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Exhibit 10.4
CONNECTED CORPORATION
1996 EQUITY INCENTIVE PLAN
(Amended and Restated May 27, 1999)
Section 1. Purpose
The purpose of the Connected Corporation 1996 Equity Incentive Plan (the
"Plan") is to attract and retain key employees, directors and consultants to
provide an incentive for them to assist Connected Corporation (the "Company") to
achieve long-range performance goals, and to enable them to participate in the
long-term growth of the Company.
Section 2. Definitions
(a) "Affiliate" means any business entity in which the Company owns directly or
indirectly 50% or more of the total combined voting power or has a
significant financial interest as determined by the Committee.
(b) "Award" means any Option, Stock Appreciation Right, Performance or Award
Share, or Restricted Stock awarded under the Plan.
(c) "Award Share" means a share of Common Stock awarded to an employee without
payment therefor.
(d) "Board" means the Board of Directors of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(f) "Committee" means a committee of not less than three members of the Board
appointed by the Board to administer the Plan. Alternatively, if the Board
so designates, the President of the Company shall serve as the sole member
of the Committee.
(g) "Common Stock" or "Stock" means the Common Stock, par value $.001 per
share, of the Company.
(h) "Company" means Connected Corporation.
(i) "Designated Beneficiary" means the beneficiary designated by a Participant,
in a manner determined by the Board, to receive amounts due or exercise
rights of the Participant in the event of the Participant's death. In the
absence of an effective designation by a Participant, Designated
Beneficiary shall mean the Participant's estate.
(j) "Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Board
in good faith or in the manner established by the Board from time to time.
(k) "Incentive Stock Option" means an option to purchase shares of Common Stock
awarded to a Participant under Section 6 which is intended to meet the
requirements of Section 422 of the Code or any successor provision.
(l) "Nonstatutory Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 which is not intended to be
an Incentive Stock Option.
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(m) "Option" means an Incentive Stock Option or a Nonstatutory Stock Option.
(n) "Participant" means a person selected by the Board to receive an Award
under the Plan.
(o) "Performance Cycle" or "Cycle" means the period of time selected by the
Board during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.
(p) "Performance Shares" mean shares of Common Stock which may be earned by the
achievement of performance goals awarded to a Participant under Section 8.
(q) "Restricted Period" means the period of time selected by the Board during
which an award of Restricted Stock may be forfeited to the Company.
(r) "Restricted Stock" means shares of Common Stock subject to forfeiture
awarded to a Participant under Section 9.
(s) "Stock Appreciation Right" or "SAR" means a right to receive any excess in
value of shares of Common Stock over the exercise price awarded to a
Participant under Section 7.
(t) "Stock Unit" means an award of Common Stock or units that are valued in
whole or in part by reference to, or otherwise based on, the value of
Common Stock, awarded to a Participant under Section 10.
Section 3. Administration
The Plan shall be administered by the Board. The Board shall have
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the operation of the Plan as it shall from time to time
consider advisable, and to interpret the provisions of the Plan. The Board's
decisions shall be final and binding. To the extent permitted by applicable law,
the Board may delegate to the Committee the power to make Awards to Participants
and all determinations under the Plan with respect thereto.
Section 4. Eligibility
All employees and, in the case of Awards other than Incentive Stock
Options, directors and consultants of the Company or any Affiliate capable of
contributing significantly to the successful performance of the Company, other
than a person who has irrevocably elected not to be eligible, are eligible to be
Participants in the Plan.
Section 5. Stock Available for Awards
(a) Subject to adjustment under subsection (b), Awards may be made under
the Plan of Options to acquire not in excess of 1,750,000 shares of
Company Common Stock. Other Awards may be made as the Board may
determine, provided that a maximum of 1,750,000 shares of Common Stock
may be issued under this Plan. If any Award in respect of shares of
Common Stock expires or is terminated unexercised or is forfeited for
any reason or settled in a manner that results in fewer shares
outstanding than were initially awarded, including without limitation
the surrender of shares in payment for the Award or any tax obligation
thereon, the shares subject to such Award or so surrendered, as the
case may be, to the extent of such expiration, termination, forfeiture
or decrease, shall again be available for award under the Plan,
subject, however, in the case of Incentive Stock Options, to any
limitation required
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under the Code. Common Stock issued through the assumption or
substitution of outstanding grants from an acquired company shall not
reduce the shares available for Awards under the Plan. Shares issued
under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.
(b) In the event that the Board in its discretion determines that any stock
dividend, extraordinary cash dividend, creation of a class of equity
securities, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination or reclassification of shares exchange
of shares, warrants or rights offering to purchase Common Stock at a
price substantially below fair market value, or other similar capital
change affects the Common Stock such that an adjustment is required in
order to preserve the benefits or potential benefits intended to be
made available under the Plan, then the Board, subject, in the case of
Incentive Stock Options, to any limitation required under the Code,
shall equitably adjust any or all of (i) the number and kind of shares
in respect of which Awards may be made under the Plan, (ii) the number
and kind of shares subject to outstanding Awards, and (iii) the award,
exercise or conversion price with respect to any of the foregoing, and
if considered appropriate, the Board may make provision for a cash
payment with respect to an outstanding Award, provided that the number
of shares subject to any Award shall always be a whole number.
(c) In the event of a consolidation or merger of the Company with another
corporation, or the sale or exchange of all or substantially all of the
assets of the Company, or a reorganization or liquidation of the
Company, the Participant shall be entitled to receive upon exercise and
payment in accordance with the terms of this Plan the same shares,
securities or property as he would have been entitled to receive upon
the occurrence of such event if he had been, immediately prior to such
event, the holder of the number of shares of Common Stock purchasable
under this Plan, or if another corporation shall be the survivor, such
corporation shall substitute therefor substantially equivalent shares,
securities or property of such other corporation; provided, however,
that in lieu of the foregoing the Board may upon written notice to the
Participant provide that this Plan shall terminate on a date not less
than twenty (20) days after the date of such notice unless theretofore
exercised. In connection with such notice, the Board may in its
discretion accelerate or waive any deferred exercise period.
Section 6. Stock Options
(a) Subject to the provisions of the Plan, the Board may award Incentive
Stock Options and Nonstatutory Stock Options and determine the number
of shares to be covered by each Option, the option price therefor and
the conditions and limitations applicable to the exercise of the
Option. The terms and conditions of Incentive Stock Options shall be
subject to and comply with Section 422 of the Code, or any successor
provision, and any regulations thereunder.
(b) The Board shall establish the option price at the time each Option is
awarded, which price shall not be less than 100% of the Fair Market
Value of the Common Stock on the date of award with respect to
Incentive Stock Options.
(c) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Board may specify in the applicable Award
or thereafter. The Board may impose such conditions with respect to the
exercise of Options, including conditions relating to applicable
federal or state securities laws, as it considers necessary or
advisable.
(d) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the
Company. Such payment may be made in whole or in
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part in cash or, to the extent permitted by the Board at or after the
award of the Option, by delivery of a note or shares of Common Stock
owned by the optionholder, including Restricted Stock, valued at their
Fair Market Value on the date of delivery, or such other lawful
consideration as the Board may determine.
(e) The Board may provide for the automatic award of an Option upon the
delivery of shares to the Company in payment of an Option for up to the
number of shares so delivered.
(f) In the case of Incentive Stock Options the following additional
conditions shall apply:
(i) Such options shall be granted only to employees of the
Company, and shall not be granted to any person who owns stock
that possesses more than ten percent of the total combined
voting power of all classes of stock of the Company or of its
parent or subsidiary corporation (as those terms are defined
in section 422(b) of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder), unless,
at the time of such grant, the exercise price of such option
is at least 110% of the fair market value of the stock that is
subject to such option and the option shall not be exercisable
more than five years after the date of grant;
(ii) Such options shall not be exercisable more than ten years from
the date hereof and shall not be exercisable more than ten
years from the date of grant;
(iii) Such options shall, by their terms, be transferable by the
optionee only by will or the laws of descent and distribution,
and shall be exercisable only by such employee during his
lifetime.
Section 7. Stock Appreciation Rights
Subject to the provisions of the Plan, the Board may award SARs in
tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised.
Section 8. Performance Shares
(a) Subject to the provisions of the Plan, the Board may award Performance
Shares and determine the number of such shares for each Performance
Cycle and the duration of each Performance Cycle. There may be more
than one Performance Cycle in existence at any one time, and the
duration of Performance Cycles may differ from each other. The payment
value of Performance Shares shall be equal to the Fair Market Value of
the Common Stock on the date the Performance Shares are earned or, in
the discretion of the Board, on the date the Board determines that the
Performance Shares have been earned.
(b) The Board shall establish performance goals for each Cycle, for the
purpose of determining the extent to which Performance Shares awarded
for such Cycle are earned, on the basis of such criteria and to
accomplish such objectives as the Board may from time to time select.
During any Cycle, the Board may adjust the performance goals for such
Cycle as it deems equitable in recognition of unusual or non-recurring
events affecting the Company, changes in applicable tax laws or
accounting principles, or such other factors as the Board may
determine.
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(c) As soon as practicable after the end of a Performance Cycle, the Board
shall determine the number of Performance Shares which have been earned
on the basis of performance in relation to the established performance
goals. The payment values of earned Performance Shares shall be
distributed to the Participant or, if the Participant has died, to the
Participant's Designated Beneficiary, as soon as practicable
thereafter. The Board shall determine, at or after the time of award,
whether payment values will be settled in whole or in part in cash or
other property, including Common Stock or Awards.
Section 9. Restricted Stock
(a) Subject to the provisions of the Plan, the Board may award shares of
Restricted Stock and determine the duration of the Restricted Period
during which, and the conditions under which, the shares may be
forfeited to the Company and the other terms and conditions of such
Awards. Shares of Restricted Stock may be issued for no cash
consideration or such minimum consideration as may be required by
applicable law.
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Board,
during the Restricted Period. Shares of Restricted Stock shall be
evidenced in such manner as the Board may determine. Any certificates
issued in respect of shares of Restricted Stock shall be registered in
the name of the Participant and unless otherwise determined by the
Board, deposited by the Participant, together with a stock power
endorsed in blank, with the Company. At the expiration of the
Restricted Period, the Company shall deliver such certificates to the
Participant or if the Participant has died, to the Participant's
Designated Beneficiary.
Section 10. Stock Units
(a) Subject to the provisions of the Plan, the Board may award Stock Units
subject to such terms, restrictions, conditions, performance criteria,
vesting requirements and payment rules as the Board shall determine.
(b) Shares of Common Stock awarded in connection with a Stock Unit Award
shall be issued for no cash consideration or such minimum consideration
as may be required by applicable law. Such shares of Common Stock may
be designated as Award Shares by the Board.
Section 11. General Provisions Applicable to Awards
(a) Documentation. Each Award under the Plan shall be evidenced by a
writing delivered to the Participant specifying the terms and
conditions thereof and containing such other terms and conditions not
inconsistent with the provisions of the Plan as the Board considers
necessary or advisable to achieve the purposes of the Plan or comply
with applicable tax and regulatory laws and accounting principles.
(b) Board Discretion. Each type of Award may be made alone, in addition to
or in relation to any other type of Award. The terms of each type of
Award need not be identical, and the Board need not treat Participants
uniformly. Except as otherwise provided by the Plan or a particular
Award, any determination with respect to an Award may be made by the
Board at the time of award or at any time thereafter.
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(c) Settlement. The Board shall determine whether Awards are settled in
whole or in part in cash, Common Stock, other securities of the
Company, Awards or other property. The Board may permit a Participant
to defer all or any portion of a payment under the Plan, including the
crediting of interest on deferred amounts denominated in cash and
dividend equivalents on amounts denominated in Common Stock.
(d) Dividends and Cash Awards. In the discretion of the Board, any Award
under the Plan may provide the Participant with (i) dividends or
dividend equivalents payable currently or deferred with or without
interest, and (ii) cash payments in lieu of or in addition to an Award.
(e) Termination of Employment. The Board shall determine the effect on an
Award of the disability, death, retirement or other termination of
employment of a Participant and the extent to which, and the period
during which, the Participant's legal representative, guardian or
Designated Beneficiary may receive payment of an Award or exercise
rights thereunder.
(f) Change in Control. In order to preserve a Participant's rights under an
Award in the event of a change in control of the Company, the Board in
its discretion may, at the time an Award is made or at any time
thereafter, take one or more of the following actions: (i) provide for
the acceleration of any time period relating to the exercise or
realization of the Award, (ii) provide for the purchase of the Award
upon the Participant's request for an amount of cash or other property
that could have been received upon the exercise or realization of the
Award had the Award been currently exercisable or payable, (iii) adjust
the terms of the Award in a manner determined by the Board to reflect
the change in control, (iv) cause the Award to be assumed, or new
rights substituted therefor, by another entity, or (v) make such other
provision as the Board may consider equitable and in the best interests
of the Company.
(g) Withholding. The Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required
by law to be withheld in respect of Awards under the Plan no later than
the date of the event creating the tax liability. In the Board's
discretion, such tax obligations may be paid in whole or in part in
shares of Common Stock, including shares retained from the Award
creating the tax obligation, valued at their Fair Market Value on the
date of delivery. The Company and its Affiliates may, to the extent
permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to the Participant.
(h) Foreign Nationals. Awards may be made to Participants who are foreign
nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Board
considers necessary or advisable to achieve the purposes of the Plan or
comply with applicable laws.
(i) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the
same or a different type, changing the date of exercise or realization
and convening an Incentive Stock Option to a Nonstatutory Stock Option,
provided that the Participant's consent to such action shall be
required unless the Board determines that the action, taking into
account any related action, would not materially and adversely affect
the Participant.
Section 12. Miscellaneous
(a) No Right To Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as
giving a Participant the right to continued employment. The Company
expressly reserves the right at any time to dismiss a Participant
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free from any liability or claim under the Plan, except as expressly
provided in the applicable Award.
(b) No Rights As Shareholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights
as a shareholder with respect to any shares of Common Stock to be
distributed under the Plan until he or she becomes the holder thereof.
A Participant to whom Common Stock is awarded shall be considered the
holder of the Stock at the time of the Award except as otherwise
provided in the applicable Award.
(c) Effective Date. This amended and restated Plan became effective on May
27, 1999. The original Plan first became effective, subject to
shareholder approval, on February 21, 1996.
(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that no amendment shall be
made without shareholder approval if such approval is necessary to
comply with any applicable tax requirement.
(e) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the Commonwealth of
Massachusetts.
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