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EXHIBIT 10.9
INTEGRITY SOFTWARE, INC.
2000 STOCK OPTION PLAN
Integrity Software, Inc., a Delaware corporation, wishes to
attract key employees, directors and officer to the Company and its Subsidiaries
and induce key employees, directors and officers to remain with the Company and
its Subsidiaries, and encourage them to increase their efforts to make the
Company's business more successful whether directly or through its Subsidiaries.
In furtherance thereof, the Integrity Software, Inc. 2000 Stock Option Plan is
designed to provide equity-based incentives to key employees, directors and
officers of the Company and its Subsidiaries.
1. Definitions.
Whenever used herein, the following terms shall have the
meanings set forth below:
"Award Agreement" means a written agreement in a form approved
by the Committee to be entered into by the Company and the Optionee of an
Option, as provided in Section 4.
"Board" means the Board of Directors of the Company.
"Cause" means, unless otherwise provided in the Optionee's
Award Agreement, (i) engaging in (A) willful or gross misconduct or (B) willful
or gross neglect, (ii) repeatedly failing to adhere to the directions of
superiors or the Board or the written policies and practices of the Company or
its Subsidiaries or its affiliates, (iii) the commission of a felony or a crime
of moral turpitude, or any crime involving the Company or its Subsidiaries, or
any affiliate thereof, (iv) fraud, misappropriation or embezzlement, (v) a
material breach of the Optionee's employment agreement (if any) with the Company
or its Subsidiaries or its affiliates, or (vi) any illegal act detrimental to
the Company or its Subsidiaries or its affiliates.
"Change in Control" shall mean the happening of any of the
following:
(i) any "person," including a "group" (as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act, but excluding
the Company, any entity controlling, controlled by or under
common control with the Company, any
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employee benefit plan of the Company or any such entity, and,
with respect to any particular Optionee, the Optionee and any
"group" (as such term is used in Section 13(d)(3) of the
Exchange Act) of which the Optionee is a member), is or
becomes the "beneficial owner" (as defined in Rule 13(d)(3)
under the Exchange Act), directly or indirectly, of securities
of the Company representing 25% or more of either (A) the
combined voting power of the Company's then outstanding
securities or (B) the then outstanding Shares (in either such
case other than as a result of an acquisition of securities
directly from the Company); or
(ii) any consolidation or merger of the Company where the
stockholders of the Company, immediately prior to the
consolidation or merger, would not, immediately after the
consolidation or merger, beneficially own (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, shares representing in the aggregate 50% or more
of the combined voting power of the securities of the
corporation issuing cash or securities in the consolidation or
merger (or of its ultimate parent corporation, if any); or
(iii) there shall occur (A) any sale, lease, exchange or other
transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all
or substantially all of the assets of the Company, other than
a sale or disposition by the Company of all or substantially
all of the Company's assets to an entity, at least 50% of the
combined voting power of the voting securities of which are
owned by Persons in substantially the same proportion as their
ownership of the Company immediately prior to such sale or (B)
the approval by stockholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company; or
(iv) the members of the Board at the beginning of any
consecutive 24-calendar-month period (the "Incumbent
Directors") cease for any reason other than due to death to
constitute at least a majority of the members of the Board;
provided that any director whose election, or nomination for
election by the Company's stockholders, was approved by a vote
of at least a majority of the members of the Board then still
in office who were members of the Board at the beginning of
such 24-calendar-month period, shall be deemed to be an
Incumbent Director.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Compensation Committee appointed by the
Board under Section 3.
"Common Stock" means the Company's Common Stock, par value
$.0025, either currently existing or authorized hereafter.
"Company" means Integrity Software, Inc., a Delaware
corporation.
"Disability" means, unless otherwise provided by the Committee
in the Optionee's Award Agreement, a disability which renders the Optionee
incapable of performing
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all of his or her material duties for a period of at least 180 consecutive or
non-consecutive days during any consecutive twelve-month period.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" per Share as of a particular date means
(i) if Shares are then listed on a national stock exchange, the closing sales
price per Share on the exchange for the last preceding date on which there was a
sale of Shares on such exchange, as determined by the Committee, (ii) if Shares
are not then listed on a national stock exchange but are then traded on an
over-the-counter market, the average of the closing bid and asked prices for the
Shares in such over-the-counter market for the last preceding date on which
there was a sale of such Shares in such market, as determined by the Committee,
or (iii) if Shares are not then listed on a national stock exchange or traded on
an over-the-counter market, such value as may be determined by the Committee in
its discretion or as may be determined in accordance with such methodologies,
procedures or other rules (which may provide, without limitation, that
determinations of Fair Market Value shall be made by an independent third party)
as may be established by the Committee in its discretion; provided that, where
the Shares are so listed or traded, the Committee may make discretionary
determinations, or implement such methodologies, procedures or other rules,
where the Shares have not been traded for 10 trading days.
"Option" means the right to purchase, at a price and for the
term fixed by the Committee in accordance with the Plan, and subject to such
other limitations and restrictions in the Plan and the applicable Award
Agreement, a number of Shares determined by the Committee.
"Optionee" means an employee, director or officer of the
Company to whom an Option is granted, or the Successors of the Optionee, as the
context so requires.
"Option Price" means the exercise price per Share.
"Plan" means this Integrity Software, Inc. 2000 Stock Option
Plan, as set forth herein and as the same may from time to time be amended.
"Retirement" means, unless otherwise provided by the Committee
in the Optionee's Award Agreement, the termination (other than for Cause) of
employment (or other termination of service, in the case of directors) of an
Optionee on or after the Optionee's attainment of age 65 or on or after the
Optionee's attainment of age 55 with five consecutive years of service with the
Company and or its Subsidiaries or its affiliates.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of Common Stock of the Company.
"Subsidiary" means any corporation (other than the Company)
that is a "subsidiary corporation" with respect to the Company under Section
424(f) of the Code. In the event the Company becomes a subsidiary of another
company, the provisions hereof applicable to subsidiaries shall, unless
otherwise determined by the Committee, also be applicable to any company that is
a "parent corporation" with respect to the Company under Section 424(e) of the
Code.
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"Successor of the Optionee" means the legal representative of
the estate of a deceased Optionee or the person or persons who shall acquire the
right to exercise an Option by bequest or inheritance or by reason of the death
of the Optionee.
2. Effective Date and Termination of Plan.
The effective date of the Plan is March 22, 2000. The Plan
shall not become effective unless and until it is approved by the stockholders
of the Company. The Plan shall terminate on, and no Option shall be granted
hereunder on or after, the 10-year anniversary of the earlier of the approval of
the Plan by the stockholders of the Company; provided, however, that the Board
may at any time prior to that date terminate the Plan.
3. Administration of Plan.
The Plan shall be administered by the Committee appointed by
the Board. The Committee shall consist of at least two individuals each of whom
shall be a "nonemployee director" as defined in Rule 16b-3 as promulgated by the
Securities and Exchange Commission ("Rule 16b-3") under the Exchange Act and
shall, at such times as the Company is subject to Section 162(m) of the Code (to
the extent relief from the limitation of Section 162(m) of the Code is sought
with respect to Options), qualify as "outside directors" for purposes of Section
162(m) of the Code. The acts of a majority of the members present at any meeting
of the Committee at which a quorum is present, or acts approved in writing by a
majority of the entire Committee, shall be the acts of the Committee for
purposes of the Plan. If and to the extent applicable, no member of the
Committee may act as to matters under the Plan specifically relating to such
member. If no Committee is designated by the Board to act for these purposes,
the Board shall have the rights and responsibilities of the Committee hereunder
and under the Award Agreements.
4. Eligibility and Grant of Options; Committee Authority.
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Subject to the provisions of the Plan, the Committee shall, in
its discretion as reflected by the terms of the Award Agreements: (i) authorize
the granting of Options to key employees, directors and officers of the Company
and its Subsidiaries; (ii) determine and designate from time to time those key
employees, directors and officers of the Company and its Subsidiaries to whom
Options are to be granted and the number of Shares to be optioned to each
employee, director and officer; (iii) determine the time or times when and the
manner and condition in which each Option shall be exercisable and the duration
of the exercise period; and (iv) determine or impose other conditions to the
grant or exercise of Options under the Plan as it may deem appropriate. In
determining the eligibility of an employee, director or officer to receive an
Option, as well as in determining the number of Shares to be optioned to any
employee, director and officer, the Committee may consider the position and
responsibilities of the employee, director or officer, the nature and value to
the Company of the employee's, director's or officer's services and
accomplishments whether directly or through its Subsidiaries, the employee's,
director's or officer's present and potential contribution to the success of the
Company whether directly or through its Subsidiaries and such other factors as
the Committee may deem relevant. The Award Agreement shall contain such other
terms, provisions and conditions not inconsistent herewith as shall be
determined by the Committee. The Optionee shall take whatever additional actions
and execute whatever additional documents the Committee may in its reasonable
judgment deem necessary or advisable in order to carry out or effect one or more
of the obligations or restrictions imposed on the Optionee pursuant to the
express provisions of the Plan and the Award Agreement.
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5. Number of Shares Subject to Options.
Subject to adjustments pursuant to Section 17, Options with
respect to an aggregate of no more than 1,650,000 Shares may be granted under
the Plan. Notwithstanding the foregoing provisions of this Section 5, Shares as
to which an Option is granted under the Plan that remains unexercised at the
expiration, forfeiture or other termination of such Option may be the subject of
the grant of further Options. Subject to adjustments pursuant to Section 17, in
no event may any Optionee receive in the aggregate Options for more than 500,000
Shares of Common Stock over the life of the Plan. Shares of Common Stock issued
hereunder may consist, in whole or in part, of authorized and unissued shares or
treasury shares. The certificates for Shares issued hereunder may include any
legend which the Committee deems appropriate to reflect any rights of first
refusal or other restrictions on transfer hereunder or under the Award
Agreement, or as the Committee may otherwise deem appropriate.
6. Option Price.
The Option Price shall be determined by the Committee on the
date the Option is granted and reflected in the Award Agreement, as the same may
be amended from time to time. Any particular Award Agreement may provide for
different exercise prices for specified amounts of Shares subject to the Option.
The Option Price with respect to each Option shall not be less than 100% of the
Fair Market Value of a Share on the day the Option is granted.
7. Period of Option and Vesting.
(a) Unless earlier expired, forfeited or otherwise terminated,
each Option shall expire in its entirety upon the 10th anniversary of the date
of grant or shall have such other term as is set forth in the applicable Award
Agreement. The Option shall also expire, be forfeited and
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terminate at such times and in such circumstances as otherwise provided
hereunder or under the Award Agreement.
(b) Each Option, to the extent that there has been no
termination of the Optionee's employment (or other service, if applicable) and
the Option has not otherwise lapsed, expired, terminated or been forfeited,
shall first become exercisable according to the terms and conditions set forth
in the Award Agreement, as determined by the Committee at the time of grant.
Unless otherwise provided in the Award Agreement or herein, no Option (or
portion thereof) shall ever be exercisable if the Optionee's employment or other
service with the Company and its Subsidiaries has terminated before the time at
which such Option would otherwise have become exercisable, and any Option that
would otherwise become exercisable after such termination shall not become
exercisable and shall be forfeited upon such termination. Notwithstanding the
foregoing provisions of this Section 7(b), Options exercisable pursuant to the
schedule set forth by the Committee at the time of grant may be fully or more
rapidly exercisable or otherwise vested at any time in the discretion of the
Committee. Upon and after the death of an Optionee, such Optionee's Options, if
and to the extent otherwise exercisable hereunder or under the applicable Award
Agreement after the Optionee's death, may be exercised by the Successors of the
Optionee.
8. Exercisability Upon and After Termination of Optionee.
(a) The Committee shall provide in the Award Agreement the
extent (if any) to which any Option may be exercised upon and after the
Optionee's termination of employment (or other service).
(b) Except as may otherwise be expressly set forth in this
Section 8, and
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except as may otherwise be expressly provided under the Award Agreement, no
provision of this Section 8 is intended to or shall permit the exercise of the
Option to the extent the Option was not exercisable upon cessation of employment
or other service.
9. Exercise of Options.
Subject to vesting, restrictions on exercisability and other
restrictions provided for hereunder or otherwise imposed in accordance herewith,
an Option may be exercised, and payment in full of the aggregate Option Price
made, by an Optionee only by written notice (in the form prescribed by the
Committee) to the Company specifying the number of Shares to be purchased.
10. Payment.
(a) The aggregate Option Price shall be paid in full upon the
exercise of the Option. Payment must be made by one of the following methods:
(i) a certified or bank cashier's check;
(ii) the proceeds of a Company loan program or
third-party sale program or a notice acceptable to
the Committee given as consideration under such a
program, in each case if permitted by the Committee
in its discretion, if such a program has been
established and the Optionee is eligible to
participate therein;
(iii) if approved by the Committee in its discretion,
Shares of previously owned Common Stock having an
aggregate Fair Market Value on the date of exercise
equal to the aggregate Option Price;
(iv) if approved by the Committee in its discretion,
through the written election of the Optionee to have
Shares withheld by the Company from the Shares
otherwise to be received, with such withheld Shares
having an aggregate Fair Market Value on the date of
exercise equal to the aggregate Option Price; or
(v) by any combination of such methods of payment or
any other method acceptable to the Committee in its
discretion.
(b) The Committee, in its discretion, may also permit the
Optionee to elect to
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exercise an Option by receiving a combination of Shares and cash, or, in the
discretion of the Committee, either Shares or solely in cash, with an aggregate
Fair Market Value (or, to the extent of payment in cash, in an amount) equal to
the excess of the Fair Market Value of the Shares with respect to which the
Option is being exercised over the aggregate Option Price, as determined as of
the day the Option is exercised.
(c) Except in the case of Options exercised by certified or
bank cashier's check, the Committee may impose limitations and prohibitions on
the exercise of Options as it deems appropriate, including, without limitation,
any limitation or prohibition designed to avoid accounting consequences which
may result from the use of Common Stock as payment upon exercise of an Option.
Any fractional Shares resulting from an Optionee's election that is accepted by
the Company shall in the discretion of the Committee be paid in cash.
11. Tax Withholding.
The Committee may, in its discretion, require the Optionee to
pay to the Company at the time of exercise of any Option the amount that the
Committee deems necessary to satisfy the Company's obligation to withhold
applicable income or other taxes incurred by reason of the exercise. Upon
exercise of the Option, the Optionee may, if approved by the Committee in its
discretion, make a written election to have Shares then issued withheld by the
Company from the Shares otherwise to be received, or to deliver previously owned
Shares, in order to satisfy the liability for such withholding taxes. In the
event that the Optionee makes, and the Committee permits, such an election, the
number of Shares so withheld or delivered shall have an aggregate Fair Market
Value on the date of exercise sufficient to satisfy the applicable withholding
taxes. Where the exercise of an Option does not give rise to an obligation by
the Company to withhold
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federal, state or local income or other taxes on the date of exercise, but may
give rise to such an obligation in the future, the Committee may, in its
discretion, make such arrangements and impose such requirements as it deems
necessary or appropriate. Notwithstanding anything contained in the Plan or the
Award Agreement to the contrary, the Optionee's satisfaction of any
tax-withholding requirements imposed by the Committee shall be a condition
precedent to the Company's obligation as may otherwise be provided hereunder to
provide Shares to the Optionee, and the failure of the Optionee to satisfy such
requirements with respect to the exercise of an Option shall cause such Option
to be forfeited.
12. Exercise by Successors.
An Option may be exercised, and payment in full of the
aggregate Option Price made, by the Successors of the Optionee only by written
notice (in the form prescribed by the Committee) to the Company specifying the
number of Shares to be purchased. Such notice shall state that the aggregate
Option Price will be paid in full, or that the Option will be exercised as
otherwise provided hereunder, in the discretion of the Company or the Committee,
if and as applicable.
13. Nontransferability of Option.
Each Option granted under the Plan shall be nontransferable by
the Optionee except by will or the laws of descent and distribution of the state
wherein the Optionee is domiciled at the time of his death; provided, however,
that the Committee may (but need not) permit other transfers, where the
Committee concludes that such transferability (i) does not result in accelerated
income taxation and (ii) is otherwise appropriate and desirable.
14. Regulations and Approvals.
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(a) The obligation of the Company to sell Shares with respect
to Options granted under the Plan shall be subject to all applicable laws, rules
and regulations, including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.
(b) The Committee may make such changes to the Plan as may be
necessary or appropriate to comply with the rules and regulations of any
government authority or to obtain tax benefits applicable to stock options.
(c) Each Option is subject to the requirement that, if at any
time the Committee determines, in its discretion, that the listing, registration
or qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or the issuance of
Shares, no Options shall be granted or payment made or Shares issued, in whole
or in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions in a manner acceptable to the
Committee.
(d) In the event that the disposition of stock acquired
pursuant to the Plan is not covered by a then current registration statement
under the Securities Act, and is not otherwise exempt from such registration,
such Shares shall be restricted against transfer to the extent required under
the Securities Act, and the Committee may require any individual receiving
Shares pursuant to the Plan, as a condition precedent to receipt of such Shares,
to represent to the Company in writing that the Shares acquired by such
individual are acquired for investment only and not with a view to distribution
and that such Shares will be disposed of only if registered for
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sale under the Securities Act or if there is an available exemption for such
disposition.
15. Administrative Rules; Interpretation.
The Committee may make such rules and regulations and
establish such procedures for the administration of the Plan as it deems
appropriate. Without limiting the generality of the foregoing, the Committee may
(i) determine (A) the conditions under which an Optionee will be considered to
have retired or become disabled and (B) whether any Optionee has done so; (ii)
establish or assist in the establishment of a program (which need not be
administered in a nondiscriminatory or uniform manner) under which the Company
or a third party may make bona-fide loans on arm's-length terms to any or all
Optionees to assist such Optionees with the satisfaction of any or all of the
obligations that such Optionees may have hereunder or under which third-party
sales may be made for such purpose (including, without limitation, a loan
program under which the Company or a third party would advance the aggregate
Option Price to the Optionee and be repaid with Option stock or the proceeds
thereof and a sale program under which funds to pay for Option stock are
delivered by a third party upon the third party's receipt from the Company of
stock certificates); (iii) determine the extent, if any, to which Options or
Shares shall be forfeited (whether or not such forfeiture is expressly
contemplated hereunder); (iv) interpret the Plan and the Award Agreements
hereunder, with such interpretations to be conclusive and binding on all persons
and otherwise accorded the maximum deference permitted by law; and (v) take any
other actions and make any other determinations or decisions that it deems
necessary or appropriate in connection with the Plan or the administration or
interpretation thereof. Unless otherwise expressly provided hereunder, the
Committee, with respect to any Option, may exercise its discretion hereunder at
the time of the award or thereafter.
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In the event of any dispute or disagreement as to the interpretation of the Plan
or of any rule, regulation or procedure, or as to any question, right or
obligation arising from or related to the Plan, the decision of the Committee
shall be final and binding upon all persons.
16. Amendments.
The Board may amend the Plan as it shall deem advisable,
except that no amendment may adversely affect an Optionee with respect to
Options previously granted unless such amendments are in connection with
compliance with applicable laws; provided that the Board may not make any
amendment in the Plan that would, if such amendment were not approved by the
holders of the Common Stock, cause the Plan to fail to comply with any
requirement of applicable law or regulation, unless and until the approval of
the holders of such Common Stock is obtained. Without limiting the generality of
the foregoing, the Committee may (subject to such considerations as may arise
under Section 16 of the Exchange Act, or under other corporate, securities or
tax laws) take any steps it deems appropriate, that are not inconsistent with
the purposes and intent of the Plan, to take into account the provisions of
Section 162(m) of the Code.
17. Changes in Capital Structure.
If (i) the Company shall at any time be involved in a merger,
consolidation, dissolution, liquidation, reorganization, exchange of shares,
sale of all or substantially all of the assets or stock of the Company or a
transaction similar thereto, (ii) any stock dividend, stock split, reverse stock
split, stock combination, reclassification, recapitalization or other similar
change in the capital structure of the Company, or any distribution to holders
of Common Stock other than cash dividends, shall occur or (iii) any other event
shall occur which in the judgment
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of the Committee necessitates action by way of adjusting the terms of the
outstanding Options, then the Committee may forthwith take any such action as in
its judgment shall be necessary to preserve to the Optionees rights
substantially proportionate to the rights existing prior to such event, and to
maintain the continuing availability of Shares under Section 5 (if Shares are
otherwise then available) in a manner consistent with the intent hereof,
including, without limitation, adjustments in (x) the number and kind of shares
or other property subject to Options, (y) the Option Price, and (z) the number
and kind of shares available under Section 5. To the extent that such action
shall include an increase or decrease in the number of Shares (or units of other
property then available) subject to outstanding Options, the number of Shares
(or units) available under Section 5 shall be increased or decreased, as the
case may be, proportionately, as may be provided by Committee in its discretion.
If a Change in Control shall occur, then the Committee as
constituted immediately before the Change in Control may make such adjustments
as it, in its discretion, determines are necessary or appropriate in light of
the Change in Control (including, without limitation, the substitution of stock
other than stock of the Company as the stock optioned hereunder, the
acceleration of the exercisability of the Options, and the "cash-out of
Options), provided that the Committee determines that such adjustments do not
have a substantial adverse economic impact on the Optionee as determined at the
time of the adjustments.
The judgment of the Committee with respect to any matter
referred to in this Section 17 shall be conclusive and binding upon each
Optionee without the need for any amendment to the Plan.
18. Notices.
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All notices under the Plan shall be in writing, and if to the
Company, shall be delivered to the Board or mailed to its principal office,
addressed to the attention of the Board; and if to the Optionee, shall be
delivered personally, sent by facsimile transmission or mailed to the Optionee
at the address appearing in the records of the Company. Such addresses may be
changed at any time by written notice to the other party given in accordance
with this Section 18.
19. Rights as Stockholder.
Neither the Optionee nor any person entitled to exercise the
Optionee's rights in the event of death shall have any rights of a stockholder
with respect to the Shares subject to an Option, except to the extent that a
certificate for such Shares shall have been issued upon the exercise of the
Option as provided for herein.
20. Rights to Employment.
Nothing in the Plan or in any Option granted pursuant to the
Plan shall confer on any individual any right to continue in the employ or other
service of the Company or its Subsidiaries or interfere in any way with the
right of the Company or its Subsidiaries and its stockholders to terminate the
individual's employment or other service at any time.
21. Exculpation and Indemnification.
The Company shall indemnify and hold harmless the members of
the Board and the members of the Committee from and against any and all
liabilities, costs and expenses incurred by such persons as a result of any act
or omission to act in connection with the performance of such person's duties,
responsibilities and obligations under the Plan, if such person acts in good
faith and in a manner that he or she reasonably believes to be in, or not
opposed to, the best interests of the Company, to the maximum extent permitted
by law.
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22. Captions.
The use of captions in this Plan is for convenience. The
captions are not intended to and do not provide substantive rights.
23. Severability.
The invalidity or unenforceability of any provision of the
Plan shall not affect the validity or enforceability of any other provision of
the Plan, which shall remain in full force and effect.
24. Governing Law.
THE PLAN SHALL BE GOVERNED BY THE LAWS OF NEW YORK, WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.
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