EXHIBIT 10.2
SONIC FOUNDRY, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ARTICLE 1
GENERAL
1.1 PURPOSE. The purpose of the Sonic Foundry, Inc. Non-Employee
Directors' Stock Option Plan is to secure for Sonic Foundry, Inc. and its
stockholders the benefits of the incentive inherent in increased common stock
ownership by the members of the Board of Directors of the Company who are not
employees for the Company.
1.2 MAXIMUM NUMBER OF SHARES. The Maximum number of shares of Common
Stock that may be offered under the Plan is 90,000 subject to adjustment as
provided in Section 3.1 below. The Common Stock to be issued may be either
authorized and unissued shares or issued shares acquired by the Company. In the
event that Options granted under the Plan shall terminate or expire without
being exercised in whole or in part, new Options may be granted covering the
shares not purchased under such lapsed Options.
1.3. DEFINITIONS. The following words and terms as used herein shall have
that meaning set forth therefor in this Section 1.3 unless a different meaning
is clearly required by the context. Whenever appropriate, words used in the
singular shall be deemed to include the plural and vice versa, and the masculine
gender shall be deemed to include the feminine gender.
1.3.1 "BOARD" or "BOARD OF DIRECTORS" shall mean the Board of
Directors of the Company.
1.3.2 "CODE" shall mean the Internal Revenue Code of 1986, as
amended, or any successor statute. Reference to a specific section of the Code
shall include a reference to any successor provision.
1.3.3 "COMMON STOCK" shall mean the common stock of the Company.
1.3.4 "COMPANY" shall mean Sonic Foundry, Inc. and its successors.
1.3.5 "EFFECTIVE DATE" is defined in Section 3.9.
1.3.6 "FAIR MARKET VALUE" of the shares of Common Stock shall mean
the closing price on the date in question (or, if no shares are traded on such
day, on the next preceding day on which shares were traded), of the Common Stock
as reported on the American Stock Exchange or such other exchange on which the
stock is listed, or if such
stock is not listed on a securities exchange in the United States, the mean
between the dealer closing "bid" and "ask" prices on the over-the-counter market
as reported by the National Association of Security Dealers Automated Quotation
System (NASDAQ), or NASDAQ'S successor, or if not reported on NASDAQ, the fair
market value of such stock as determined by the Board in good faith and based on
all relevant factors.
1.3.7 "NSO" shall mean a nonqualified stock option granted in
accordance with the provisions of Article 2 of this Plan.
1.3.8 "NON-EMPLOYEE DIRECTOR" shall mean a member of the Board of
Directors who is not an employee of the Company.
1.3.9 "OPTION" shall mean an NSO.
1.3.10 "OPTIONEE" shall mean a Non-Employee Director to whom an
Option is granted under the Plan.
1.3.11 "PLAN" shall mean the Sonic Foundry, Inc. Non-Employee
Directors' Stock Plan, as set forth herein and as amended from time to time.
1.4 ADMINISTRATION. The Plan shall be administered by the Board.
1.4.1 The Board shall have all the powers vested in it by the terms
of the Plan, such powers to include authority (within the limitations described
herein) to prescribe the form of the agreement embodying awards of nonqualified
stock options made under the Plan. The Board shall, subject to the provisions of
the Plan, grant Options under the Plan and shall have the power to construe the
Plan, to determine all questions arising thereunder and to adopt and amend such
rules and regulations for the administration of the Plan as it may deem
desirable. Any decision of the Board in the administration of the Plan, as
described herein, shall be final and conclusive. The Board may act only by a
majority of its members in office, except that the members thereof may authorize
any one or more of their number or the Secretary or any other officer of the
Company to execute and deliver documents on behalf of the Board.
1.4.2 To the fullest extent permitted by law, each person who is or
shall have been a member of the Board shall be indemnified and held harmless by
the Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan and against and from any and all amounts paid by
him or her in settlement thereof, with the Company's approval, or paid by him or
her in satisfaction of any judgment in any such action, suit, or proceeding
against him or her, provided that the person shall give the Company an
opportunity, at its own expense, to handle and defend the same before the person
undertakes to handle and defend it on his or her own
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behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such person may be entitled under the
Company's Amended and Restated Articles of Incorporation or Bylaws, as a matter
of law, or otherwise, or any power that the Company may have to indemnify them
or hold them harmless.
1.5 ELIGIBILITY REQUIREMENTS. Each Non-Employee Director shall be eligible
to receive Options to accordance with Article 2 below. The adoption of this Plan
shall not be deemed to give any director any right to or be granted options to
purchase Common Stock, except to the extent and upon such terms and conditions
as set forth in this Plan.
ARTICLE 2
TERMS AND CONDITIONS OF OPTIONS
2.1 GRANT. Options granted under the Plan shall be evidenced by an
agreement in such form as the Board shall prescribe from time to time in
accordance with the Plan and shall comply with the terms and conditions set
forth under this Article 2.
2.2 NUMBER OF SHARES. Each Non-Employee Director shall receive an Option
for 10,000 shares of Common Stock upon his initial appointment to the Board,
except that each Non-Employee Director currently in Office shall receive an
Option for 10,000 Shares of Common Stock on the date this Plan is adopted by the
Directors. In addition, each year, commencing with the year 1998, as of the date
of the Annual Meeting of Stockholders of the Company, each Non-Employee Director
who is then reelected or who is continuing as a member of the Board after the
adjournment of the Annual Meeting shall receive an Option for 10,000 shares of
Common Stock.
2.3 OPTION PRICE. The Option exercise price shall be the Fair Market Value
of the Common Stock on the date of the Annual Meeting of Stockholders.
2.4 METHOD OF EXERCISE. An Option may be exercised by a Non-Employee
Director during such time as may be permitted by the Option and the Plan by
providing written notice to the Board and tendering the purchase price in
accordance with the provisions of Section 2.5, and complying with any other
exercise requirements contained in the Option or promulgated from time to time
by the Board.
2.5 METHOD OF PAYMENT. Each Option shall state the method of payment for
the Option price upon the Option. The method of payment stated in the Option
shall include payment in full (a) in United States dollars in cash or by check,
bank draft or money order payable to the order of the Company, (b) in the
discretion of and in the manner determined by the Board, by the delivery of
shares of Common Stock already owned by the Optionee, (c) by any other legally
permissible means acceptable to the Board at the time of the grant of the Option
(including a promissory note or cashless exercise as permitted under the Federal
Reserve
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Board's Regulation T, subject to applicable legal restrictions), or (d) in the
discretion of the Board, through a combination of (a), (b) and (c) of this
Section 2.5. If the option price is paid in whole or in part through the
delivery of shares of Common Stock, the decision of the Board with respect to
the Fair Market Value of such shares shall be final and conclusive.
2.6 TERM AND EXERCISE OF OPTIONS.
2.6.1 One hundred percent (100%) of the total number of shares of
Common Stock covered by the Option shall become exercisable beginning with the
first anniversary date of the grant of the Option and shall be exercisable by
the Non-Employee Director for a period of ten (10) years from the date of grant.
Not less than one hundred (100) shares may be exercised at any one time unless
the number exercised is the total number at the time exercisable under the
Option.
2.6.2 Notwithstanding the foregoing no Option or any part of an
Option shall be exercisable unless written notice of the exercise is delivered
to the Company specifying the number of shares to be purchased and payment in
full is made for the
2.7 DEATH OR OTHER TERMINATION OF POSITION AS A DIRECTOR. Subject to the
provisions of Section 2.6:
2.7.1 If a person shall cease to be a Non-Employee Director for any
reason, such person, or in the case of death, the executors, administrators,
legatees or distributees of such person, as the case may be, may at any time
prior to the date of the expiration of the Option, exercise the Option with
respect to any shares of Common Stock as to which such person has not exercised
the Option on the date the person ceased to be such a Non-Employee Director.
2.7.2 In the event any Option is exercised by the executors,
administrators, legatees or distributees of the estate of a deceased Optionee,
the Company shall be under no obligation to issue Common Stock thereunder unless
and until the Company is satisfied that the person or persons exercising the
Option are the duly appointed legal representatives of the deceased Optionee's
estate or the proper legatees or distributees thereof.
2.8 TRANSFERABILITY OF OPTIONS. The Option shall not be transferable by
the Optionee otherwise than by will or the laws of descent and distribution, and
shall be exercisable during his lifetime only by him or by his legal guardian or
representative, except that the option may also be transferable to members of
the optionee's Immediate Family (defined hereinbelow), to a partnership whose
members are only the optionee and/or members of the optionee's Immediate Family,
or to a trust for the benefit of only the optionee and/or members of the
optionee's Immediate Family.
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An individual's "Immediate Family" includes only his or her spouse, parents
or other ancestors, and children and other direct descendants of that individual
or of his or her spouse (including such ancestors and descendants by adoption).
2.9 DELIVERY OF CERTIFICATES REPRESENTING SHARES. As soon as practicable
after the exercise of an Option, the Company shall deliver, or cause to be
delivered, to the Non-Employee Director exercising the Option, a certificate or
certificates representing the shares of Common Stock purchased upon the
exercise. Certificates representing shares of Common Stock to be delivered to a
Non-Employee Director shall be registered in the name of such director.
2.10 RIGHTS AS A STOCKHOLDER. A Non-Employee Director shall have no rights
as a stockholder with respect to any shares of Common Stock covered by his or
her Option until the date on which he or she becomes a record owner of the
shares purchased upon the exercise of the Option (the "record ownership date").
No adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property), distributions, or other rights for which
the record date is prior to the record ownership date, except as provided in
Article 3.
ARTICLE 3
MISCELLANEOUS
3.1 STOCK ADJUSTMENTS.
3.1.1 In the event of any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split or other division or
consolidation of shares or the payment of a stock dividend (but only on Common
Stock) or any other increase or decrease in the number of such shares effected
without any receipt of consideration by the Company, then, in any such event,
the number of shares of Common Stock that remain available under the Plan, the
number of shares of Common Stock covered by each outstanding Option, and the
purchase price per share of Common Stock covered by each outstanding Option
shall be proportionately and appropriately adjusted for any such increase or
decrease.
3.1.2 Subject to any required action by the stockholders, if any
change occurs in the Common Stock by reason of any recapitalization,
reorganization, merger, consolidation, split-up, combination or exchange of
shares, or of any similar change affecting Common Stock, then, in any such
event, the number and type of shares covered by each outstanding Option, and the
purchase price per share of Common Stock covered by each outstanding Option,
shall be proportionately and appropriately adjusted for any such change. A
dissolution or liquidation of the Company shall cause each outstanding Option to
terminate.
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3.1.3 In the event of a change in the Common Stock as presently
constituted that is limited to a change of all of its authorized shares with par
value into the same number of shares with a different par value or without par
value, the shares resulting from any change shall be deemed to be shares of
Common Stock within the meaning of the Plan.
3.1.4 To the extent that the foregoing adjustment relate to stock
or securities of the Company, such adjustments shall be made by, and in the
discretion of, the Board, whose determination in that respect shall be final,
binding and conclusive.
3.1.5 Except as hereinabove expressly provided in this Section 3.1,
a Non-Employee Director shall have no rights by reason of any division or
consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class or by reason of any dissolution, liquidation, merger or consolidation,
or spin-off of assets or stock of another corporation; and any issuance by the
Company of shares of stock of any class, securities convertible into shares of
stock of any class, or warrants or options for shares of stock of any class
shall not affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Common Stock subject to the Option.
3.1.6 The existence of the Plan, and the grant of any Option
pursuant to the Plan, shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge or to consolidate, or to dissolve,
to liquidate, to sell, or to transfer all or any part of its business or assets.
3.2 LISTING AND REGISTRATION OF COMMON STOCK. Each Option shall be subject
to the requirement that if at any time the Board of Directors shall determine,
in its discretion, that the listing, registration or qualification of the Common
Stock covered thereby upon any securities exchange or under any state or federal
laws, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such Option or the issuance or purchase of shares thereunder, such Option may
not be exercised unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Board. Notwithstanding anything in the Plan to the
contrary, if the provisions of this Section 3.2 become operative, and if, as a
result thereof, the exercise of an Option is delayed, then and in that event,
the term of the Option shall not be affected. Notwithstanding the foregoing or
any other provision in the Plan, the Company shall have no obligation under the
Plan to cause any shares of Common Stock to be registered or qualified under any
federal or state law or listed on any stock exchange or admitted to any national
marketing system.
3.3 TERM OF THE PLAN. The Plan shall terminate upon the earlier of the
following dates or events; (a) upon the adoption of a resolution of the Board
terminating the Plan; or (b) ten years from the Effective Date.
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3.4 AMENDMENT OF THE PLAN; TERMINATION. The Board may, insofar as
permitted by law, from time to time, with respect to any shares of Common Stock
at the time not subject to Options, suspend, discontinue or terminate the Plan
or revise or amend it in any respect whatsoever.
3.5 APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of Common Stock pursuant to Options will be used for general corporate
purposes.
3.6 NO OBLIGATION TO EXERCISE. The granting of any Option under the Plan
shall impose no obligation upon any Optionee to exercise such Option.
3.7 NO IMPLIED RIGHTS TO DIRECTORS. Except as expressly provided for in
the Plan, no Non-Employee Director or other person shall have any claim or right
to be granted an Option under the Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving any Non-Employee Director any right to be
retained as a Director or in any other capacity.
3.8 WITHHOLDING. Whenever the Company proposes or is required to issue or
transfer shares of Common Stock under the Plan, the Company shall have the right
to require the Optionee to remit to the Company an amount sufficient to satisfy
any federal, state or local withholding tax liability prior to the delivery of
any certificate or certificates for such shares. Whenever under the Plan
payments are to be made in cash, such payments shall be made net of an amount
sufficient to satisfy any federal, state or local withholding tax liability.
3.9 CONDITIONS PRECEDENT TO EFFECTIVENESS. The Plan shall become effective
upon the adoption of the Plan by the Board of Directors.
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