EXHIBIT 4.7
MERCATOR SOFTWARE, INC.
1997 EQUITY INCENTIVE PLAN
As Adopted May 8, 1997 and Amended July 21, 1997, January 27, 1999, March 17,
1999, May 18, 1999, April 3, 2000, June 19, 2000, May 17, 2001, August 15, 2001
and May 14, 2002
1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options, Restricted Stock and Stock
Bonuses. Capitalized terms not defined in the text are defined in Section 23.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and 18,
the total number of Shares reserved and available for grant and issuance
pursuant to Awards made under this Plan will be 12,200,000 Shares until December
31, 2002. On January 1, 2003, the total number of Shares reserved and available
for grant and issuance pursuant to Awards made under this Plan will be increased
by the lesser of (a) 7.5% of the number of Shares outstanding on the close of
business immediately preceding January 1, 2003, or (b) 3,000,000 Shares. Subject
to Sections 2.2 and 18, Shares will again be available for grant and issuance in
connection with future Awards under the Plan if the shares: (a) are subject to
issuance upon exercise of an Option but cease to be subject to such Option for
any reason other than exercise of such Option; (b) are subject to an Award
granted hereunder but are forfeited or are repurchased by the Company at the
original issue price; or (c) are subject to an Award that otherwise terminates
without Shares being issued. Any authorized shares not issued or subject to
outstanding grants under the Company's 1993 Stock Option Plan (the "Prior Plan")
on the Effective Date (as defined below) and any shares that: (a) are issuable
upon exercise of options granted pursuant to the Prior Plan that expire or
become unexercisable for any reason without having been exercised in full or (b)
are subject to an option granted pursuant to the Prior Plan but are forfeited or
are repurchased by the Company at the original issue price; will no longer be
available for grant and issuance under the Prior Plan, but will be available for
grant and issuance under this Plan. At all times the Company shall reserve and
keep available a sufficient number of Shares as shall be required to satisfy the
requirements of all outstanding Options granted under this Plan and all other
outstanding but unvested Awards granted under this Plan. No Participant may
receive (a) Restricted Stock Awards, (b) Stock Bonus Awards, or (c) Options with
an Exercise Price below Fair Market Value for more than 150,000 Shares over the
term of the Plan, and the sum of such awards issued under this Plan may not
exceed 300,000 Shares in the aggregate over the term of the Plan.
2.2 Adjustment of Shares. In the event that the number of
outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the stockholders of the
Company and compliance with applicable securities laws; provided, however, that
fractions of a Share will not be issued but will either be replaced by a cash
payment equal to the Fair
Market Value of such fraction of a Share or will be rounded up to the nearest
whole Share, as determined by the Committee.
3. ELIGIBILITY. ISO (as defined in Section 5 below) may be granted
only to employees (including officers and directors who are also employees) of
the Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors, consultants, independent contractors
and advisors of the Company or any Parent or Subsidiary of the Company; provided
such consultants, contractors and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction. No person will be eligible to receive more than 300,000 Shares in
any calendar year under this Plan pursuant to the grant of Awards hereunder,
other than new employees of the Company or of a Parent or Subsidiary of the
Company (including new employees who are also officers and directors of the
Company or any Parent or Subsidiary of the Company) who are eligible to receive
up to a maximum of 1,000,000 Shares in the calendar year in which they commence
their employment. A person may be granted more than one Award under this Plan.
4. ADMINISTRATION.
4.1 Committee Authority. This Plan will be administered by the
Committee. Subject to the general purposes, terms and conditions of this Plan,
the Committee will have full power to implement and carry out this Plan. Without
limiting the previous sentence, the Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and
any other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations
relating to this Plan, including determining the forms and agreements used in
connection with this Plan; provided that the Committee may delegate to the
President and Chief Executive Officer or the Chief Financial Officer, the
authority to approve revisions to the forms and agreements used in connection
with this Plan that are designed to facilitate Plan administration, and that are
not inconsistent with this Plan or with any resolutions of the Committee
relating to this Plan;
(c) select persons to receive Awards; provided that the
Committee may delegate to one or more executive officers of the Company who are
also members of the Board, the authority to grant an Award under this Plan to
Participants who are not Insiders of the Company;
(d) determine the terms of Awards;
(e) determine the number of Shares or other consideration
subject to Awards;
(f) determine whether Awards will be granted singly, in
combination or in tandem with, in replacement of, or as alternatives to, other
Awards under this Plan or any other incentive or compensation plan of the
Company or any Parent or Subsidiary of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of
Awards;
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(i) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) amend this Plan, except for amendments that increase the
number of Shares available for issuance under this Plan or change the
eligibility criteria for participation in this Plan, or any other amendments
that would require approval of the stockholders of the Company;
(l) make all other determinations necessary or advisable for
the administration of this Plan.
4.2 Committee Interpretation and Discretion. Any determination
made by the Committee with respect to any Award will be made in its sole
discretion at the time of grant of the Award or, unless in contravention of any
express term of this Plan or Award, at any later time, and such determination
will be final and binding on the Company and on all persons having an interest
in any Award under this Plan. Any dispute regarding the interpretation of this
Plan or any award Agreement shall be submitted by the participant or the Company
to the Committee for review. The resolution of such a dispute by the Committee
shall be final and binding on the Company and the Participant.
5. OPTIONS. The Committee may grant Options to eligible persons and
will determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISO") or Non-Qualified Stock Options ("NQSO"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this Plan
will be evidenced by an Award Agreement which will expressly identify the Option
as an ISO or an NQSO ("Stock Option Agreement"). The Stock Option Agreement will
be substantially in a form (which need not be the same for each Participant)
that the Committee or an officer of the Company (pursuant to Section 41(b)) has
from time to time approved, and will comply with and be subject to the terms and
conditions of this Plan.
5.2 Date of Grant. The date of grant of an Option will be the
date on which the Committee makes the determination to grant such Option, unless
a later date is otherwise specified by the Committee. The Stock Option Agreement
and a copy of this Plan will be delivered to the Participant within a reasonable
time after the granting of the Option.
5.3 Exercise Period. Options may be exercisable within the times
or upon the occurrence of events determined by the Committee and set forth in
the Stock Option Agreement governing such Option; subject to the provisions of
Section 5.6 and subject to Company policies established by the Committee (or by
individuals to whom the Committee has delegated responsibility) from time to
time with respect to vesting during leaves of absences. No Option will be
exercisable after the expiration of ten (10) years from the date the Option is
granted; provided however that no ISO granted to a person who directly or by
attribution owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of any Parent or Subsidiary of the
Company ("Ten Percent Stockholder") will be exercisable after the expiration of
five (5) years from the date the ISO is granted. The Committee also may provide
for Options to become exercisable at one time or from time to time, periodically
or otherwise, in such number of Shares or percentage of Shares as the Committee
determines.
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5.4 Exercise Price. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may not be less than
85% of the Fair Market Value of the Shares on the date of grant; provided that:
(i) the Exercise Price of an ISO will not be less than 100% of the Fair Market
Value of the Shares on the date of grant; and (ii) the Exercise Price of any ISO
granted to a Ten Percent Stockholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased must be made in accordance with Section 8 of this Plan and the Stock
Option Agreement.
5.5 Method of Exercise. Options may be exercised only by delivery
to the Company of a written stock option exercise agreement (the "Exercise
Agreement"). The Exercise Agreement will be substantially in a form (which need
not be the same for each Participant), that the Committee or an Officer of the
Company (pursuant to Section 4.1(b)) has from time to time approved and shall
state the number of Shares being purchased, the restrictions imposed on the
Shares purchased under such Exercise Agreement, if any, and such representations
and agreements regarding Participant's investment intent and access to
information and other matters, if any, as may be required or desirable by the
Company to comply with applicable securities laws, together with payment in full
of the Exercise Price for the number of shares being purchased.
5.6 Termination.
(a) Termination for Other than Cause. An Option granted to a
Participant will cease to vest on the Participant's Termination. Following the
Participant's Termination, the Participant's Option may be exercised (to the
extent such Option was exercisable immediately prior to the Termination Date):
(i) no later than three (3) months after the Termination
Date if the Participant is Terminated for any reason except death or Disability,
unless a shorter or longer time period not exceeding five (5) years is
specifically set forth in the Participant's Stock Option Agreement; provided
that any exercise of an ISO more than three (3) months after the Termination
Date is deemed to be an NQSO, and provided further than no Option may be
exercised later than the expiration date of the Option.
(ii) no later than twelve (12) months after the Termination
Date if the Participant is Terminated because of Participant's death or
Disability (or the Participant dies within three (3) months after a Termination
other than because of Participant's death or Disability), unless a shorter or
longer time period not exceeding five (5) years is specifically set forth in the
Participant's Stock Option Agreement; provided that any exercise of an ISO more
than twelve (12) months after the Termination Date when the Termination is for
Participant's Disability is deemed to be an NQSO, and provided further that no
option may be exercised later than the expiration date of the Option.
(b) Termination for Cause. Notwithstanding the provisions in
paragraph 5.6(a) above, if a Participant is determined by the Board to have
committed an act of theft, embezzlement, fraud, dishonesty or a breach of
fiduciary duty to the Company or Subsidiary, neither the Participant, the
Participant's estate nor such other person who may then hold the Option shall be
entitled to exercise any Option with respect to any Shares whatsoever, after
termination of service, whether or not after termination of service the
Participant may receive payment from the Company or Subsidiary for vacation pay,
for services rendered prior to termination, for services rendered for the day on
which termination occurs, for salary in lieu of notice, or for any other
benefits. In making such determination, the Board shall give the Participant an
opportunity to present to the Board evidence on his behalf. For
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the purpose of this paragraph, termination of service shall be deemed to occur
on the date when the Company dispatches notice or advice to the Participant that
his service is terminated.
5.7 Limitations on Exercise. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISO. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISO are
exercisable for the first time by a Participant during any calendar year (under
this Plan or under any other incentive stock option plan of the Company, Parent
or Subsidiary of the Company) will not exceed $100,000. If the Fair Market Value
of Shares on the date of grant with respect to which ISO are exercisable for the
first time by a Participant during any calendar year exceeds $100,000, then the
Options for the first $100,000 worth of Shares to become exercisable in such
calendar year will be ISO and the Options for the amount in excess of $100,000
that become exercisable in that calendar year will be NQSO. In the event that
the Code or the regulations promulgated thereunder are amended after the
Effective Date of this Plan to provide for a different limit on the Fair Market
Value of Shares permitted to be subject to ISO, such different limit will be
automatically incorporated herein and will apply to any Options granted after
the effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered will be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them;
provided, however, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.4 of this Plan for
Options granted on the date the action is taken to reduce the Exercise Price.
5.10 No Disqualification. Notwithstanding any other provision in
this Plan, no term of this Plan relating to ISO will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the
Company to sell to an eligible person Shares that are subject to restrictions.
The Committee will determine to whom an offer will be made, the number of Shares
the person may purchase, the price to be paid (the "Purchase Price"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a
Restricted Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement ("Restricted Stock Purchase Agreement") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. The offer of Restricted Stock will be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company within thirty (30) days from the
date the Restricted Stock Purchase Agreement is delivered to the person. If such
person does not execute and deliver the Restricted Stock Purchase Agreement
along with full
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payment for the Shares to the Company within thirty (30) days, then the offer
will terminate, unless otherwise determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold pursuant to
a Restricted Stock Award will be determined by the Committee and will be at
least 85% of the Fair Market Value of the Shares on the date the Restricted
Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price will be 100% of the Fair Market
Value. Payment of the Purchase Price must be made in accordance with Section 8
of this Plan.
6.3 Restrictions. Restricted Stock Awards will be subject to such
restrictions (if any) as the Committee may impose. The Committee may provide for
the lapse of such restrictions in installments and may accelerate or waive such
restrictions, in whole or part, based on length of service, performance or such
other factors or criteria as the Committee may determine.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of Shares
(which may consist of Restricted Stock) for services rendered to the Company or
any Parent or Subsidiary of the Company. A Stock Bonus may be awarded for past
services already rendered to the Company, or any Parent or Subsidiary of the
Company (provided that the Participant pays the Company the par value of the
shares awarded by such Stock Bonus in cash) pursuant to an Award Agreement (the
"Stock Bonus Agreement") that will be in such form (which need not be the same
for each Participant) as the Committee will from time to time approve, and will
comply with and be subject to the terms and conditions of this Plan. A Stock
Bonus may be awarded upon satisfaction of such performance goals as are set out
in advance in the Participant's individual Award Agreement (the "Performance
Stock Bonus Agreement") that will be in such form (which need not be the same
for each Participant) as the Committee will from time to time approve, and will
comply with and be subject to the terms and conditions of this Plan. Stock
Bonuses may vary from Participant to Participant and between groups of
Participants, and may be based upon the achievement of the Company, Parent or
Subsidiary and/or individual performance factors or upon such other criteria as
the Committee may determine.
7.2 Terms of Stock Bonuses. The Committee will determine the
number of Shares to be awarded to the Participant and whether such Shares will
be Restricted Stock. If the Stock Bonus is being earned upon the satisfaction of
performance goals pursuant to a Performance Stock Bonus Agreement, then the
Committee will determine: (a) the nature, length and starting date of any period
during which performance is to be measured (the "Performance Period") for each
Stock Bonus; (b) the performance goals and criteria to be used to measure the
performance, if any; (c) the number of Shares that may be awarded to the
Participant; and (d) the extent to which such Stock Bonuses have been earned.
Performance Periods may overlap and Participants may participate simultaneously
with respect to Stock Bonuses that are subject to different Performance Periods
and different performance goals and other criteria. The number of Shares may be
fixed or may vary in accordance with such performance goals and criteria as may
be determined by the Committee. The Committee may adjust the performance goals
applicable to the Stock Bonuses to take into account changes in law and
accounting or tax rules and to make such adjustments as the Committee deems
necessary or appropriate to reflect the impact of extraordinary or unusual
items, events or circumstances to avoid windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus may be
paid currently or on a deferred basis with such interest or dividend equivalent,
if any, as the Committee may determine. Payment may be made in the form of cash,
whole Shares, including Restricted Stock, or a combination thereof, either in a
lump sum payment or in installments, all as the Committee will determine.
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7.4 Termination During Performance Period. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Stock Bonus only to the extent earned as of the date of Termination in
accordance with the Performance Stock Bonus Agreement, unless the Committee will
determine otherwise.
8. PAYMENT FOR SHARE PURCHASES.
8.1 Payment. Payment for Shares purchased pursuant to this Plan
may be made by any of the following methods (or any combination of such methods)
that are described in the applicable Stock Option Agreement or other Award
Agreement and that are permitted by law:
(a) in cash (by check);
(b) by cancellation of indebtedness of the Company to the
Participant;
(c) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for within the
meaning of SEC Rule 144 (and, if such shares were purchased from the Company by
use of a promissory note, such note has been fully paid with respect to such
shares); or (2) were obtained by Participant in the public market;
(d) by tender of a full recourse promissory note having such
terms as may be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and 1274 of the
Code; provided, however, that Participants who are not employees or directors of
the Company will not be entitled to purchase Shares with a promissory note
unless the note is adequately secured by collateral other than the Shares;
provided, further, that the portion of the Purchase Price or Exercise Price
equal to the par value of the Shares, if any, must be paid in cash;
(e) by waiver of compensation due or accrued to the
Participant for services rendered; provided, however, that the portion of the
Purchase Price or Exercise Price equal to the par value of the Shares, if any,
must be paid in cash; or
(f) with respect only to purchases upon exercise of an Option,
and provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the
Participant and a broker-dealer that is a member of the National Association of
Securities Dealers (a "NASD Dealer") whereby the Participant irrevocably elects
to exercise the Option and to sell a portion of the Shares so purchased to pay
for the Exercise Price, and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly to the Company; or
(2) through a "margin" commitment from the Participant and
a NASD Dealer whereby the Participant irrevocably elects to exercise the Option
and to pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company.
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8.2 Loan Guarantees. The Committee may, in its sole discretion,
help the Participant pay for Shares purchased under this Plan by authorizing a
guarantee by the Company of a third-party loan to the Participant.
8.3 Issuance of Shares. Upon payment of the applicable Purchase
Price or Exercise Price (or a commitment for payment from the NASD Dealer
designated by the Participant in the case of an exercise by means of a "same-day
sale" or "margin" commitment), and compliance with other conditions and
procedures established by the Company for the purchase of shares, the Company
shall issue the Shares registered in the name of Participant (or in the name of
the NASD Dealer designated by the Participant in the case of an exercise by
means of a "same-day sale" or "margin" commitment) and shall deliver
certificates representing the Shares (in physical or electronic form, as
appropriate). The Shares may be subject to legends or other restrictions as
described in Section 13 of the Plan.
9. WITHHOLDING TAXES.
9.1 Withholding Generally. Whenever Shares are to be issued under
Awards granted under this Plan, the Company may require the Participant to pay
to the Company an amount sufficient to satisfy federal, state and local
withholding tax requirements prior to the delivery of any certificate(s) for the
Shares. If a payment in satisfaction of an Award is to be made in cash, the
payment will be net of an amount sufficient to satisfy federal, state, and local
withholding tax requirements.
9.2 Stock Withholding. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee and must be in writing in a form acceptable to the
Committee
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1 Voting and Dividends. No Participant will have any of the
rights of a stockholder of the Company with respect to any Shares until the
Shares are issued to the Participant. After Shares are issued to the
Participant, the Participant will be a stockholder and have all the rights of a
stockholder with respect to the Shares; provided, however, that if the Shares
are Restricted Stock, any new, additional or different securities the
Participant may become entitled to receive with respect to the Shares by virtue
of a stock dividend, stock split or any other change in the corporate or capital
structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's original Purchase Price pursuant to Section
12.
11. TRANSFERABILITY. Except as set forth below (i) no Option shall
be transferable by any Participant other than by will or the laws of descent and
distribution and (ii) Options may be exercised during the Participant's lifetime
only by the Participant (or, if the Participant is disabled and so long as the
Option remains exercisable, by the Participant's duly appointed guardian or
other legal representative). However, the Committee may, in its discretion,
permit a Participant holding an NQSO to transfer the NQSO to (i) one or more
members of his or her immediate family (including the Participant's spouse and
lineal descendants and spouses of lineal descendants); (ii) trusts for the
benefit
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of the Participant and/or any person referred to in clause (i); (iii) entities
wholly-owned by the Participant and/or any persons or trusts referred to in
clauses (i) or (ii); or (iv) charitable organizations) for estate planning
purposes. In connection with permitting transfers, the Committee may require
that (i) no consideration be given or payment made for any such transfer, (ii)
the stock option agreement pursuant to which such NQSO is granted must expressly
provide for transferability in a manner consistent with the Plan, and (iii)
subsequent transfers of the transferred NQSO shall be prohibited except those in
accordance with this Section. Following any such transfer, the NQSO shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, and the transferee of such NQSO shall be subject
to the applicable terms of the Plan. The events of Termination of employment set
forth in a Participant's Stock Option Agreement shall continue to be applied
with respect to the original holder of such NQSO, following which such NQSO
shall be exercisable by the transferee only to the extent and for the periods
specified in such Stock Option Agreement.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right to repurchase a portion of or all of a Participant's Shares that are not
"vested" (as defined in the Award Agreement) following the Participant's
Termination at any time within ninety (90) days after the later of Participant's
Termination Date and the date Participant purchases Shares under this Plan, for
cash and/or cancellation of purchase money indebtedness, at the Participant's
Exercise Price or Purchase Price, as the case may be.
13. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan (whether in physical or electronic form, as
appropriate) will be subject to such stock transfer orders, legends and other
restrictions that the Committee deems necessary or advisable, including without
limitation restrictions under any applicable federal, state or foreign
securities law, or any rules, regulations and other requirements of the SEC or
any stock exchange or automated quotation system on which the Shares may be
listed.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.
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16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will
not be effective unless such Award is in compliance with all applicable state,
federal and foreign securities laws, rules and regulations of any governmental
body, and the requirements of any stock exchange or automated quotation system
upon which the Shares may then be listed or quoted, as they are in effect on the
date of grant of the Award and also on the date of exercise or other issuance.
Notwithstanding any other provision in this Plan, the Company will have no
obligation to issue or deliver certificates for Shares under this Plan prior to:
(a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable; and/or (b) completion of any registration
or other qualification of such Shares under any state, federal or foreign law or
ruling of any governmental body that the Company determines to be necessary or
advisable. The Company will be under no obligation to register the Shares with
the SEC or to effect compliance with the registration, qualification or listing
requirements of any state, federal or foreign securities laws, stock exchange or
automated quotation system, and the Company will have no liability for any
inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award
granted under this Plan will confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship
with, the Company or any Parent or Subsidiary of the Company or limit in any way
the right of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.
18. CORPORATE TRANSACTIONS.
18.1 Assumption or Replacement of Awards by Successor. In the
event of
(a) a dissolution or liquidation of the Company;
(b) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
the Company or their relative stock holdings and the Awards granted under this
Plan are assumed, converted or replaced by the surviving corporation, which
assumption will be binding on all Participants);
(c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges with the Company in such merger, or
which owns or controls another corporation that merges, with the Company in such
merger) cease to own their shares or other equity interest in the Company;
(d) the sale of all or substantially all of the assets of the
Company; or
(e) the acquisition, sale or transfer of more than 50% of the
outstanding shares of the Company by tender offer or similar transaction;
any or all outstanding Awards will automatically vest for one
additional year and may also be assumed, converted or replaced by the surviving
corporation (if any), which assumption, conversion or replacement will be
binding on all Participants. The Committee may, in its sole discretion, provide
for additional accelerated vesting of any or all Awards that are assumed,
converted or replaced by the surviving corporation. In lieu of assuming,
converting or replacing such Awards, the surviving corporation may substitute
equivalent Awards or provide substantially similar consideration to
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Participants as was provided to stockholders (after taking into account the
existing provisions of the Awards and the one year additional vesting). The
surviving corporation may also issue, in place of outstanding Shares of the
Company held by the Participant, substantially similar shares or other property
subject to repurchase restrictions no less favorable to the Participant. In the
event such surviving corporation (if any) refuses to assume or substitute
Awards, as provided above, pursuant to a transaction described in this
Subsection 18.1, such Awards will automatically vest for one additional year and
will expire on such transaction at such time and on such conditions as the
Committee will determine, provided, however, that the Committee may, in its sole
discretion, provide for additional accelerated vesting of any or all Awards
granted pursuant to this Plan. If such accelerated options are not exercised
prior to the consummation of the corporate transaction, they shall terminate in
accordance with the provisions of this Plan.
18.2 Other Treatment of Awards. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 18, in
the event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, sale of assets or other
"corporate transaction."
18.3 Assumption of Awards by the Company. The Company, from time
to time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either; (a) granting an Award under this Plan in substitution of
such other company's award; or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan became effective on
the date on which the registration statement filed by the Company with the SEC
under the Securities Act registering the initial public offering of the
Company's Common Stock is declared effective by the SEC (the "Effective Date").
This Plan was approved by the stockholders of the Company, consistent with
applicable laws, within twelve (12) months after the date this Plan was adopted
by the Board.
20. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as
provided herein, this Plan will terminate ten (10) years from the date this Plan
was adopted by the Board. This Plan and all agreements thereunder shall be
governed by and construed in accordance with the laws of the State of
Connecticut.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan. In addition, pursuant to Section 4.1(k), the Board has delegated
to the Committee the authority to make certain amendments to this Plan.
Notwithstanding the foregoing, neither the Board nor the Committee shall without
the approval of the stockholders of the Company amend this Plan in any manner
that requires such stockholder approval pursuant to the Code or the regulation
promulgated thereunder as such provisions
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apply to ISO plans, pursuant to the Exchange Act or any rule promulgated
thereunder or any rules or regulations promulgated by the Stock exchange or
automated quotation system on which the Company's Stock is quoted. No amendment
that is detrimental to a Participant may be made to any outstanding Award
without the consent of the Participant.
22. NON-EXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan
by the Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
23. DEFINITIONS. As used in this Plan, the following terms will have
the following meanings:
"Award" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.
"Award Agreement" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
"Committee" means the committee appointed by the Board to
administer this Plan, or if no such committee is appointed, the Board. The
Committee, if appointed, will consist of not less than two members of the Board.
"Company" means Mercator Software, Inc. or any successor
corporation.
"Disability" means a disability within the meaning of Section
22(e)(3) of the Code, as determined by the Committee.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Price" means the price at which a holder of an Option
may purchase the Shares issuable upon exercise of the Option.
"Fair Market Value" means, as of any date, the value of a share
of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National
Market, its closing price on the Nasdaq National Market on the date of
determination (grant date) as reported in The Wall Street Journal;
(b) if such Common Stock is publicly traded and is then listed
on a national securities exchange, its closing price on the date of
determination on the principal national securities exchange on which the Common
Stock is listed or admitted to trading as reported in The Wall Street Journal;
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(c) if such Common Stock is publicly traded but is not quoted
on the Nasdaq National Market nor listed or admitted to trading on a national
securities exchange, the average of the closing bid and asked prices on the date
of determination as reported in The Wall Street Journal;
(d) in the case of an Award made on the Effective Date, the
price per share at which shares of the Company's Common Stock are initially
offered for sale to the public by the Company's underwriters in the initial
public offering of the Company's Common Stock pursuant to a registration
statement filed with the SEC under the Securities Act; or
(e) if none of the foregoing is applicable, by the Committee
in good faith.
"Insider" means an officer or director of the Company or any
other person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.
"Option" means an award of an option to purchase Shares pursuant
to Section 5.
"Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
"Participant" means a person who receives an Award under this
Plan.
"Plan" means this Mercator Software, Inc. 1997 Equity Incentive
Plan, as amended from time to time.
"Restricted Stock Award" means an award of Shares pursuant to
Section 6.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of the Company's Common Stock reserved for
issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and any
successor security.
"Stock Bonus" means an award of Shares, or cash in lieu of
Shares, pursuant to Section 7.
"Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
"Termination" or "Terminated" means, for purposes of this Plan
with respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director, consultant, independent
contractor, or advisor to the Company or a Parent or Subsidiary of the Company.
An employee will not be deemed to have ceased to provide services in the case of
(i) sick leave, (ii) military leave, or (iii) any other leave of absence
approved by the Committee, provided, that such leave is for a period of not more
than 90 days, unless reemployment upon the expiration of such
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leave is guaranteed by contract or statute or unless provided otherwise pursuant
to formal policy adopted from time to time by the Company and issued and
promulgated to employees in writing. In the case of any employee on an approved
leave of absence, the Committee may make such provisions respecting suspension
of vesting of the Award while on leave from the employ of the Company or a
Subsidiary as it may deem appropriate, except that in no event may an Option be
exercised after the expiration of the term set forth in the Option agreement.
The Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "Termination Date").
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