EXHIBIT 10.20
WAM!NET INC.
1998 COMBINED STOCK OPTION PLAN
1. Purpose. The purpose of the WAM!NET Inc. 1998 Combined Stock Option
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Plan (the "Plan") is to provide a continuing long-term incentive to selected
eligible officers and key employees (including foreign nationals) of WAM!NET
Inc. (the "Corporation") and of any subsidiary corporation of the Corporation
(the "Subsidiary"), as herein defined, to Non-Employee Directors of the
Corporation and to Non-Employee Consultants to the Corporation; to provide a
means of rewarding outstanding performance; and to enable the Corporation to
maintain a competitive position to attract and retain key personnel necessary
for continued growth and profitability.
2. Definitions. The following words and phrases as used herein shall
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have the meanings set forth below:
2.1. "Addendum" shall mean an addendum attached to the Plan which
provides for certain grants of Options to employees of the Corporation or a
Subsidiary who are foreign nationals, and is intended to conform to the laws of
such employees' country of citizenship with respect to such Options and the
granting thereof.
2.2. "Board" shall mean the Board of Directors of the Corporation.
2.3. "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.4. "Committee" shall mean the Stock Option Committee of the Board, or
such other committee of the Board as may be designated by the Board, from time
to time, for the purpose of administering this plan as contemplated by Section 4
hereof.
2.5. "Common Stock" shall mean the common stock, $0.01 par value, of
the Corporation.
2.6. "Corporation" shall mean WAM!NET Inc., (f/k/a Netco Communications
Corporation), a Minnesota corporation.
2.7. "Non-Employee Consultant" shall mean an individual who is retained
to provide consulting or legal services to the Corporation or a Subsidiary, and
who is not an employee of the Corporation or any Subsidiary.
2.8. "Non-Employee Director" shall mean a member of the Board who is
not an employee of the Corporation or any Subsidiary.
2.9. "Fair Market Value" of any security on any given date shall be
determined by the Committee as follows: (a) if the security is listed for
trading on one or more national securities exchanges, or is quoted on NASDAQ
National Market, the last reported sales price on the principal such exchange or
NASDAQ on the date in question, or if such security shall not have
WAM!NET Inc.
1998 Combined Stock option Plan
been traded on such principal exchange on such date, NASDAQ on the first day
prior thereto on which such security was so traded; or (b) if the security is
not listed for trading on a national securities exchange or NASDAQ National
Market, but is traded in the over-the-counter market, including NASDAQ, closing
bid price for such security on the date in question, or if there is no such bid
price for such security on such date, the closing bid price on the first day
prior thereto on which such price existed; or (c) if neither (a) nor (b) is
applicable, by any means deemed fair and reasonable by the Committee, which
determination shall be final and binding on all parties.
2.10. "ISO" shall mean any stock option granted pursuant to this Plan
as an "incentive stock option" within the meaning of Section 422 of the Code.
2.11. "NQO" shall mean any stock option granted pursuant to this Plan,
which is not an ISO.
2.12. "Option" shall mean any stock option granted pursuant to this
Plan.
2.13. "Optionee" shall mean any person who is the holder of an Option
granted pursuant to this Plan.
2.14. "Plan" shall mean this 1998 Combined Stock Option Plan of the
Corporation.
2.15. "Subsidiary" shall mean any corporation which at the time
qualifies as a subsidiary of the Corporation under Section 425(f) of the Code.
2.16. "Tax Date" shall mean the date on which the amount of tax to be
withheld is determined under the Code.
3. Shares Available Under Plan. The number of shares which may be
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issued pursuant to Options granted under this Plan, including Options granted
pursuant to an Addendum, shall not exceed 25,000,000 shares of the Common Stock
of the Corporation; provided, however, that shares which become available as a
result of canceled, unexercised, lapsed or terminated Options granted under this
Plan shall be available for issuance pursuant to Options subsequently granted
under this Plan, and the number of shares for which Options have been granted or
are available for grant under this Plan shall be proportionately increased or
decreased in accordance with Section 8 hereof upon occurrence of any event
described therein. The shares issued upon exercise of Options granted under this
Plan may be authorized and unissued shares or shares previously acquired or to
be acquired by the Corporation.
4. Administration.
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4.1. The Plan will be administered by the Board of Directors or by a
Committee (the "Committee") selected by the Board and consisting of at least
three members, none of whom for at least one year prior to service on the
Committee has been eligible to receive any Option under the Plan, or under any
other benefit plan of the Corporation or any of its affiliates entitling the
participants therein to acquire stock or stock options of the Corporation or any
of its Subsidiaries. The Board or such Committee are hereinafter described as
the Committee.
2.
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1998 Combined Stock option Plan
4.2. The Committee will have plenary authority, subject to provisions
of the Plan, to determine when and to whom Options will be granted, the term of
each Option, the number of shares covered by it, the participation by the
Optionee in other plans, and any other terms or conditions of each Option. The
Committee shall determine with respect to each grant of an Option whether a
participant shall receive an ISO or an NQO, or an Option pursuant to the
provisions of an Addendum. The number of shares, the term and the other terms
and conditions of a particular kind of Option need not be the same, even as to
options granted at the same time. The Committee's recommendations regarding
option grants and terms and conditions thereof will be conclusive.
4.3. The Committee will have the sole responsibility for construing and
interpreting the Plan, for establishing and amending any rules and regulations
as it deems necessary or desirable for the proper administration of the Plan,
and for resolving all questions arising under the Plan. Any decision or action
taken by the Committee arising out of or about the construction, administration,
interpretation and effect of the Plan and of its rules and regulations will, to
the extent permitted by law, be within its absolute discretion, except as
otherwise specifically provided herein, and will be conclusive and binding on
all Optionees, all successors, and any other person, whether that person is
claiming under or through any Optionee or otherwise.
4.4. The Committee will designate one of its members as chairman. It
will hold its meetings at the times and places as it may determine. A majority
of its members will constitute a quorum, and all determinations of the Committee
will be made by a majority of its members. Any determination reduced to writing
and signed by all members will be fully as effective as if it had been made by a
majority vote at a meeting duly called and held. The Committee may appoint a
secretary, who need not be a member of the Committee, and may make such rules
and regulations for the conduct of its business as it may deem advisable.
4.5. No member of the Committee will be liable, in the absence of bad
faith, for any act or omission with respect to his services on the Committee.
Service on the Committee will constitute service as a member of the Board, so
that the members of the Committee will be entitled to indemnification and
reimbursement as Board members pursuant to the Corporation's Bylaws.
4.6. The Committee will regularly inform the Board as to its actions
with respect to all Options granted under the Plan and the terms and conditions
and any such Options in a manner, at any times, and in any form as the Board may
reasonably request.
5. Participants.
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5.1. Participation in this Plan shall be limited to employees of the
Corporation or of a Subsidiary and to Non-Employee Directors and Non-Employee
Consultants. Non-Employee Directors and Non-Employee Consultants shall
participate under this Plan only as specified in Section 14 hereof.
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WAM!NET Inc.
1998 Combined Stock option Plan
5.2. Without amending the Plan, the Committee may grant Options to
employees of the Corporation or of any Subsidiary who are foreign nationals on
such terms and conditions different from those specified in this Plan as may in
the judgment of the Committee be necessary or desirable to foster and promote
achievement of the purposes of the Plan, and, in furtherance of such purposes
the Committee may make such Addenda, modification, amendments, procedures,
subplans and the like as may be necessary or advisable to comply with provisions
of laws in other countries in which the Corporation or any Subsidiary operates
or has employees.
5.3. Subject to other provisions of this Plan, Options may be granted
to the same participants on more than one occasion.
5.4. Except with respect to Options granted to Non-Employee Directors
or Non-Employee Consultants under Section 15, the Committee's determination
under the Plan including, without limitation, determination of the persons to
receive Options, the form, amount and type of such Options, and the terms and
provisions of Options need not be uniform and may be made selectively among
otherwise eligible participants, whether or not the participants are similarly
situated.
6. Terms and Conditions.
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6.1. Each Option granted under the Plan shall be evidenced by a written
agreement, which shall be subject to the provisions of this Plan and to such
other terms and conditions as the Corporation may deem appropriate.
6.2. Each Option agreement shall specify the period for which the
Option thereunder is granted which in no event shall exceed ten years from the
date of the grant for any Option designated by the Committee as an ISO or ten
years and one day from the date of grant for any Option and shall provide that
the Option shall expire at the end of such period.
6.3. The exercise price per share shall be determined by the Committee
at the time any Option is granted and, if the Option is an ISO, shall be no less
than one hundred percent (100%) of Fair Market Value of the Common Stock of the
Corporation on the date the Option is granted, as determined by the Committee.
6.4. The aggregate Fair Market Value (determined as of the time the
Option is granted) of the Common Stock with respect to which an ISO under this
Plan or any other plan of the Corporation or its Subsidiaries is exercisable for
the first time by an Optionee during any calendar year shall not exceed
$100,000.
6.5. An Option shall be exercisable at such time or times, and with
respect to such minimum number of shares, as may be determined by the
Corporation at the time of the grant. The Option agreement may require, if so
determined by the Corporation, that no part of the Option may be exercised until
the Optionee shall have remained in the employ of the Corporation or of a
Subsidiary for such period after the date of the Option as the Corporation may
specify.
4.
WAM!NET Inc.
1998 Combined Stock option Plan
6.6. The Corporation may prescribe the form of legend which shall be
affixed to the stock certificate representing shares to be issued and the shares
shall be subject to the provisions of any repurchase agreement or other
agreement restricting the sale or transfer thereof. Such agreements or
restrictions shall be noted on the certificate representing the shares to be
issued.
6.7. Each Incentive Stock Option granted hereunder shall not be
transferable by the Optionee other than by will or by the laws of descent and
distribution, and shall be, during the Optionee's lifetime, exercisable only by
the Optionee or Optionee's guardian or legal representative. Each Non-Qualified
Stock Option granted hereunder may be transferred by the Optionee for estate
planning purposes subject to prior or other written approval by the Committee in
its sole discretion or pursuant to any policy and requirements concerning such
transfers then in effect as the Committee may in its discretion establish, amend
or revoke from time to time; by will or the laws of descent and distribution; or
pursuant to a qualified domestic relations order as defined in Section 414 of
the Code or Section 206 of the Employee Retirement Income Security Act, or rules
thereunder. Except as permitted by the preceding sentences, each Option granted
under the Plan and the rights and privileges thereby conferred shall not be
transferred, assigned or pledged in any way (whether by operation of law or
otherwise), and shall not be subject to execution, attachment or similar
process. Any attempt to so transfer, assign, pledge or otherwise dispose of an
Option, or of any right or privilege conferred thereby, contrary to the
provisions of the Option or the Plan, or any levy of any attachment or similar
process upon such rights and privileges, shall be void and unenforceable against
the Corporation.
7. Exercise of Option.
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7.1. Each exercise of an Option granted hereunder, whether in whole or
in part, shall be by written notice thereof, delivered to the Secretary of the
Corporation (or such other person as may be designated). The notice shall state
the number of shares with respect to which the Options are being exercised and
shall be accompanied by payment in full for the number of shares so designated.
Shares shall be registered in the name of the Optionee unless the Optionee
otherwise directs in his or her notice of election.
7.2. Payment shall be made to the Corporation either (i) in cash,
including certified check, bank draft or money order, (ii) at the discretion of
the Corporation, by delivering Common Stock of the Corporation already owned by
the participant, (iii) at the discretion of the Corporation, by delivering a
promissory note, containing such terms and conditions acceptable to the
Corporation, for all or a portion of the purchase price of the shares so
purchased, or a combination of (i), (ii) and (iii). With respect to (ii), the
Fair Market Value of stock so delivered shall be determined as of the date
immediately preceding the date of exercise.
7.3. Upon notification of the amount due and prior to, or concurrently
with, the delivery to the Optionee of a certificate representing any shares
purchased pursuant to the exercise of an Option, the Optionee shall promptly pay
to the Corporation any amount necessary to satisfy applicable federal, state or
local withholding tax requirements.
5.
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1998 Combined Stock option Plan
8. Adjustment of Option Stock. In case the shares issuable upon
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exercise of any Option granted under the Plan at any time outstanding shall be
subdivided into a greater or combined into a lesser number of shares (whether
with or without par value), the number of shares purchasable upon exercise of
such Option immediately prior thereto shall be adjusted so that the Optionee
shall be entitled to receive a number of shares which he or she would have owned
or have been entitled to receive after the happening of such event had such
Option been exercised immediately prior to the happening of such subdivision or
combination or any record date with respect thereto. An adjustment made pursuant
to this paragraph shall become effective immediately after the effective date of
such subdivision or combination retroactive to the record date, if any, for such
subdivision or combination. The option price (as such amount may have
theretofore been adjusted pursuant to the provisions hereof) shall be adjusted
by multiplying the option price immediately prior to the adjustment of the
number of shares purchasable under the Option by a fraction, of which the
numerator shall be the number of shares purchasable upon the exercise of the
Option immediately prior to such adjustment, and of which the denominator shall
be the number of shares so purchasable immediately thereafter. Substituted
shares of stock shall be deemed shares under Section 3 of the Plan.
9. Change in Control.
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9.1. For purposes of this Section 9, a "Change in Control" of the
Corporation will mean (i) the sale, lease, exchange or other transfer of
substantially all of the assets of the Corporation (in one transaction or in a
series of related transactions) to a person or entity that is not controlled,
directly or indirectly, by the Corporation, (ii) a merger or consolidation to
which the Corporation is a party if the stockholders of the Corporation
immediately prior to effective date of such merger or consolidation do not have
"beneficial ownership" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended) immediately following the effective date of such merger
or consolidation of more than 80% of the combined voting power of the surviving
corporation's outstanding securities ordinarily having the right to vote at
elections of directors, or (iii) a change in control of the Corporation of a
nature that would be required to be reported pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, whether or not the Corporation
is then subject to such reporting requirements, including, without limitation,
such time as (1) any person becomes, after the effective date of the Plan, the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended), directly or indirectly, of 40% or more of the combined
voting power of the Corporation's outstanding securities ordinarily having the
right to vote at elections of directors, or (2) individuals who constitute the
Board of Directors on the effective date of the Plan cease for any reason to
constitute at least a majority of the Board, provided that any person becoming a
director subsequent to the effective date of the Plan whose election, or
nomination for election by the Corporation's stockholders, was approved by a
vote of at least a majority of the directors comprising the Board on the
effective date of the Plan will, for purposes of this Section 9.1, be considered
as though such persons were a member of the Board of Directors on the effective
date of the Plan.
9.2. Without limiting the authority of the Committee under Section 4 of
the Plan, if a Change in Control of the Corporation occurs, then, if approved by
the Committee in its sole
6.
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1998 Combined Stock option Plan
discretion either in an agreement evidencing an Option grant at the time of
grant or at any time after the grant of an Option, all Options will become
immediately exercisable in full and will remain exercisable in accordance with
the terms of the Plan; provided, however, that a recipient of Incentive Stock
Options may elect that such acceleration of vesting not apply with respect to
some or all of the Incentive Stock Options granted to him by so notifying the
Committee in writing within three (3) business days of being notified of the
Committee's actions pursuant to this Section 9.
9.3. If a Change in Control of the Corporation occurs, then the
Committee in its sole discretion either in an agreement evidencing an Option
grant at the time of grant or at any time after the grant of an Option, and
without the consent of any Option recipient effected thereby, may determine that
some or all recipients holding outstanding Options will receive, with respect to
and in lieu of some or all of the shares of Option Stock, as of the effective
date of any such Change in Control of the Corporation, cash in an amount equal
to the excess of the Fair Market Value of such shares either immediately prior
to the effective date of such Change in Control of the Corporation or, if
greater, determined on the basis of the amount paid as consideration by the
other party(ies) to the Change in Control transaction over the exercise price
per share of such Options.
9.4. Notwithstanding anything in Section 9.2 or 9.3 of the Plan to the
contrary, if the Corporation is then subject to the provisions of Section 280G
of the Code, and if the acceleration of the vesting of an Option as provided in
Section 9.2 or the payment of cash in exchange for all or part of an Option as
provided in Section 9.3 (which acceleration or payment could be deemed a
"payment" within the meaning of Section 28OG(b)(2) of the Code), together with
any other payments which such recipient has the right to receive from the
Corporation or any corporation that is a member of an "affiliated group" (as
defined in Section 1504(a) of the Code without regard to Section 1504(b) of the
Code) of which the Corporation is a member, would constitute a "parachute
payment" (as defined in Section 28OG(b)(2) of the Code), then the payments to
such recipient pursuant to Section 9.2 or 9.3 will be reduced to the largest
amount as will result in no portion of such payments being subject to the excise
tax imposed by Section 4999 of the Code; provided, however, that if such
recipient is subject to a separate agreement with the Corporation or a
Subsidiary which specifically provides that payments attributable to one or more
forms of employee stock incentives or to payments made in lieu of employee stock
incentives will not reduce any other payments under such agreement, even if it
would constitute an excess parachute payment, then the limitations of this
Section 9.4 will, to that extent, not apply.
10. Assignments. Other than as provided in Section 6.7, any Option
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granted under this Plan shall be exercisable only by the Optionee to whom
granted during his or her lifetime and shall not be assignable or transferable
otherwise than by will or by the laws of descent and distribution.
11. Severance; Death; Disability. An Option shall terminate, and no
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rights thereunder may be exercised, if the person to whom it is granted ceases
to be employed by the Corporation or by a Subsidiary except that:
7.
WAM!NET Inc.
1998 Combined Stock option Plan
11.1. If the employment of the Optionee is terminated by any reason
other than his or her death or disability, the Optionee may at any time within
not more than three months after termination of his or her employment, exercise
his or her Option rights but only to the extent they were exercisable by the
Optionee on the date of termination of his or her employment; provided, however,
that if the employment is terminated as a result of the Optionee's deliberate,
willful or gross misconduct as determined by the Committee, all rights under the
Option shall terminate and expire upon such termination.
11.2. If the Optionee dies while in the employ of the Corporation or a
Subsidiary, or within not more than three months after termination of his or her
employment, the Optionee's rights under the Option may be exercised at any time
within one year following such death by his or her personal representative or by
the person or persons to whom such rights under the Option shall pass by will or
by the laws of descent and distribution, but only to the extent they were
exercisable by the Optionee on the date of death.
11.3. If the employment of the Optionee is terminated because of
permanent disability, the Optionee, or his or her legal representative, may at
any time within not more than one year after termination of his or her
employment, exercise his or her Option rights but only to the extent they were
exercisable by the Optionee on the date of termination of his or her employment.
11.4. The same exercise periods as provided in Sections 11.1, 11.2 and
11.3 shall also apply with respect to a tranferee of an Option pursuant to
Section 6.7, including the extension of the exercise period under Section 11.2
upon the death of the tranferee.
11.5. Any provision of Sections 11.1, 11.2 and 11.3 to the contrary
notwithstanding, no Option or any right claimed thereby, therein or thereunder
shall be exercisable by anyone after the expiration of the term of the Option.
11.6. Transfers of employment between the Corporation and a Subsidiary,
or between Subsidiaries, will not constitute termination of employment for
purposes of any Option granted under this Plan. The Committee may specify in the
terms and conditions of an Option whether any authorized leave of absence or
absence for military or government service or for any other reasons will
constitute a termination of employment for purposes of the Option and the Plan.
12. Rights of Participants. Neither the participant nor the personal
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representatives, heirs, or legatees of such participant shall be or have any of
the rights or privileges of a shareholder of the Corporation in respect of any
of the shares issuable upon the exercise of an Option granted under this Plan
unless and until certificates representing such shares shall have been issued
and delivered to the participant or to such personal representatives, heirs or
legatees.
13. Securities Registration. If any law or regulation of the
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Securities and Exchange Commission or of any other body having jurisdiction
shall require the Corporation or the participant to take any action in
connection with the exercise of an Option, then notwithstanding any contrary
provision of an Option agreement or this Plan, the date for exercise of such
Option
8.
WAM!NET Inc.
1998 Combined Stock option Plan
and the delivery of the shares purchased thereunder shall be deferred until the
completion of the necessary action. In the event that the Corporation shall deem
it necessary, the Corporation may condition the grant or exercise of an Option
granted under this Plan upon the receipt of a satisfactory certificate that the
Optionee is acquiring the Option or the shares obtained by exercise of the
Option for investment purposes and not with the view or intent to resell or
otherwise distribute such Option or shares. In such event, the stock certificate
evidencing such shares shall bear a legend referring to applicable laws
restricting transfer of such shares. In the event that the Corporation shall
deem it necessary to register under the Securities Act of 1933, as amended, or
any other applicable statute, any Options or any shares with respect to which an
Option shall have been granted or exercised, then the participant shall
cooperate with the Corporation and take such action as is necessary to permit
registration or qualification of such Options or shares.
14. Duration and Amendment.
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14.1. There is no express limitation upon the duration of the Plan,
except for the requirement of the Code that all ISO's must be granted within ten
years from the date the Plan is approved by the shareholders.
14.2. The Board may terminate or may amend the Plan at any time;
provided, however, that the Board may not, without approval of the shareholders
of the Corporation, (i) increase the maximum number of shares as to which
Options may be granted under the Plan, (ii) permit the granting of ISO's at less
than 100% of Fair Market Value at time of grant, (iii) change the class of
employees eligible to receive Options under the Plan, or (iv) permit Directors
to receive options under the Plan other than pursuant to Section 15 hereof; and,
provided further, that the Board may not amend the Plan more than once every six
months, other than to comport with changes in the Code, the Employee Retirement
Income Security Act, or rules thereunder.
15. Granting of Options to Non-Employee Directors and Non-Employee
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Consultants.
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15.1. Non-Employee Directors and Non-Employee Consultants shall be
entitled to receive such Options under this Plan as may be granted to them from
time to time.
15.2. All Options granted to Non-Employee Directors and Non-Employee
Consultants shall be designated as NQOs, shall be evidenced by a written option
agreement signed by the Corporation and the Non-Employee Director or Non-
Employee Consultant, and shall be subject to the same terms and provisions as
are then in effect with respect to granting of NQOs to salaried officers and key
employees of the Corporation, except that the Option shall be exercisable as to
all or any part of the shares subject to the Option from the date the Option is
granted, and shall expire on the earliest of (i) twelve months after the
Optionee ceases to be a Non-Employee Director or a Non-Employee Consultant
(except by death), (ii) one year after the death of the optionee, or (iii) seven
years after the date of grant. Subject to the foregoing, all provisions of this
Plan not inconsistent with the foregoing shall apply to Options granted to Non-
Employee Directors, except that Non-Employee Directors shall always have the
right to deliver stock in exercise of options as provided in Section 7.2.
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1998 Combined Stock option Plan
16. Approval of Shareholders. This Plan expressly is subject to
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approval of holders of a majority of the outstanding shares of Common Stock of
the Corporation, and if it is not so approved on or before one year after the
date of adoption of this Plan by the Board, the Plan shall not come into effect,
and any Options granted pursuant to this Plan shall be deemed canceled.
17. Conditions of Employment. The granting of an Option to a
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participant under this Plan who is an employee shall impose no obligation on the
Corporation to continue the employment of any participant and shall not lessen
or affect the right of the Corporation to terminate the employment of the
participant.
18. Other Options. Nothing in the Plan will be construed to limit the
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authority of the Corporation to exercise its corporate rights and powers,
including, by way of illustration and not by way of limitation, the right to
grant options for proper corporate purposes otherwise than under the Plan to any
employee or any other person, firm, corporation, association, or other entity,
or to grant options to, or assume options of, any person for the acquisition by
purchase, lease, merger, consolidation, or otherwise, of all or any part of the
business and assets of any person, firm, corporation, association, or other
entity.
19. Governing Law. The provisions of the Plan, including the
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provisions and Rules of any Addendum, Appendix, or other document incorporated
herein, shall be governed by, interpreted and enforced in accordance with the
laws of the State of Minnesota, unless and to the extent they are pre-empted by
the laws of the United States of America. In the event that these laws conflict
with the laws of any other nation, the laws of the state of Minnesota or the
United States of America, as applicable, shall prevail to the maximum possible
extent.
10.
ADDENDUM TO THE
WAM!NET INC. 1998 COMBINED STOCK OPTION PLAN
1998 SHARE OPTION SCHEME RULES
APPLICABLE TO UNITED KINGDOM EMPLOYEES
The following Rules comprise a scheme intended to extend the benefits of stock
options granted under the Plan to employees of WAM!NET Inc. who are residents in
the United Kingdom and to United Kingdom resident employees of companies of
which WAM!NET Inc. has control pursuant to Section 840 of the Act (as defined
below). These Rules are designed to qualify for approval as an approved share
option scheme under Schedule 9 (as defined below).
The Rules should be read in conjunction with the Plan and are subject to the
terms and conditions of the Plan except to the extent that the terms of the Plan
are specifically disapplied or are inconsistent with the terms of these Rules.
The Rules set out below apply to any grant of Options under the Plan to
individuals who are residents in the United Kingdom for United Kingdom tax
purposes and in respect of whom the limitations in Rule 4.1 below have not been
breached, and expressly stated to be subject to these Rules.
ARTICLE 1.
DEFINITIONS
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1.1) In the Scheme the following words and expressions shall have the
following meanings:
(a) "Act" shall mean the United Kingdom Income and Corporation Taxes
Act 1988.
(b) "Adoption Date" shall mean the date on which the Scheme is adopted
by the Corporation in a general meeting of the Company's shareholders.
(c) "Announcement Date" shall mean any date on which the Company makes
a preliminary announcement of its final or interim results in respect of
any financial period.
(d) "Associated Company" shall mean any company which is an associated
company of the Corporation within the meaning of Section 416 of the Act.
(e) "Auditors" shall mean the auditors for the time being of the
Corporation.
(f) "Board" shall mean the board of directors of the Corporation.
(g) "Committee" shall mean the committee of the Board appointed
pursuant to Rule 9.1.
A-1
(h) "Control" has the meaning given to it by Section 840 of the Act
provided that for the purposes of Rule 7, "Change in Control" shall be
as defined in Rule 7.1.
(i) "Corporation" shall mean WAM!NET Inc., a Minnesota corporation
(j) "Date of Grant" shall mean, in relation to an Option, the date on
which the Option was or is to be granted pursuant to Rule 2.1.
(k) "Eligible Employee" shall mean any resident of the United Kingdom
for United Kingdom tax purposes who is an employee of the Corporation or
member of the Participating Group, but excluding any director of a
member or members of the Participating Group who is contracted to work
for less than 25 hours a week (excluding meal breaks) in that capacity
and also excluding any person who is prohibited from participating by
the provisions of paragraph 8 of Schedule 9.
(l) "Executive Share Option Scheme" shall mean any Share Option Scheme
in which participation is confined to those employees and directors as
may be selected at the discretion of the body administering the scheme.
(m) "Fair Market Value" shall mean, if the Shares are quoted for
trading on a recognized stock exchange (as defined in Section 841 of the
Act), on any given date a price equal to the middle market quotation of
a Share as derived from such exchange on the day immediately preceding
the Date of Grant or, if no such quotation shall exist on such day, the
last such quotation prior thereto, or if the Shares are not so quoted,
the price of a Share on the day immediately preceding the Date of Grant
as agreed in advance of grant with Shares Valuation Division in
accordance with the provisions of Part VIII of the Untied Kingdom
Taxation of Chargeable Gains Act 1992.
(n) "Group" shall mean the Corporation and all of the Subsidiaries, and
"member of the Group" shall be construed accordingly.
(o) "Holding Company" shall have the meaning given to it by Section 736
of the United Kingdom Companies Act 1985.
(p) "Operative Period" shall mean the period of ten years commencing on
the Adoption Date.
(q) "Option" shall mean a right to acquire Shares under the Scheme.
(r) "Participant" shall mean an Eligible Employee who has been granted
an Option which has neither ceased to be exercisable nor lapsed or,
where applicable, the personal representative(s) of any such person.
(s) "Participating Group" shall mean the Corporation and any members of
the Group which the Board has resolved shall participate in the Scheme,
and "member of the Participating Group" shall be construed accordingly.
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(t) "Revenue Approval" shall mean approval of the Scheme by the Board
of Inland Revenue of the United Kingdom under Schedule 9.
(u) "Schedule 9" shall mean Schedule 9 to the Act.
(v) "Scheme" shall mean the scheme herein contained as from time to
time amended in accordance with the provisions and known as the 1998
Share Option Scheme Addendum to the WAM!NET 1998 Combined Stock Option
Plan.
(w) "Shares" shall mean ordinary shares of $0.01 par value each in the
capital of the Corporation as defined in the Corporation's Articles of
Incorporation and which satisfy the requirements of paragraphs 10 to 14
inclusive of Schedule 9.
(x) "Share Option Scheme" shall mean any scheme for employees which has
been approved by the Corporation in a general meeting of its
shareholders and provides for the grant of options to employees to
subscribe for Shares.
(y) "Subscription Price" shall mean the price per Share payable on the
exercise of an Option as determined by the Committee but in no event
less than the Fair Market Value of a Share or, should it be higher than
such Fair Market Value, the nominal or par value of a Share.
(z) "Subsidiary" shall mean a company which is both under the Control
of the Corporation and which is a subsidiary of the Corporation within
the meaning of Section 736 of the Companies Act 1985.
Any reference herein to a statutory provision shall include a reference to that
provision as amended or re-enacted from time to time. Where the context
permits, the singular shall include the plural and vice versa and the masculine
gender shall include the feminine. Any reference herein to a "Rule" shall be to
a rule of the Scheme save where the contrary is expressed.
ARTICLE 2.
GRANT OF OPTIONS
----------------
2.1) Notice of Grant. The Committee may at their discretion at any
---------------
time during the Operative Period give notice in writing to any Eligible Employee
granting him an Option subject to and in accordance with the terms of the Scheme
provided that any such grant shall only be made after the Adoption Date and
receipt of Revenue Approval.
The said notice shall inform him of the date on which it was granted, the number
of Shares in respect of which it was granted, the Subscription Price and any
performance targets or additional conditions to be satisfied as a condition of
the Option in accordance with Rule 3. Each Option shall be granted strictly on
the basis that participation in the Scheme will be deemed to constitute an
agreement to be bound by the rules of the Scheme.
2.2) Surrender. Each Eligible Employee to whom an Option is granted
---------
may surrender the Option by giving notice to that effect to the Corporation,
such notice to be received within thirty days after the Date of Grant. The
Option shall, to the extent surrendered, be deemed never to have been granted.
2.3) Option Certificate. No payment will be required as consideration
------------------
for the grant of an Option. All Options shall be granted under seal or as a deed
and an option certificate will be issued to each Participant after the Date of
Grant.
2.4) Non-transferability. The grant of an Option shall be personal
-------------------
to the Participant and may not be transferred to or, subject to the provisions
of Rule 6.3, exercised by any other person.
2.5) Rights of Option. Any Options granted pursuant to Rule 2.1 shall
----------------
rank pari passu in all respects and shall not give any entitlement or rights to
holders other than those specified in the Scheme.
ARTICLE 3.
CONDITION PRECEDENT TO EXERCISE
-------------------------------
As of any Date of Grant the Committee specify that the exercise of any
Option granted shall be subject to such conditions (not already specified in
these Rules) as may be specified in the Option and a Participant may not
exercise his Option unless and until any such condition so specified has been
satisfied PROVIDED THAT:
3.1) Any condition that relates to performance howsoever measured shall
be objective and:
(a) if there is an event or change in circumstances which causes any
such condition (whether or not specified in these Rules) to become
inappropriate the Committee may, acting fairly and reasonably, alter,
add to or waive any part or all of the said condition save that the
condition in any amended form will be a fairer measure of performance
and will be equivalent to (and in any event no more difficult to satisfy
than) the terms of the said condition prior to such alteration or
addition; and
(b) except as otherwise determined by the Committee at the time at
which the Option is granted, the said condition shall cease to apply in
the event that an Option becomes exercisable in accordance with Rules
6.3 or 6.5(a) (other than the event of retirement on or after the age of
60 years or any other age at which he may be bound to retire in
accordance with the terms of a contract of employment);
3.2) Upon the occurrence of any of the events mentioned in Rule 7 or in
any other circumstances which it considers relevant, the Committee may, in
respect of any condition and/or circumstances not falling under Rule 3.1:
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(a) waive all or some of such conditions; or
(b) make such adjustments, including the imposition of entirely
different conditions, to the conditions specified in the Option as it
may decide;
provided that no such adjustment shall be made unless the Auditors (acting as
experts and not as arbitrators) shall have confirmed in writing to the Committee
that the adjustment is, in their opinion, fair and reasonable.
ARTICLE 4.
LIMITATIONS ON GRANT OF OPTIONS
-------------------------------
The number of Shares over which the Committee may grant an Option to an Eligible
Employee on any date shall be limited so that the aggregate cost of acquiring
those Shares and any other shares which may be acquired in respect of options
previously granted to him under the Scheme and any other Executive Share Option
Scheme approved in accordance with Schedule 9 and established by the Corporation
or any Associated Company and not exercised does not exceed or further exceed
such amount as is for the time being specified for the purposes of paragraph 28
of Schedule 9 (which at the Adoption Date is (Pounds)30,000).
ARTICLE 5.
EXERCISE OF OPTIONS
-------------------
5.1) Notice of Exercise. An Option shall only be exercised by a
------------------
Participant within such period as may be applicable by virtue of the provisions
of Rule 6 and subject thereto the exercise shall be effected in such form and
manner as the Committee may from time to time prescribe. In the absence of the
Committee prescribing to the contrary, a Participant shall exercise an Option by
his giving to the Corporation at its principal place of business prior notice in
writing signed by the Participant, which notice shall specify the number of
Shares (which shall be a multiple of 10 or be equal to the balance of the Shares
remaining subject to the Option) in respect of which the Option is being
exercised and shall be accompanied both by payment in full of the aggregate
Subscription Price for the said Shares and the option certificate evidencing the
grant of the relevant Option for cancellation or amendment. The date of receipt
of such notice shall (in the absence of the Committee prescribing otherwise) be
deemed to be the date of exercise of the Option or of the relevant portion of
the Option, as the case may be.
5.2) Allotment/Transfer. The Corporation shall allot to the
------------------
Participant or a nominee for the Participant or procure the transfer to him of
the appropriate number of Shares and shall enter the Participant in the
Corporation's stock register of shareholders as the holder of such Shares within
thirty days after the date of exercise of the Option (the date of such entry
being, for the purpose of Rule 5.3, the "date of allotment") and provided that
the Corporation issues share certificates the Corporation shall deliver to the
Participant or his nominee a definitive share certificate in respect thereof.
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5.3) Rights of Shares. Any Shares issued pursuant to the preceding
----------------
Rule 5.2 shall rank pari passu in all respects and form a uniform class with the
Shares in issue on the date of allotment save that they shall not rank for or be
entitled to any dividend or other distribution or any issue of Shares by way of
capitalization of profits or reserves or any issue of securities by way of
rights which under the terms of a resolution passed by the Corporation is to be
or is proposed to be paid or made to the holders of Shares on the register on a
date prior to the date of allotment.
5.4) Listing. At such time as the Shares are listed for trading on
-------
any stock exchange, the Corporation shall, at its expense, make application for
admission to the relevant list (or analogous procedure) of all Shares allotted
pursuant to the exercise of any Option.
5.5) Ineligibility. A person who is prohibited from participating by
-------------
the provisions of paragraph 8 of Schedule 9 may not exercise an Option.
ARTICLE 6.
TIME FOR EXERCISE OF OPTIONS
----------------------------
6.1) Time Limits.
-----------
(a) Subject as permitted by:
(1) Rule 6.3; and
(2) Rule 6.5; and
(3) Rule 7;
an Option may not be exercised earlier than three years after
the date on which it was granted.
(b) An Option may not be exercised later than ten years after the
date on which it was granted and, to the extent unexercised after
the expiry of the said period, it shall lapse and become of no
effect.
6.2) Subject as permitted by rules 6.3 and 6.5, an Option may not be
exercised by a Participant who has ceased to be an Eligible Employee.
6.3) Death of Participant. If a Participant dies while in the
--------------------
employment of a member of the Group or dies before the expiry of the period
allowed by Rule 6.5 his personal representative(s) may exercise any Option of
the Participant then subsisting at any time prior to the expiry of ten years
from the date on which it was granted and within but not later than twelve
months of his death, notwithstanding that such exercise may occur within three
years of the date on which the Option was granted and to the extent unexercised
after the said period of twelve months it shall lapse and become of no effect.
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6.4) Cessation of Employment. Subject to Rule 6.5, if a Participant
-----------------------
ceases to be employed by the Group or being a director ceases to be contracted
to work for more than 25 hours per week in that capacity in either case
otherwise than by death any Option of his then subsisting shall lapse and become
of no effect.
6.5) If a Participant ceases to be employed by the Group or being a
director ceases to be contracted to work for more than 25 hours per week in that
capacity in either case otherwise than by death the following provisions shall
apply to any Option of his then subsisting:
(a) if he ceases to be so employed by reason of:
(1) injury, disability, redundancy (within the meaning of the
Employment Rights Act 1996); or
(2) retirement on reaching the age of 60 years or any other age at
which he is bound to retire in accordance with the terms of
his contract of employment; or
(3) the company by which he is employed ceasing to be a member of
the Group; or
(4) the undertaking in which he is employed being transferred to a
transferee which is not a member of the Group;
he may exercise his Option at any time or from time to time within
the period of six months (or such longer period as may be allowed
pursuant to the proviso to this Rule 6.5) after ceasing to be so
employed and, subject to Rule 6.3, at the expiry of that period his
Option, to the extent unexercised shall lapse and become of no
effect;
(b) if he ceases to be so employed for any other reason, the Option may
not be exercised at all unless the Committee shall (at its discretion
determined within three months after the Participant ceases to be so
employed) permit such exercise, in which event it may (and subject to
Rule 6.3 must, if at all) be exercised to the extent permitted by the
Committee within the period of six months after ceasing to be so
employed;
provided that the Committee may extend the period within which the Participant
may exercise his Option in any case falling within Rule 6.5(a) or Rule 6.5(b) to
such period ending not later than six months after the earliest date upon which
the exercise of that Option would not result in the Participant being chargeable
to income tax under the Tax Acts (as defined in Section 831 of the Act) in
respect of that exercise.
6.6) For the purposes of this Rule 6 where a Participant's employment
is terminated without notice it shall be deemed to cease on the date on which
the termination takes effect and where the said employment is terminated with
notice it shall be deemed to cease upon the date of the expiry of such notice
or, if earlier, cessation of employment.
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ARTICLE 7.
CHANGE IN CONTROL OF THE CORPORATION
------------------------------------
7.1) Change in Control. For purposes of this Rule 7, a "Change in
-----------------
Control" of the Corporation will mean (i) the sale, lease, exchange or other
transfer of substantially all of the assets of the Corporation (in one
transaction or in a series of related transactions) to a person or entity that
is not controlled, directly or indirectly, by the Corporation, (ii) a merger or
consolidation to which the Corporation is a party if the stockholders of the
Corporation immediately prior to effective date of such merger or consolidation
do not have "beneficial ownership" (as defined in Rule 13d-3 under the United
States Securities Exchange Act of 1934, as amended) immediately following the
effective date of such merger or consolidation of more than 80% of the combined
voting power of the surviving corporation's outstanding securities ordinarily
having the right to vote at elections of directors, or (iii) a change in control
of the Corporation of a nature that would be required to be reported pursuant to
Section 13 or 15(d) of the United States Securities Exchange Act of 1934, as
amended, whether or not the Corporation is then subject to such reporting
requirements, including, without limitation, such time as (1) any person
becomes, after the Adoption Date, the "beneficial owner" (as defined in
Rule 13d-3 under the United States Securities Exchange Act of 1934, as amended),
directly or indirectly, of 40% or more of the combined voting power of the
Corporation's outstanding securities ordinarily having the right to vote at
elections of directors, or (2) individuals who constitute the Board on the
Adoption Date cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a director subsequent to the Adoption
Date whose election, or nomination for election by the Corporation's
stockholders, was approved by a vote of at least a majority of the directors
comprising the Board on the Adoption Date will, for purposes of this Rule 7.1,
be considered as though such person was a member of the Board on the Adoption
Date.
7.2) If a Change in Control of the Corporation occurs, then each
Participant shall be notified by the Committee of whether or not such Change in
Control has resulted in the requirements of paragraphs 10 to 14 inclusive of
Schedule 9 ceasing to be satisfied and may, subject to Rules 3 and 5, exercise
his Option at any time and from time to time within the period of six months
following the Change in Control notwithstanding that such exercise may occur
within three years of the date on which the Option was granted and at the end of
that period all Options, to the extent unexercised, shall lapse.
ARTICLE 8.
VARIATIONS IN THE SHARE CAPITAL OF THE CORPORATION
--------------------------------------------------
8.1) Variation or Reorganization. If at any time after the date of
---------------------------
grant of an Option and before it ceases to be exercisable there is a variation
or reorganization of the share capital of the Corporation by virtue of which
Shares are subdivided into a greater or combined into a lesser number of shares
(whether with or without par value), the number of Shares issuable upon exercise
of such Option immediately prior thereto shall be adjusted so that the
Participant shall be entitled to receive a number of Shares which he or she
would have owned or have been
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entitled to receive after the happening of such event had such Option been
exercised immediately prior to the happening of such subdivision or combination
or any record date with respect thereto. An adjustment made pursuant to this
Rule shall become effective immediately after the effective date of such
subdivision or combination retroactive to the record date, if any, for such
subdivision or combination. The Subscription Price (as such amount may have
theretofore been adjusted pursuant to the provisions hereof) shall be adjusted
by multiplying the Subscription Price immediately prior to the adjustment of the
number of Shares issuable under the Option by a fraction, of which the numerator
shall be the number of Shares issuable upon the exercise of the Option
immediately prior to such adjustment, and of which the denominator shall be the
number of Shares so issuable immediately thereafter. Substituted shares of stock
shall be deemed Shares for the purpose of this Scheme.
8.2) In the event of any other variation of the share capital of the
Corporation not falling within Rule 8.1, the Subscription Price and/or the
number of Shares in respect of which the Option may be exercised shall be
adjusted to such extent and in such manner as the Auditors shall in their
opinion consider and confirm in writing to the Committee to be fair and
reasonable.
8.3) Notwithstanding Rules 8.1 and 8.2, the aggregate Subscription
Price payable on the exercise of an Option previously granted hereunder shall
not be increased by any adjustment pursuant to Rule 8.1 or Rule 8.2 and any such
adjustments shall be subject to prior approval by the Board of Inland Revenue.
8.4) All Participants shall be notified in writing of any such
adjustments as soon as practicable thereafter and the Corporation shall be
entitled to call in the option certificates for the Options affected by such
adjustments for endorsement or replacement, as may appear appropriate.
ARTICLE 9.
ADMINISTRATION OF THE SCHEME
----------------------------
9.1) Committee. The Scheme shall in all respects be administered
---------
under the direction of a duly authorized Committee of the Board appointed by the
Board for that purpose. The Committee may make such rules for the conduct of the
Scheme, not being inconsistent with the provisions hereof, as it shall think
fit. Any dispute regarding the interpretation of the Scheme or the terms of any
Option shall be determined by the Committee in its discretion (after seeking
such advice as it shall consider necessary) and its decision shall be final and
binding.
9.2) Authorized Share Capital. The Corporation shall at all times
------------------------
maintain an amount of authorized and unissued Shares sufficient to satisfy
outstanding Options to subscribe for Shares under the Scheme.
9.3) Notices. Any notice or other communication under or in
-------
connection with the Scheme may be given by personal delivery or by sending the
same by post, in the case of a company to its registered office or its principal
place of business, and in the case of an individual to his last known address,
or, where he is a director or an employee of a member of the
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Participating Group, either to his last known address or to the address of the
place of business at which he performs the whole or substantially the whole of
the duties of his office or employment.
ARTICLE 10.
AMENDMENT OF THE SCHEME
-----------------------
10.1) Board Resolution. The Board shall at any time be entitled to
----------------
amend by resolution all or any of the provisions of the Scheme, provided that:
(a) no amendment to the disadvantage of any Participant shall be made
unless:
(1) the Board shall have invited every such Participant to give an
indication as to whether or not he approves the amendment; and
(2) the amendment is approved by a majority of those Participants
who have given such an indication;
(b) no amendment to the advantage of any existing or future
Participants shall be made without the prior approval by ordinary
resolution of the shareholders of the Company in general meeting (except
for minor amendments to benefit the administration of the Scheme, to
take account of a change in legislation or to obtain or maintain any
favorable tax, exchange-control or regulatory treatment for Participants
or for any Participating Company);
(c) with the exception of amendments to any conditions attached to any
Option pursuant to Rule 3.1, no amendment made to the Scheme shall
become effective until it has been approved by the Board of Inland
Revenue and nothing shall be done to the Scheme which would prejudice
the obtaining of Revenue Approval or cause it to be withdrawn.
10.2) Revenue Approval. The Board may at any time by resolution and
----------------
without other formality amend the Scheme in any way to the extent necessary to
secure and maintain Revenue Approval and to ensure that Revenue Approval is not
withdrawn pursuant to any statutory modification of the provisions of the Act.
10.3) Notification. On any such amendment being made by the Board all
------------
Participants shall be notified in writing as soon as practicable thereafter.
10.4) Termination. The Board or the Corporation in a general meeting
-----------
of the shareholders shall be entitled by resolution to terminate the Scheme at
any time but Options previously granted shall continue to be valid and
exercisable in accordance with the provisions of the Scheme.
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ARTICLE 11.
ADDITIONAL PROVISIONS
---------------------
11.1) Conflict. Every Option shall be subject to the condition that
--------
no Shares shall be issued to a Participant following the exercise of an Option
if such issue would be contrary to any enactment or regulation for the time
being in force of the United Kingdom or of any other country having jurisdiction
in relation thereto. The Corporation shall not be bound to take any action to
obtain the consent of any governmental authority to such issue or to take any
action to ensure that any such issue shall be in accordance with any such
enactment or regulation if such action could in the opinion of the Committee be
unduly onerous.
11.2) Employment. The rights and obligations of any individual under
----------
the terms of his employment with any member of the Group shall not be affected
by his participation in the Scheme or any right which he may have to participate
in the Scheme or any right which he may have to participate therein, and an
individual who participates therein shall waive any and all rights to
compensation or damages in consequence of the termination of his office or
employment for any reason whatsoever insofar as those rights arise or may arise
from his ceasing to have rights under or be entitled to exercise an Option as a
result of such termination.
11.3) Auditors. In any matter in which they are required to act
--------
hereunder the Auditors shall be deemed to be acting as experts and not as
arbitrators.
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THE APPENDIX TO THE
-------------------
1998 SHARE OPTION SCHEME ADDENDUM
---------------------------------
("THE SCHEME")
THE UNAPPROVED PART OF THE SCHEME
---------------------------------
1. This Appendix sets out the provisions of a sub-scheme to the Scheme, which
sub-scheme shall be known as the "Unapproved Part." It is intended that
the Unapproved Part of the Scheme shall not be approved by the Inland
Revenue.
2. The provisions of the Unapproved Part of the Scheme shall be all the
provisions set out in the Scheme and any Option granted under the
Unapproved Part shall be governed in accordance with those provisions but
with the following modifications:
(a) In Rule 1.1 of the Scheme a director or employee will not be
excluded from being an "Eligible Employee" by virtue of the
prohibition in the provisions of paragraph 8 of Schedule 9 and the
"Shares" need not satisfy the conditions specified in paragraphs 10
to 14 inclusive of Schedule 9.
(b) In Rule 1.1(y) of the Scheme, the Subscription Price shall be
determined by the Committee using a traded market value, if any, or
other fair market value as the Committee shall determine in its
discretion, but in any event without the necessity to obtain the
agreement of the Shares Valuation Division, provided that such
value shall not be less than the nominal or par value of a Share.
(c) Rule 4 of the Scheme shall not apply and for the avoidance of doubt
the Unapproved Part shall not include any restriction under
paragraph 28 of Schedule 9 (as amended by Section 114(2) of the
Finance Act 1996) on the number of Shares over which the Board may
grant an Option to an Eligible Employee.
(d) Rule 5.4 and the proviso to Rule 6.5 of the Scheme shall not apply.
(e) Rule 6.1(a) of the Scheme notwithstanding, an Option may be
exercised earlier than three years after the date on which it was
granted if and as provided in the Option Certificate.
(f) In Rules 6.1(b) and 6.3 of the Scheme the period of ten years shall
remain as stated except where Section 135 (Subsections (2) and (5))
of the Act provide for another period, in which case such other
period shall apply.
(g) Any requirement in any Rules of the Scheme relating to the approval
of the Board of Inland Revenue shall not apply for the purposes of
the Unapproved Part of the Scheme.
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(h) Any Amendment made to the Scheme by virtue of any provision
contained therein shall be deemed to have been incorporated in the
Unapproved Part, at the date that any such amendment becomes
effective, unless the contrary is stipulated at the time. For the
avoidance of doubt the Board may amend this Appendix and the
Unapproved Part without such amendment having the effect of
amending the Scheme.
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