plan will
have no fixed expiration date; provided, however, that no Incentive Stock
Options may be granted more than 10 years after the earlier of the Plan's
adoption by the Board and approval by the shareholders.
15.3 CONSENT OF OPTIONEE
The amendment or termination of the Plan shall not, without the
consent of the Optionee, impair or diminish any rights or obligations under
any Option theretofore granted under the Plan.
Any change or adjustment to an outstanding Incentive Stock Option
shall not, without the consent of the Optionee, be made in a manner so as
to constitute a "modification" that would cause such Incentive Stock Option
to fail to continue to qualify as an Incentive Stock Option.
SECTION 16. GENERAL
16.1 OPTION AGREEMENTS
Options granted under the Plan shall be evidenced by a written
agreement that shall contain such terms, conditions, limitations and
restrictions as the Plan Administrator shall deem advisable and that are
not inconsistent with the Plan.
16.2 CONTINUED EMPLOYMENT OR SERVICES; RIGHTS IN OPTIONS
None of the Plan, participation in the Plan or any action of the Plan
Administrator taken under the Plan shall be construed as giving any person
any right to be retained in the employ of the Company or limit the
Company's right to terminate the employment or services of any person.
16.3 REGISTRATION
The Company shall be under no obligation to any Optionee to register
for offering or resale or to qualify for exemption under the Securities
Act, or to register or qualify under state securities laws, any shares of
Common Stock, security or interest in a security paid or issued under, Or
created by, the Plan, or to continue in effect any such registrations or
qualifications if made. The Company may issue certificates for shares with
such legends and subject to such restrictions on transfer and stop-transfer
instructions as counsel for the Company deems necessary or desirable for
compliance by the Company with federal and state securities laws.
Inability of the Company to obtain, from any regulatory body having
jurisdiction, the authority deemed by the Company's counsel to be necessary
for the lawful issuance and sale of any shares hereunder or the
unavailability of an exemption from registration for the issuance and sale of
any shares hereunder shall relieve the Company of any liability in respect
of the nonissuance or sale of such shares as to which such requisite
authority shall not have been obtained.
As a condition to the exercise of an Option, the Company may require
the Optionee to represent and warrant at the time of any such exercise or
receipt that such shares are being purchased or received only for the
Optionee's own account and without any present intention to sell or
distribute such shares if, in the opinion of counsel for the Company, such
a representation is required by any relevant provision of the
aforementioned laws. At the option of the Company, a stop-transfer order
against any such shares may be placed on the official stock books and
records of the Company, and a legend indicating that such shares may not be
pledged, sold or otherwise transferred, unless an opinion of counsel is
provided (concurred in by counsel for the Company) stating that such
transfer is not in violation of any applicable law or regulation, may be
stamped on stock certificates to ensure exemption from registration. The
Plan Administrator may also require such other action or agreement by the
Optionee as may from time to time be necessary to comply with the federal
and state securities laws.
16.4 NO RIGHTS AS A SHAREHOLDER
No Option shall entitle the Optionee to any dividend, voting or other
right of a shareholder unless and until the date of issuance under the Plan
of the shares that are the subject of such Option, free of all applicable
restrictions.
16.5 COMPLIANCE WITH LAWS AND REGULATIONS
Notwithstanding anything in the Plan to the contrary, the Board, in
its sole discretion, may bifurcate the Plan so as to restrict, limit or
condition the use of any provision of the Plan to Optionees who are
officers or directors subject to Section 16 of the Exchange Act without so
restricting, 1imiting or conditioning the Plan with respect to other
Optionees. Additionally, in interpreting and applying the provisions of the
Plan, any Option granted as an Incentive Stock Option pursuant to the Plan
shall, to the extent permitted by law, be construed as an "incentive stock
option" within the meaning of Section 422 of the Code.
16.6 NO TRUST OR FUND
The Plan is intended to constitute an "unfunded" plan. Nothing
contained herein shall require the Company to segregate any monies or other
property, or shares of Conunon Stock, or to create any trusts, or to make
any special deposits for any immediate or deferred amounts payable to any
Optionee, and no Optionee shall have any rights that are greater than those
of a general unsecured creditor of the Company.
16.7 SEVERABILLITY
If any provision of the Plan or any Option is determined to be
invalid, illegal or unenforceable in any jurisdiction, or as to any person,
or would disqualify the Plan or any Option under any law deemed applicable
by the Plan Administrator, such provision shall be construed or deemed
amended to conform to applicable laws, or, if it cannot be so construed or
deemed amended without, in the Plan Administrator's determination,
materially altering the intent of the Plan or the Option, such provision
shall be stricken as to such jurisdiction, person or Option, and the
remainder of the Plan and any such Option shall remain in full force and
effect.
SECTION 17. EFFECTIVE DATE
The Plan's effective date is the date on which it is adopted by the
Board, so long as it is approved by the Company's shareholders at any time
within 12 months of such adoption.
Adopted by the Board on April 12, 1998, and approved by the Company's
shareholders on April 25, 1998.