EXHIBIT 10.2
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CONVERGENT NETWORKS, INC.
1998 RESTRICTED STOCK PURCHASE PLAN
(as amended on July 13, 2000)
1. Purpose
The purpose of the Convergent Networks, Inc. 1998 Restricted Stock
Purchase Plan, as amended (the "Plan"), is to attract and retain the
services of experienced and knowledgeable directors, officers,
consultants and other key personnel (individually a "Participant,"
collectively "Participants") of Convergent Networks, Inc. (the
"Corporation") or any subsidiary for the benefit of the Corporation and
its stockholders and to provide additional incentive for Participants to
promote the success of the Corporation or its subsidiaries through
continuing ownership of its common stock.
2. Shares Subject to Plan
The total number of shares of common stock, par value $.00001 per share
("Shares"), of the Corporation which may be subject to the Plan shall not
exceed sixteen million one hundred ninety five thousand (16,195,000)
Shares in the aggregate, subject to reduction for those amounts of shares
issued or reserved for issuance under outstanding stock option granted
under the Company's 1998 Stock Option Plan ("Stock Option Plan") and
subject to any adjustment under Section 13 hereof. Shares which are sold
under the plan but which are repurchased by the Corporation shall become
available for additional sales under the Plan or the Stock Option Plan.
3. Administration of the Plan
(a) At the discretion of the Company's Board of Directors, the Plan shall
be administered either (i) by the full Board of Directors of the Company
or (ii) by a
committee (the "Committee") consisting of two or more members of the
Company's Board of Directors. In the event of that the full Board of
Directors is the administrator of the Plan, references herein to the
Committee shall be deemed to include the full Board of Directors. The
Board of Directors may from time to time appoint a member or members of
the Committee in substitution for or in addition to the member or members
then in office and may fill vacancies on the Committee however caused.
The Committee shall choose one of its members as Chairman and shall hold
meetings at such times and places as it shall deem advisable. A majority
of the members of the Committee shall constitute a quorum and any action
may be taken by a majority of those present and voting at any meeting.
(b) The Committee shall be responsible for administration of the Plan. In its
discretion, and subject to the provisions of the Plan, it shall have the
power to select Participants, authorize sales of stock, construe the
Plan, determine all questions and adopt and amend rules and regulations
for the administration of the Plan. A majority of the members of the
Committee shall constitute a quorum and any action may be taken by a
majority of those present and voting at any meeting. Meetings may be held
by conference telephone calls. Any action may also be taken without the
necessity of a meeting by a written instrument signed by a majority of
the Committee. The decision of the Committee on all questions of
interpretation and application of the Plan shall be final and binding on
all persons. The Committee may correct any defect or supply any omission
or reconcile any inconsistency in the Plan or in any Offer (as
hereinafter defined) as necessary to carry the Plan into effect. The
members of the Committee shall be entitled to reasonable compensation, as
determined by the
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Board, for services in connection with the Plan, and the Corporation
shall reimburse members of the Committee for any necessary expenses
incurred by them. The Corporation shall indemnify the Committee and each
member against all expense or liability occasioned by any act or omission
in good faith.
4. Eligibility
Participants shall be selected by the Committee from directors, officers,
consultants and other key personnel of the Corporation or any subsidiary.
In designating Participants and in determining the number of shares to be
sold to any Participant, the Committee shall take into account the
Participant's level of responsibility, performance, potential,
compensation, the number of Shares of the Corporation's common stock
purchased or subject to purchase under stock options granted to the
Participant pursuant to any of the Corporation's stock option plans, and
such other considerations as the Committee deems appropriate.
5. Rights to Purchase; Offer
After the Committee determines that it will offer a Participant the right
to purchase Shares under the Plan, it shall make a written offer (an
"Offer") to the Participant stating the number of shares the Participant
shall be entitled to purchase, the purchase price per Share, such other
conditions, including repurchase and escrow rights, as the Committee
deems appropriate, and that the Participant has fifteen (15) days to
accept the Offer. The Committee may extend the term of the Offer. The
Offer shall incorporate by reference the provisions of the Plan. Subject
to the Plan, Offers made to different Participants, or to the same
Participant at different times, may be subject to provisions which differ
from each other.
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6. Purchase Price
The purchase price of the Shares (the "Original Purchase Price") shall be
determined from time to time by the Committee. The Original Purchase
Price shall be paid in full, in cash or equivalent, to the Corporation
prior to expiration of the Offer. The date the Original Purchase Price is
paid is called the "Closing Date".
7. Shares Subject to Repurchase
(a) A Participant's Shares are subject to repurchase by the Corporation
at the Original Purchase Price for up to five (5) years after either
the Closing Date or such other date within twelve (12) months prior
to the Closing Date as determined by the Committee on a case by case
basis (the "Vesting Reference Date"):
(i) If the Participant shall for any reason, including without
limitation death, disability, voluntary action or involuntary
removal with or without cause, cease to be employed or engaged in
any capacity by the Corporation or any of its subsidiaries, the
Corporation may repurchase at the Original Purchase Price all of
the Shares (such number of shares being subject to equitable
adjustment for any stock split, stock dividend combination of
shares or the like), other that any of such shares which have
become Vested Shares as defined in Section 7(b).
(ii) "Vested Shares" shall mean those Shares that are no longer
subject to repurchase by the Company under section 7(a) as
determined in accordance with the following schedule: Prior to
the first anniversary date of the Vesting Reference Date (the
"First Anniversary Date"), 100% of the Shares shall be subject to
repurchase by the Company under Section 7(a).
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On the First Anniversary Date, twenty percent (20%) of the Shares
shall vest and no longer be subject to repurchase by the Company under
Section 7(a). Thereafter, additional Shares shall vest on a quarterly
basis, in arrears, as follows: at the end of each calendar quarter
after the First Anniversary Date, an additional 5% of the Shares shall
vest and no longer be subject to repurchase by the Company under
Section 7(a) hereof such that by the fifth anniversary date of the
Vesting Reference Date all the Shares shall be vested and not subject
to repurchase. Any Shares not vested under this Section 7(b) shall
continue to be subject to repurchase by the Company under Section 7(a)
hereof. Notwithstanding any other provisions of this section, in the
event of a Change of Control (as hereinafter defined) of the Company,
the Participant will automatically receive eighteen (18) months
accelerated vesting, except that any Participant hired after October
14, 1998, who has less than twelve (12) months service with the
Company will receive six (6) months accelerated vesting. In addition,
the Participant's then remaining unvested Shares shall continue to
vest at a quarterly rate of 5% of the Shares originally issued. For
purposes of the Plan, a "Change of Control" shall be deemed to have
occurred if any of the following conditions have occurred: (1) the
merger or consolidation of the Company with another entity where the
Company is not the surviving entity and where after the merger or
consolidation (i) its stockholders prior to the merger or
consolidation hold less than 50% of the voting stock of the surviving
entity and (ii) its
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Directors prior to the merger or consolidation are less than a
majority of the Board of the surviving entity; (2) the sale of all or
substantially all of the Company's assets to a third party and
subsequent to the transaction (i) its stockholders hold less than 50%
of the stock of said third party and (ii) its Directors are less than
a majority of the Board of said third party; (3) a transaction or
series of related transactions, including a merger of the Company with
another entity where the Company is the surviving entity, whereby (i)
50% or more of the voting stock of the Company after the
transaction(s) is owned actually or beneficially by parties who held
less than thirty percent (30%) of the voting stock, actually or
beneficially, prior to the transaction(s) and (ii) its Board of
Directors after the transaction(s) or within sixty (60) days thereof,
is comprised of less than a majority of the Directors serving prior to
the transaction(s); or (4) the Continuing Directors shall not
constitute a majority of the Board of Directors of the Company. The
term "Continuing Directors" shall mean a member of the Board of
Directors of the Company who either was a member of the Board of
Directors of the Company on the date this Plan was adopted by the
Board of Directors or who subsequently became a director of the
Company and whose initial appointment, initial election or initial
nomination for election by the Company's shareholders subsequent to
such date was approved by a vote of a majority of the Continuing
Directors then on the Board of Directors of the Company.
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(b) Notwithstanding the foregoing vesting set forth under Section 7(a)
above, the Committee may in its discretion (i) specifically approve a
different vesting schedule for the Shares, or (ii) accelerate the
vesting of any Shares subject to such terms and conditions as the
Board of Directors or the Committee, as the case may be, deems
necessary and appropriate.
(c) In addition to the foregoing, the Committee may in its discretion
waive any such repurchase rights at any time on or subsequent to the
Closing Date. A Participant may not sell, exchange, transfer,
pledge, hypothecate or otherwise dispose of such Shares subject to
the aforementioned repurchase rights.
8. Deposit of Shares in Escrow
Certificates representing Shares shall bear a legend that the shares
represented thereby may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with the terms
of the Plan and the transfer agent for the common stock of the
Corporation shall be so instructed. Each Participant shall deposit such
certificates together with a stock power or other instrument of transfer,
appropriately endorsed in blank with signatures witnessed, with an escrow
agent designated by the Committee under a deposit agreement requiring the
Shares to be held in escrow until a repurchase occurs under Section 7 or
until such repurchase rights shall have lapsed, and containing such other
terms and conditions as the Committee shall approve, all expenses of any
such escrow to be borne by the Corporation. Each Participant hereby
irrevocably constitutes and appoints the Secretary of the Company as his
or her attorney to transfer Shares on the books of the Company in
connection with any repurchase. During the period while the Shares are
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held in escrow, the Participant shall be entitled to receive all
dividends declared thereon.
9. Form of Agreements
The Committee may specify from time to time such forms of Repurchase
Agreement, Sales Agreement, Escrow Agreement and other agreements and
documents it deems necessary in connection with the issuance of Shares
under the Plan.
10. Provisions Relating to Securities Act
(a) Shares shall be registered in the name of the Participant on the
stock and transfer records of the Corporation and stock certificates
shall be delivered after the Offer has been accepted. However, if the
Board determines that the listing upon any securities exchange or the
registration or qualification under any federal or state law of the
Shares, or the consent or approval of any governmental regulatory
body, is necessary or desirable in connection with the sale of such
Shares, registration on the stock and transfer records and delivery
of stock certificates may be delayed until such listing,
registration, qualification, consent or approval is obtained, free of
any conditions not acceptable to the Board.
(b) Delivery of Shares may be made either from shares of authorized but
unissued common stock or from outstanding shares of common stock held
in the Treasury of the Corporation.
(c) Notwithstanding any other provision of this Plan, the Corporation may
delay registration on its stock and transfer records and delivery of
stock certificates to a Participant until one of the following
conditions shall have been satisfied
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(i) The Shares covered by a sale are at the time of such sale
effectively registered under the Securities Act of 1933
(the "Securities Act"),
(ii) A no action letter in respect of the sale of such Shares
shall have been obtained by the Corporation from the
Securities and Exchange Commission; or
(iii) Counsel for the Corporation shall have given an opinion,
which opinion shall not be unreasonably conditioned or
withheld, that such Shares are exempt from registration
under the Securities Act.
Moreover, unless such Shares have been effectively registered under the
Securities Act the Corporation shall be under no obligation to make any
sale unless the Participant shall first give a written representation to
the Corporation satisfactory to the Corporation's counsel and upon which,
in the opinion of such counsel, the Corporation may reasonably rely, that
the Participant is acquiring the Shares as an investment and not with a
view to or for sale in connection with any distribution of any such Shares
in violation of the Securities Act. Each certificate representing Shares
delivered in such sale shall bear a legend referring to such investment
representation.
(d) The Corporation shall have no obligation, contractual or otherwise, to
any Participant to register the Shares to be sold to such Participant
under the Securities Act.
(e) If a Participant desires to make an election with respect to Shares
under Section 83(b) of the Internal Revenue Code of 1986, as amended
(the "Code"), the
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Participant must do so within thirty (30) days after the Closing
Date. A sample form of an election is included in Exhibit A.
11. Expenses of the Plan
All costs and expenses for the adoption and administration of the Plan
shall be borne by the Corporation.
12. No Implied Right
Nothing in the Plan shall be deemed to give any person, or any other person
claiming under or through him, any contractual or other right to
participate in the benefits of the Plan. Nothing in the Plan and no action
or sale thereunder shall be construed to constitute or be evidence of any
agreement or understanding, express or implied, on the part of the
Corporation to employ or otherwise retain any participant for any specific
period of time.
13. Adjustments
In the event of any change in the outstanding shares of common stock of the
Corporation by reason of any stock dividend or split, recapitalization,
merger, consolidation, combination or exchange of shares for other
securities, or other similar corporate change, the Committee may make such
adjustments as the Committee deems appropriate in (a) the total number of
Shares which may be offered for purchase under the Plan; and (b) the number
of Shares which may be offered to any Participant.
14. Transferability
Except as otherwise specifically provided in the Plan, no right or interest
under the Plan of any Participant shall be assignable or transferable, in
whole or in part, either
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directly or by operation of law or otherwise, including, without
limitation, execution, levy, garnishment, attachment, pledge, bankruptcy
or in any other manner (except by will or the laws of descent and
distribution in accordance with the Plan, pursuant to a qualified domestic
relations order as defined by the Code or under Title I of the Employee
Retirement Income Security Act, or the rules thereunder); and no such
right or interest of any Participant shall be subject to any obligation or
liability of such Participant.
15. Withholding of Income Taxes
The Corporation shall have the right to deduct from any amounts paid to
the Participant and to require the Participant to remit payment to the
Corporation to cover any federal, state or local taxes required by law to
be withheld with respect to any event under the Plan.
16. Approval
The Plan shall be subject to approval by the affirmative vote of a majority
of the shares of common stock of the Corporation entitled to vote within
twelve months of adoption by the Board and shall be effective as of the
date of adoption of the Plan by the Board. Any Shares purchased prior to
such approval shall not vest until such approval is obtained.
17. Effective Date
The Plan shall become effective upon adoption by the Directors.
18. Voting Rights Agreement
Upon the acceptance of an Offer, the Participant shall enter into a Voting
Rights Agreement, pursuant to which such Participant shall grant to Bing
Yang, President
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and Chief Executive Officer of the Corporation, the right to vote all
Shares held by the Participant.
19. Amendment and Termination of the Plan
Unless sooner terminated as herein provided, the Plan shall terminate ten
(10) years from its effective date, or upon the sale of all the Shares
available for sale under the Plan, whichever shall first occur. The Board
may at any time terminate, extend, or amend the Plan. However, termination
or amendment of the Plan shall not, without the consent of any person
affected thereby, modify or in any way affect any right or obligation
created prior to such termination or amendment, and any amendment of the
Plan which materially increases benefits accruing to Participants under the
Plan, materially increases the number of Shares reserved for the Plan or
materially modifies the requirements of eligibility for participation in
the Plan must be approved by the affirmative vote of a majority of the
shares of common stock of the Corporation outstanding and entitled to vote
before it may take effect.
20. Notices
Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Corporation, to its principal place of
business, attention: President, and if to a Participant, to the address
appearing on the records of the Corporation.
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EXHIBIT A
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FORM OF 83(b) ELECTION
Election to Include in Gross Income in Year
Of Transfer of Property Pursuant to
Section 83(b) of the Internal Revenue code
The undersigned hereby elects pursuant to 83(b) of the Internal Revenue
Code with respect to the property described below and supplies the
following information in accordance with the regulations promulgated
thereunder:
1. The name, address and taxpayer identification number of the
undersigned are:
Taxpayer I.D. No.:
2. Description of property with respect to which the election is being
made:
__________________ shares of Common Stock, $.00001 par value per
share, of Convergent Networks, Inc. (the "Shares")
3. Date on which property was transferred is _________________, 2000
The taxable year to which this election relates is calendar year 2000
4. Nature of the restriction(s) to which the property is subject is:
The Shares are subject to repurchase by Convergent Networks
Corporation at the original purchase price therefore for up to five
(5) years after the date of transfer in the event of termination of
the taxpayer's employment with Convergent Networks Corporation for
any reason in accordance with the following repurchase schedule.
Prior to _____________, 2000, one hundred (100%) of the Shares are
subject to repurchase. On __________, 2000 twenty percent (20%) of
the Shares subject to repurchase hereunder shall vest and eight
percent (80%) of the Shares are subject to repurchase. Thereafter
additional Shares shall Vest on a quarterly basis such that for each
month after ___________, 2000, five (5%) of said Shares shall Vest
and the number of shares subject to repurchase shall decrease by a
like amount on a per month basis.
5. The fair market value at the time of transfer (determined without
regard to any restrictions other than restrictions which by their
terms will never lapse) of the property with respect to which this
election is being made is $.___ per share.
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6. The amount paid by taxpayer for said property is $.___ per share.
7. A Copy of this statement has been furnished to Convergent Networks,
Inc.
Dated:
By: _______________________________
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