Exhibit 10.4
CLAREMONT TECHNOLOGY GROUP, INC.
1996 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
1. PURPOSE.
The purpose of the Claremont Technology Group, Inc. 1996 Stock Option Plan
for Nonemployee Directors (the "Plan") is to promote the interests of Claremont
Technology Group, Inc. (the "Company") and its shareholders by strengthening the
Company's ability to attract and retain the services of experienced and
knowledgeable nonemployee directors and by enhancing such directors incentive to
work on behalf of the Company and its shareholders.
2. SHARES SUBJECT TO THE PLAN.
Subject to adjustment as provided in Article 7, the total number of shares
of Common Stock (the "Common Stock") of the Company for which options may be
granted under the Plan in fiscal year 1996 shall be 55,000, and the total number
of shares of Common Stock for which options may be granted under the Plan in
each fiscal year thereafter during any part of which the Plan is effective shall
be 70,000 shares of Common Stock (the "Shares"). The Shares shall be shares
currently authorized but unissued. If any option granted under the Plan expires
or terminates for any reason without having been exercised in full, the Shares
subject to, but not delivered under, such option may become available for the
grant of other options under the Plan. No shares delivered to the Company in
full or partial payment of an option price payable pursuant to Section 6.5 shall
become available for the grant of other options under the Plan.
3. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Compensation Committee of the
Company's Board of Directors (the "Committee"). Subject to the terms of the
Plan, the Committee shall have the power to construe the provisions of the Plan,
to determine all questions arising thereunder, and to adopt and amend such rules
and regulations for administering the Plan as the Committee deems desirable.
4. PARTICIPATION IN THE PLAN.
Each member of the Company's Board of Directors (a "Director") who is not
otherwise an employee of: 1) the Company, 2) any shareholder holding more than
50% of the voting stock of the Company (unless such shareholder's internal
policies permit those employees to retain ownership of stock or stock options
issued under this Plan), or 3) any subsidiary of the Company (an "Eligible
Director") shall be eligible to participate in the Plan.
5. NONSTATUTORY STOCK OPTIONS.
All options granted under the Plan shall be nonstatutory options not
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
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1 - 1996 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
6. OPTION TERMS.
Each option granted to an Eligible Director under the Plan and the issuance
of Shares thereunder shall be subject to the following terms:
6.1 OPTION AGREEMENTS. Each option granted under the Plan shall be
evidenced by an option agreement (an "Agreement") duly executed on behalf of the
Company and by the Eligible Director to whom such option is granted and dated as
of the applicable date of grant. Each Agreement shall be signed on behalf of
the Company by an officer or officers delegated such authority by the Committee
using either manual or facsimile signature. Each Agreement shall comply with
and be subject to the terms and conditions of the Plan. Any Agreement may
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Committee.
6.2 OPTION GRANT SIZE AND GRANT DATES.
6.2.1 RECRUITMENT GRANTS. On the date a person first is elected or
appointed as a member of the Company's Board of Directors, if such person
is an Eligible Director, such person shall automatically be granted an
option to purchase 20,000 Shares, which option shall vest ratably on a
quarterly basis over three years (the "Recruitment Grant Term"). The
option grants made pursuant to the preceding sentence are each referred to
as a "Recruitment Grant." A Recruitment Grant shall not be made to any
person who is an Eligible Director on the date the Plan is approved by the
Board of Directors.
6.2.2 RENEWAL GRANTS. Immediately following the Company's first
Annual Meeting (as described in the Company's Bylaws) after the expiration
of each Eligible Director's Recruitment Grant Term, each such Eligible
Director shall automatically be granted options to purchase Shares as
follows: each Eligible Director shall receive an option to purchase 15,000
Shares, which option shall vest ratably on a quarterly basis over three
years (the "Renewal Grant Term"). The option grants made pursuant to the
preceding sentence are each referred to as a "Renewal Grant." In addition,
immediately following the Company's first Annual Meeting after the
expiration of each Eligible Director's initial or succeeding Renewal Grant
Term, each such Eligible Director shall automatically be granted another
Renewal Grant. The Renewal Grants shall begin with respect to each
Eligible Director with the first Annual Meeting held after the expiration
of such Eligible Director's Recruitment Grant Term.
6.3 OPTION EXERCISE PRICE. The option exercise price per share for each
Recruitment Grant and each Renewal Grant shall be the fair market value of the
Common Stock on the date of grant. The fair market value per Share shall be
determined by the Board in its discretion; provided, however, that where there
is a public market for the Common Stock, the fair market value per Share shall
be the closing price of the Common Stock for the date of grant, as reported in
THE WALL STREET JOURNAL (or, if not so reported, as otherwise reported by the
National Association of Securities Dealers Automated Quotation (NASDAQ) System)
or, in the event the Common Stock is listed on a stock exchange, the fair market
value per Share shall be the closing price on such exchange on the date of grant
of the option, as reported in THE WALL STREET JOURNAL.
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6.4 TIME AND MANNER OF OPTION EXERCISE. Subject to Sections 6.2 and
6.7, any exercisable option is exercisable in whole or in part at any time or
from time to time during the option period by giving written notice, signed by
the person exercising the option, to the Company stating the number of Shares
with respect to which the option is being exercised, accompanied by payment in
full of the option exercise price for the number of Shares to be purchased. The
date both such notice and payment are received by the office of the Secretary of
the Company shall be the date of exercise of the stock option as to such number
of Shares, subject to Section 6.9. No option may at any time be exercised with
respect to a fractional share.
6.5 PAYMENT OF EXERCISE PRICE. 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 Board and may consist in whole or part of:
6.5.1 cash;
6.5.2 check;
6.5.3 promissory note;
6.5.4 transfer to the Company of shares of the Common Stock having
a fair market value at the time of such exercise equal to the option
exercise price; or
6.5.5 delivery of instructions to the Company to withhold from the
option shares that would otherwise be issued on the exercise that number of
option shares having a fair market value at the time of such exercise equal
to the option exercise price.
If the fair market value of the number of whole shares transferred or the
number of whole option shares surrendered is less than the total exercise price
of the option, the shortfall must be made up in cash or by check.
6.6 TERM OF OPTIONS. Each option shall expire ten years from its date
of grant, but shall be subject to earlier termination as follows:
6.6.1 In the event of the termination of an optionee's service as
a Director, other than by reason of retirement, total and permanent
disability, or death, the then-outstanding options of such optionee shall
automatically expire 90 days after the effective date of such termination.
For purposes of the Plan, the term "by reason of retirement" means:
(i) mandatory retirement pursuant to Board policy; or (ii) termination of
service voluntarily at any time after age 65.
6.6.2 In the event of the termination of an optionee's service as
a Director by reason of retirement or total and permanent disability, the
then-outstanding options of such optionee shall expire one year after the
date of such termination or on the stated grant expiration date, whichever
is earlier.
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6.6.3 In the event of the death of an optionee while the optionee
is a Director, the then-outstanding options of such optionee shall expire
one year after the date of death of such optionee or on the stated grant
expiration date, whichever is earlier.
Exercise of a deceased optionee's options that are still exercisable shall
be by the estate of such optionee or by a person or persons whom the optionee
has designated in writing filed with the Company, or, if no such designation has
been made, by the person or persons to whom the optionee's rights have passed by
will or the laws of descent and distribution.
6.7 TRANSFERABILITY. An option may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent and distribution, and may be exercised during the lifetime
of the optionee only by the optionee or, if incapacitated, by his or her legal
guardian or legal representative.
6.8 LIMITATION OF RIGHTS.
6.8.1 LIMITATION AS TO SHARES. Neither the recipient of such option under
the Plan nor an optionee's successor or successors in interest shall have any
rights as a stockholder of the Company with respect to any Shares subject to an
option granted to such person until the date of issuance of a stock certificate
for such Shares.
6.8.2 LIMITATION AS TO DIRECTORSHIP. Neither the Plan, nor the granting
of an option, nor any other action taken pursuant to the Plan shall constitute
or be evidence of any agreement or understanding, express or implied, that an
Eligible Director has a right to continue as a Director for any period of time
or at any particular rate of compensation.
6.9 REGULATORY APPROVAL AND COMPLIANCE. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares shall comply with all relevant provisions of law,
including, without limitation, any applicable state securities laws, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations thereunder and the requirements of any stock
exchange upon which such shares may then be listed, and such issuance shall be
further subject to the approval of counsel for the Company with respect to such
compliance, including the availability of an exemption from registration for the
issuance and sale of such shares. The inability of the Company to obtain from
any regulatory body the authority deemed by the Company to be necessary for the
lawful issuance and sale of any shares under this Plan, or the unavailability of
an exemption from registration for the issuance and sale of any shares under
this Plan, shall relieve the Company of any liability with respect to the non-
issuance or sale of such shares.
As a condition to the exercise of an option, the Company may require the
optionee to represent and warrant in writing at the time of such exercise that
the shares are being purchased only for investment and without any then-present
intention to sell or distribute such shares. At the option of the Company, a
stop-transfer order against such shares may be placed on the stock books and
records of the Company, and a legend indicating that the stock may not be
pledged, sold or otherwise transferred unless an opinion of counsel is provided
stating that such transfer is not in violation of any applicable law or
regulation, may be stamped on the certificates representing such shares in order
to assure an exemption from registration. The Company also may require such
other
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documentation as may from time to time be necessary to comply with federal and
state securities laws. THE COMPANY HAS NO OBLIGATION TO UNDERTAKE REGISTRATION
OF OPTIONS OR THE SHARES OF STOCK ISSUABLE UPON THE EXERCISE OF OPTIONS.
As a condition to the exercise of any option granted under this Plan, the
optionee shall make such arrangements as the Company may require for the
satisfaction of any federal, state or local withholding tax obligations that may
arise in connection with such exercise.
The issuance, transfer or delivery of certificates of Common Stock pursuant
to the exercise of options may be delayed, at the discretion of the Board, until
the Company is satisfied that the applicable requirements of the federal and
state securities laws and the withholding provisions of the Code have been met.
6.10 SIX MONTH HOLDING PERIOD. At least six months must elapse from the
date of an Renewal Grant or a Recruitment Grant to the date the optionee
disposes of the Shares acquired upon exercise of the option, or (if the option
is disposed of other than by exercise) to the date of disposition of the option
itself.
7. CAPITAL ADJUSTMENTS.
The aggregate number and class of Shares subject to and authorized by the
Plan, the number and class of Shares with respect to which an option may be
granted to an Eligible Director under the Plan as provided in Article 6, the
number and class of Shares subject to each outstanding option, and the exercise
price per share specified in each such option shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a split-up or consolidation of shares or any like capital
adjustment or the payment of any stock dividend, or other increase or decrease
in the number of such shares effected without receipt of consideration by the
Company.
In the event of the proposed dissolution or liquidation of the Company,
each outstanding option will terminate immediately prior to the consummation of
such proposed action, unless otherwise provided by the Board. The Board may, in
the exercise of its sole discretion in such instances, declare that outstanding
options shall terminate as of a date fixed by the Board and give each optionee
the right to exercise his option in whole or in part. In the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, each outstanding option
shall be assumed or an equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless the
Board determines, in the exercise of its sole discretion, not to require such
assumption or substitution.
8. EXPENSES OF THE PLAN.
All costs and expenses of the adoption and administration of the Plan shall
be borne by the Company, and none of such expenses shall be charged to any
optionee.
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9. EFFECTIVE DATE AND DURATION OF THE PLAN.
The Plan shall be effective immediately, subject to approval by the
Company's shareholders, and subject to any conditions imposed in connection with
such approval. The Plan shall continue in effect until it is terminated by
action of the Board or the Company's shareholders, but such termination shall
not affect the terms of any then-outstanding options.
10. TERMINATION AND AMENDMENT OF THE PLAN.
The Board may amend, terminate or suspend the Plan at any time, in its sole
and absolute discretion; provided, however, that if required to qualify the Plan
under Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of
1934, as amended, no amendment shall be made more than once every six months
that would change the amount, price or timing of Recruitment Grants or Renewal
Grants, other than to comport with changes in the Code, or the rules and
regulations promulgated thereunder; and provided, further, that if required to
qualify the Plan under Rule 16b-3, no amendment shall be made without the
approval of the Company's shareholders that would:
10.1 materially increase the number of Shares that may be issued under
the Plan;
10.2 materially modify the requirements as to eligibility for
participation in the Plan; or
10.3 otherwise materially increase the benefits accruing to participants
under the Plan.
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